Offences and Penalties Under the Code

In one line

Chapter XIII is the sanction: fines rising to twenty lakh rupees for an employer who lays off, retrenches or closes without permission, smaller fines for unfair labour practices and illegal industrial action, a power in a Government officer to impose penalties without going to court, and a power to compound most offences by paying a proportion of the maximum.

In exam wording: section 86 of the Industrial Relations Code 2020 prescribes penalties in twenty sub-sections, ranging from a fine of not less than one lakh rupees and up to ten lakh rupees for an employer who contravenes sections 78, 79 or 80, to a residuary fine of up to one lakh rupees under sub-section (20); section 85 empowers the appropriate Government to appoint an officer not below the rank of Under Secretary to hold an enquiry and impose penalties under the specified sub-sections; section 87 requires a complaint by or under the authority of the appropriate Government and confines trial to a Metropolitan Magistrate or Judicial Magistrate of the first class; section 88 makes officers of a company liable in stated circumstances; and section 89 permits compounding of offences not punishable with imprisonment only, at fifty per cent. of the maximum fine where the offence is punishable with fine only and seventy-five per cent. where it is punishable with imprisonment up to one year or with fine.

Why the law has this at all

Every Chapter of this Code so far has told somebody to do something or not to do it. A union must file annual returns. An employer must certify standing orders, must give notice before changing conditions of service, must not lay off without permission in a large establishment, must not commit an unfair labour practice. Workers must not strike without notice.

None of that is worth anything without a consequence, and Chapter XIII supplies it.

But a penal chapter attached to industrial law has a particular difficulty. The people who breach it are not criminals in the ordinary sense: they are employers making commercial decisions and workers pressing grievances, and prosecuting them in a magistrate's court is slow, blunt and often counter-productive. A prosecution that takes four years to produce a ten thousand rupee fine has protected nobody.

So the Code does three things that a conventional penal chapter would not.

It scales the fines to the actor and the harm. An employer who closes a plant of five hundred people without permission faces up to ten lakh rupees, and twenty lakh on a repeat. A worker who joins an illegal strike faces a thousand.

It creates an administrative route. Section 85 lets a Government officer hold an enquiry and impose a penalty for the commoner defaults, without any prosecution at all.