Why in news?
Supreme Court agreed to hear AITUC Tamil Nadu’s plea challenging definition and exclusions of ‘industry’ under Industrial Relations Code, 2020. The IRC protects workers only if they work in an ‘industry’. AITUC argues that the IRC definition is vague and its long list of exclusions can deprive lakhs of workers of protection.
UPSC Relevance
Prelims – Labour Codes, Section 2(p) of IRC, Bangalore Water Supply case, triple test, Concurrent List entries on labour, AITUC.
Mains
GS3: Indian economy, labour reforms and employment.
Meaning of ‘industry’
- Industrial Disputes Act, 1947 – Section 2(j) – Defined industry broadly as any business, trade, undertaking, manufacture or calling of employers, including any calling, service, employment or industrial occupation of workmen.
- Bangalore Water Supply and Sewerage Board vs A. Rajappa (1978) – A seven-judge Constitution Bench, through Justice V.R. Krishna Iyer, overruled the narrow view and gave the famous triple test.
- Any activity is an ‘industry’ if it is:
- Systematic or organised,
- Carried on with co-operation between employer and employee, and
- For production or distribution of goods and services to satisfy human wants (not spiritual or religious wants).
- Any activity is an ‘industry’ if it is:
- Result – Hospitals, educational institutions, clubs, research bodies and municipalities came under ‘industry’.
- 1982 amendment that never came – Parliament amended Section 2(j) in 1982 to exclude hospitals, educational and charitable institutions, but the amendment was never notified. So Rajappa remained the law.
Definition under the Industrial Relations Code, 2020
- Section 2(p) – Industry means any systematic activity carried on by co-operation between employer and worker for production, supply or distribution of goods or services to satisfy human wants or wishes – whether or not there is capital investment or profit motive.
- Exclusions – The Code keeps out:
- Institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic service;
- Activities of the appropriate government relatable to sovereign functions, including defence, research, atomic energy and space;
- Domestic service; and
- Any other activity notified by the Central Government.
Old definition vs new definition
| Aspect | ID Act, 1947 – Section 2(j) (as read in Rajappa) | IRC, 2020 – Section 2(p) |
|---|---|---|
| Basis | Broad wording, expanded by judicial interpretation | Triple test written into the law itself |
| Charitable / social bodies | Covered if they employ paid staff | Excluded if wholly or substantially charitable |
| Sovereign functions | Only strictly sovereign functions excluded | Wider list – includes research, atomic energy, space |
| Domestic service | Not specifically dealt with | Expressly excluded |
| Executive power | No power to exclude by notification | Centre can exclude ‘any other activity’ by notification |
| Hospitals, schools | Covered under ‘industry’ | Covered unless they fall under an exclusion |
Practice MCQ
Q1. With reference to the ‘triple test’ laid down in the Bangalore Water Supply and Sewerage Board vs A. Rajappa case, consider the following statements:
1. The activity must be systematic or organised.
2. The activity must be carried on with a profit motive.
3. The activity must involve co-operation between employer and employees.
4. Activities meant to satisfy spiritual or religious wants are also covered.
How many of the above statements are correct?
(a) Only one
(b) Only two
(c) Only three
(d) All four
Answer: (b)
Explanation: Statements 1 and 3 are correct. Profit motive is irrelevant, and activities for spiritual or religious wants are not covered.
Q2. Consider the following statements regarding the Industrial Relations Code, 2020:
Statement-I: Workers employed in an institution owned by an organisation wholly engaged in charitable service may not be covered under ‘industry’ in the Code.
Statement-II: The Code allows the Central Government to exclude any other activity from the definition of ‘industry’ by notification.
Which one of the following is correct in respect of the above statements?
(a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
(b) Both Statement-I and Statement-II are correct but Statement-II does not explain Statement-I
(c) Statement-I is correct but Statement-II is incorrect
(d) Statement-I is incorrect but Statement-II is correct
Answer: (b)
Explanation: Both are correct. But charitable institutions are excluded by a separate, express exclusion in Section 2(p), not through the Centre’s notification power.
Mains Practice Question
“The definition of ‘industry’ under the Industrial Relations Code, 2020 trades judicial expansion for legislative clarity, but at the cost of worker protection.” Discuss in the light of the Bangalore Water Supply judgment and the exclusions under the Code. (15 marks, 250 words)
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