Closing the Gap: Assessing the Compatibility of Closure Provisions with Economic Policies in India, under the Industrial Relations Code, 2020

The consolidation of the Industrial Relations Code, 2020, was aimed at giving impetus to the economic activity in the country without compromising on the basic aspects of the benefits to workers. This code provides a ‘procedure for the closing certain Establishment under Section 80 of Chapter X’. A cursory glance at the provisions reveals that this provision is identical to the previous provision under section 25-O of the Industrial Disputes Act, 1947, except the size of the workers is raised from 100 workers to 300 workers. A cursory glance at the provision under section 80 reveals that it creates an exit barrier for those industrial establishments which are not financially or commercially viable and wish to close their establishment to reallocate the productive resources to more viable activity. An attempt is made to ‘assess the Compatibility of Closure Provisions with Economic Policies in India’. The first part of this paper deals with the concept and meaning of the term ‘Closure’ of an industrial establishment. In the second part, an attempt is made to analyse the special provision under Chapter X of the Industrial Relations Code, 2020, regarding the procedure for the closure of certain industrial establishments under Section 80. In the third part, an attempt is made to assess the administrative and financial compatibility of the special provisions relating to the closure of certain establishments with present economic policies in India. Further, to suggest certain measures to make the provision more pragmatic to benefit all the stakeholders in the establishment.