Supreme Court to Review Industry Definition Under Industrial Relations Code 2020

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Key takeaways

The Supreme Court has agreed to examine a petition by AITUC challenging the constitutional validity of the definition of industry under the Industrial Relations Code, 2020.
The new law consolidates 3 major labor statutes from 1926, 1946, and 1947 into a single framework.
Exclusions under the 2020 Code deny statutory protections on retrenchment, lay-offs, and conciliation to workers in charitable, sovereign, and domestic sectors.
This legal challenge questions the deviation from the 1978 Bangalore Water Supply precedent and alleges a violation of Article 14 equality rights.

The Supreme Court of India agreed to hear a legal petition filed by the All India Trade Union Congress (AITUC).
This petition challenges the constitutional validity of how the word industry is defined under the Industrial Relations Code, 2020.
The central legal dispute focuses on the exclusion of specific institutions from this definition, which changes how worker protections and dispute resolutions operate.

The Industrial Relations Code, 2020 combines three older laws: the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947.
Under this Code, an industry means any organized activity where employers and workers collaborate to produce, supply, or distribute goods and services.
The new law explicitly leaves out organizations that are mainly involved in charitable, social, or philanthropic activities.
The definition also excludes government operations connected to sovereign functions.
The Code leaves out domestic services from the definition of an industry.
The law gives the Central Government discretionary power to add other activities to this exclusion list through official notifications.

Critics argue that these exclusions violate Article 14 of the Constitution, which guarantees the right to equality.
The new law judges an establishment by who owns it rather than the actual work done, leaving workers doing identical jobs with different legal protections.
For example, a nurse in a private hospital can access Industrial Tribunals, but a nurse in a charitable hospital doing the same work loses this remedy.
The Code gives the government wide power to exclude more activities without clear criteria, leading to worries about excessive delegation and arbitrary executive decisions.
This new definition strays from the famous 1978 ruling in Bangalore Water Supply and Sewerage Board v. A. Rajappa.
The 1978 judgment established a triple test focusing on systematic activity, employer-employee cooperation, and production, regardless of profit motive or owner identity.

In the Jai Bir Singh case of August 2026, the Supreme Court confirmed that the 1978 triple test still applies to older pending cases under the Industrial Disputes Act, 1947.
However, the court noted that Section 2(p) of the Industrial Relations Code, 2020 requires a fresh legal review, making this current examination necessary.

Employees in excluded sectors do not lose all their general legal rights completely.
However, these workers lose key statutory safeguards against retrenchment, lay-offs, and sudden workplace closures.
They are also removed from the official conciliation machinery established under the new labor code.