Supreme Court to hear plea saying labour code keeps charitable hospital and welfare body workers out of labour courts

New Delhi: The Supreme Court on Wednesday agreed to hear a petition filed by the All India Trade Union Congress, Tamil Nadu, challenging the definition of 'industry' under the Industrial Relations Code, 2020, as unconstitutional.

The trade union has challenged provisions under Section 2(p)(ii)(i), Section 2(p)(ii)(ii) and Section 2(p)(ii)(iv), which exclude institutions engaged in charitable, social or philanthropic services, activities related to sovereign functions, and other activities notified by the central government from the statutory definition of industry.

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The petition said the exclusions would deprive workers in establishments such as charitable hospitals, educational institutions and welfare organisations of the ability to challenge illegal termination, retrenchment and unfair labour practices before labour courts and industrial tribunals. It argued the disparity undermines the principles of equality and non-arbitrariness under Articles 14 and 16 of the Constitution, while infringing workers' rights to livelihood and access to justice under Article 21.

"The impugned exclusions raise serious constitutional concerns under Articles 14, 16, 19(1)(c) and 21 of the Constitution, as they arbitrarily deprive large classes of workers of statutory labour protections and create irrational distinctions between similarly situated workers. Workers employed in establishments such as charitable hospitals, welfare institutions and other public or service organisations would thereby be denied access to the statutory machinery for investigation and settlement of industrial disputes and rendered unable to challenge illegal termination, retrenchment or unfair labour practices before labour courts and industrial tribunals," the trade body said in its petition filed through counsel Aarthi Rajan.

The petition cited an August ruling by a nine-judge Constitution bench of the Supreme Court, which held that the determining factor in deciding whether an establishment qualifies as an industry is the nature of its activities, rather than its institutional character, profit motive or the identity of the employer.

The court also clarified that where an establishment undertakes multiple functions, its dominant activity determines whether it qualifies as an industry, the petition said.

However, the August ruling held that its interpretation of 'industry' would not apply to the Industrial Relations Code, 2020. The earlier definition, which covered government departments, hospitals, universities and welfare bodies, had been modified under the new code. The ruling would apply prospectively to pending disputes under the Industrial Disputes Act, 1947.

According to Rajan, the exclusions under the new law depart from the principles laid down by the Constitution bench by excluding entire classes of establishments based on their institutional character rather than the nature of their activities.