Labour Codes: #18 Misconduct Procedure and Departmental Investigations under New Labour Codes
1. Introduction
The New Labor Codes in India overhaul misconduct and disciplinary procedures, emphasizing formal policies, clear timelines, and stronger accountability. Key changes include mandatory standing orders, a 90-day inquiry limit, subsistence allowances, and stricter penalties. The following table summarize the requirements under each Code and their business impact.
2. Key Provisions of India’s New Labour Codes – Misconduct and Disciplinary Procedures
| Labour Code | Key Provisions |
| Industrial Relations Code, 2020 |
1. Employers must draft standing orders covering misconduct classification, disciplinary procedures, suspension, and termination 2. Investigations/inquiries after suspension must be completed within ninety (90) days 3. Subsistence allowance during suspension: 50% of wages for first ninety (90) days, 75% thereafter if delay not attributable to worker 4. Disputes regarding standing orders can be raised before Industrial Tribunal |
| Code on Wages, 2019 |
1. Places strict limits on deductions from wages 2. Allows deduction from bonus for misconduct-related financial loss in the same financial year 3. If any bonus amount remains after deduction, employee entitled to receive the balance |
| Labour Code | Key Provisions |
| Code on Social Security, 2020 |
1. Protects women from dismissal during maternity leave 2. Employers may deny maternity benefits for gross misconduct through written order 3. Gratuity may be forfeited wholly or partially for damage to employer’s property 4. Gratuity may be forfeited for termination due to riotous conduct, violence, or offenses involving moral turpitude |
| Occupational Safety, Health & Working Conditions Code, 2020 |
1. Employees must act responsibly at workplace for their own and others’ safety 2. Non-compliance with safety duties constitutes misconduct 3. Penalties for hazardous process breaches: up to 2 years imprisonment or fine of Rs. 5,00,000 4. Breaches resulting in accidents may lead to imprisonment and heavy fines 5. Employee contravening duties may be fined up to Rs. 10,000 |
2. Key Business Impact
- Businesses are encouraged to formalise their disciplinary systems: clear policies, certified standing orders, and proper inquiry mechanisms are now mandatory.
- Employers will now require faster decision making: inquiries must finish within ninety (90) days or the business pays higher subsistence allowance, increasing cost of delay.
- The new provisons create financial exposure on employers: non-compliance can result in extra payouts, penalties, litigation, and potential criminal liability for management.
- The recent changes demand stronger documentation: every action (suspension, inquiry, termination, bonus/gratuity deduction) must be legally defensible in case of challenge.