Labour Laws and Practice · Law of Industrial Relations

Offences, Penalties and Miscellaneous Provisions under the Industrial Relations Code

Updated 11 October 2026 · Fact-checked

This topic covers the closing provisions of the Industrial Relations Code, 2020: who can launch prosecution (only the appropriate Government or its authority), how fine-only offences are compounded, how the Chapter overrides inconsistent laws while protecting more favourable worker benefits, and the amendment of Act 7 of 2017. Answer by stating the provision, applying the facts, and concluding.

Understand Offences, Penalties and Miscellaneous Provisions

Every Code ends with provisions that decide how it is enforced and how it fits with other laws. You need four ideas here: cognizance, compounding, overriding effect and consequential changes.

Cognizance (Section 87). No court can take cognizance of an offence under the Code except on a complaint made by or under the authority of the appropriate Government. So a worker or a trade union cannot file a prosecution directly. Also, no court inferior to a Metropolitan Magistrate or Judicial Magistrate of the first class can try these offences.

Compounding (Section 89). Compounding lets the accused settle an offence by paying a sum instead of facing trial. It applies only to offences that are not punishable with imprisonment only, or with imprisonment and also fine. A Gazetted Officer specified by the appropriate Government compounds it. The sum goes to the Social Security Fund under section 141 of the Social Security Code, 2020. It is not available for a repeat offence within three years.

Overriding effect (Section 76). The provisions of the Chapter on lay-off, retrenchment and closure prevail over any other law, including standing orders. But a worker keeps any more favourable benefit available under another Act, standing order, award or contract. State laws on settlement of industrial disputes are not affected, but lay-off and retrenchment rights and liabilities follow this Chapter.

Consequential provisions. Section 102 amends the Eighth Schedule to the Finance Act, 2017 (Act 7 of 2017). Section 104 repeals the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947 by notification, and saves actions taken under them. Section 103 allows the Central Government to remove difficulties by order within three years of commencement.

Key rules to remember

Cognizance of offences (Section 87): Court takes cognizance only on a complaint by or under authority of the appropriate Government; trial by Metropolitan Magistrate or Judicial Magistrate of first class or higher; No private complaint is enough. Courts below that rank cannot try the offence.
Compounding of fine-only offences (Section 89(1)): Composition sum = 50% of the maximum fine; Applies to offences punishable with fine only.
Compounding of offences with imprisonment up to one year or fine (Section 89(1)): Composition sum = 75% of the maximum fine; Applies to offences punishable with imprisonment of not more than one year or with fine. Read the section text for the exact wording.
Bar on compounding (Section 89(2)): No compounding for a second or later offence within 3 years of an earlier compounded or convicted similar offence; The three years run from the date of commission of the earlier similar offence.
Non-compliance with compounding order (Section 89(7)): Additional sum = 20% of the maximum fine, plus the fine; Payable by a person who fails to comply with the compounding officer's order.
Effect of compounding (Section 89(5) and (6)): Before prosecution: no prosecution. After prosecution: officer informs the adjudicating officer under section 85(1) and the accused is discharged; Section 89(8) bars compounding except under this section.
Overriding effect (Section 76): Chapter prevails over other laws and standing orders, but more favourable benefits continue; State dispute-settlement laws are not affected, except that lay-off and retrenchment follow the Chapter.
Removal of difficulties (Section 103): Central Government order, no order after 3 years from commencement, laid before each House of Parliament; Orders must not be inconsistent with the Code.

How to solve Offences, Penalties and Miscellaneous Provisions questions

Use the same four-part structure for any question: provision, facts, analysis, conclusion.

1Identify which part the question tests: prosecution, compounding, overriding effect, repeal or amendment.
2State the section and its rule in plain words, with its exact conditions.
3List the facts that matter: who filed the complaint, whether the offence carries imprisonment, whether it is a repeat offence, and whether a benefit is more favourable.
4For compounding, check the bars in order: type of punishment, repeat within three years, and the authority.
5For overriding effect, ask if the matter is lay-off or retrenchment and compare the worker's existing benefit with the Code.
6Compute the composition sum from the maximum fine if numbers are given, using the correct percentage.
7Write a one-line conclusion that answers exactly what was asked, and add a practical compliance point.

Quickest way: Four-question check

When to use it: Use it for short case-based questions when time is tight.

Who complains? Only the appropriate Government or its authority (Section 87).
Can it be compounded? Not if it is punishable with imprisonment only, or with imprisonment and also fine, and not if it is a repeat within three years.
How much? 50% of the maximum fine for fine-only offences; 75% where punishment is imprisonment up to one year or fine.
Is there a conflict of laws? The Chapter prevails, but the worker keeps any more favourable benefit.

Common mistakes in Offences, Penalties and Miscellaneous Provisions

Saying a worker or trade union can directly prosecute the employer in court.
Students assume ordinary criminal complaint rules apply.
Fix: Quote Section 87: cognizance only on a complaint by or under the authority of the appropriate Government.
Allowing compounding of every offence under the Code.
Compounding is remembered as a general relief.
Fix: Check the punishment first. Offences punishable with imprisonment only, or with imprisonment and also fine, cannot be compounded.
Mixing up the 50% and 75% figures.
Both percentages are in one sub-section.
Fix: Link 50% to fine-only offences and 75% to offences with imprisonment up to one year or fine.
Saying the Code always overrides better benefits under standing orders or contracts.
The words 'notwithstanding' are read without the proviso.
Fix: Always add the proviso: the worker continues to enjoy more favourable benefits in that matter.
Saying Section 76 overrides all State laws on industrial disputes.
Students ignore sub-section (2).
Fix: State that State dispute-settlement laws are unaffected, but lay-off and retrenchment rights follow the Chapter.
Describing Section 102 as amending the Industrial Relations Code itself.
The direction of amendment is not read.
Fix: Section 102 amends the Eighth Schedule to the Finance Act, 2017, replacing the tribunal description and the reference to the Industrial Disputes Act, 1947.

Worked examples

Example 1

An employer commits an offence under the Code punishable with fine only, with a maximum fine of ₹2,00,000. He applies for compounding before any prosecution. Advise on the sum payable and the effect of compounding. It is his first offence.

Show the solution

Provision: Section 89(1) allows compounding of offences not punishable with imprisonment only or with imprisonment and also fine, on the accused's application, before or after prosecution.
Facts: the offence is fine-only and it is a first offence, so the repeat-offence bar in Section 89(2) does not apply.
Sum: for fine-only offences the composition sum is 50% of the maximum fine, so 50% × ₹2,00,000 = ₹1,00,000.
Authority: a Gazetted Officer specified by the appropriate Government compounds it, and the amount is credited to the Social Security Fund under section 141 of the Social Security Code, 2020.
Effect: compounding is before prosecution, so under Section 89(5) no prosecution can be instituted for that offence.

Answer: The employer can compound by paying ₹1,00,000 (50% of ₹2,00,000) to the specified Gazetted Officer. No prosecution can follow for that offence.

Example 2

A company's standing orders give retrenched workers a notice period longer than the Code requires. The company argues that the Code overrides standing orders so only the Code's period applies. Is the company correct?

Show the solution

Provision: Section 76(1) says the Chapter applies notwithstanding anything inconsistent in any other law, including standing orders.
Proviso: where a worker is entitled under any other Act, standing orders, award or contract to benefits in a matter that are more favourable than under the Code, the worker continues to be entitled to them.
Application: the longer notice period under the standing orders is more favourable to the worker on that matter.
Conclusion: the overriding effect does not take away the more favourable benefit.

Answer: The company is incorrect. Under the proviso to Section 76(1), the workers keep the more favourable notice period under the standing orders.

Exam tips

Write the section number with each rule, but only for sections you are sure of: 76, 87, 89, 102, 103, 104.
Always quote the exact conditions: fine-only, no imprisonment-only offences, and the three-year repeat bar.
In case questions, state the provision, apply the facts, then conclude in one sentence.
For overriding effect, always mention the proviso and sub-section (2); examiners reward both.
Add a practical point: apply to the specified Gazetted Officer in the prescribed manner and pay into the Social Security Fund.

Practice questions from Law of Industrial Relations

Offences, Penalties and Miscellaneous Provisions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Offences, Penalties and Miscellaneous Provisions: frequently asked questions

Who can file a complaint for an offence under the Industrial Relations Code, 2020?

Under Section 87, a court takes cognizance only on a complaint made by or under the authority of the appropriate Government. A worker or union cannot start prosecution directly. Trial is by a Metropolitan Magistrate or Judicial Magistrate of the first class or higher.

Can every offence under the Code be compounded?

No. Section 89 excludes offences punishable with imprisonment only, or with imprisonment and also fine. Repeat offences within three years of an earlier compounded or convicted similar offence also cannot be compounded.

Where does the compounding amount go?

It is credited to the Social Security Fund established under section 141 of the Social Security Code, 2020, as provided in the proviso to Section 89(1).

What does Section 102 of the Industrial Relations Code do?

It amends the Eighth Schedule to the Finance Act, 2017 (Act 7 of 2017), against serial number 1. It updates the Industrial Tribunal description to refer to section 44(1) of the Code and replaces the Industrial Disputes Act, 1947 with the Industrial Relations Code, 2020.