22/08/2026
Supreme court’s verdict on definition of “Industry” is against the interest of workers!
Unite against the assault on rights of the working class !
Repeal the anti-worker four labour codes!
- Issued by the Revolutionary Workers’ Party of India (RWPI)
In continuation of a long list of anti-worker and pro-capital verdicts over the last few decades, the Supreme Court has delivered yet another anti-worker verdict, redefining “industry”. On 20 August 2026, a nine-judge Constitution Bench headed by Chief Justice of India Surya Kant ruled that a 1978 Supreme Court judgment that defined what constitutes an “industry” in the context of labor laws, will not be applicable to the Modi government's 4 Labor Codes, which were brought into effect on 21st November, 2025 and that have become fully operational from 1 April 2026. It is noteworthy that the 1978 judgement was the benchmark in the judicial framework, which allowed a broad definition of what constitutes an industry. It stated that any activity which is systematic or organised, operated on the basis of employer-employee cooperation and dealt in the production of goods and services to satisfy human wants, would come in the ambit of “industry”. The 9 judge bench held by a 5:4 margin that aspects of the old “triple test” could be refined and reformulated, leaving room for narrowing of the scope of the term “industry”. It also noted that the 1978 judgement would not be applicable as a precedent to the Industrial Relations Code, and would only apply to those cases which are already in court at this date. According to the Supreme Court, the Industrial Disputes Act has now been replaced by the Industrial Relations Code. The future battle over what qualifies as an “industry” will take place under the text of the new Code itself rather than simply through the old precedent, effectively wiping clean the legal slate to allow room for more flexibility in interpretations of the new Industrial Relations Code. In effect, the gains of the decades long struggles of the working class are sought to be erased. This verdict is yet another instance showing the pro-capital tilt of judiciary in India. One cannot forget that earlier this year the Chief Justice of India Surya Kant had held Trade Unions to be largely responsible for stopping country’s industrial growth.
The Four Labour Codes and the Assault on Workers’ Rights
The fascist Modi government's 4 Labour Codes that have become fully operational since 1st April this year, represents the biggest assault on the rights of the working class since independence. The government presents them as a “simplification” and “modernisation” of labour law, claiming that 29 earlier labour laws have been consolidated into four comprehensive codes, but the reality could not be further away from its claim. It is clear as broad day light that the Four Labour codes are introduced primarily to facilitate the "ease of doing business" by giving a free hand for capital to exploit the working class in any manner possible while it systematically defangs the working class of its organising capacity.
The four Codes are the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020.
What is the Industrial Relations Code?
The Industrial Relations Code is particularly important because it governs the terrain on which workers organise and confront employers. It has replaceed the Industrial Disputes Act, the Trade Unions Act and the Standing Orders Act. One of its most consequential changes is the conception of "Fixed-Term Employment", which legalizes and formalizes the entire trend of contractualization and casualization, which the capitalist class has already been practicing in the neoliberal era. Employment security has been systematically weakened by the raising of the threshold for retrenchment or closure of factory establishments requiring prior government permission, from 100 workers under the older Industrial Disputes Act, to 300 workers under the new code. This threshold emplowers the owners of more than 87% of industrial enterprises in the country to "hire-and-fire" at will. The threshold can also be arbitrarily increased at the government's prerogative, which is outlined in the same code.
This is precisely the kind of "flexibility" demanded by capital in the neoliberal era, which can only come at the expense of the fighting capacity of the working class. The Code also changes the legal architecture of trade-union recognition. Registration itself requires a union to satisfy a membership threshold which applies throughout the lifetime of the union, of 10 per cent of workers or 100 workers. Unions can be deregistered if they fail to meet this criterion at any given time. To be a formally recognised union the membership criterion is set even higher at 30%. The discretionary powers of the registrar involved in registering unions has been expanded which effectively gives them the control on which unions are registered, and which can be deregistered, and that too without sticking to any time limit. Compare this to the case of new factory registrations, where if the registrar fails to take timely action the registration is granted automatically after a stipulated time!
The right to strike is subjected to a much wider notice requirement, which renders strikes practically impossible. Workers covered by the Code cannot strike without giving notice within 60 days before striking and observing the statutory waiting period. The employers will obviously try every means of intimidating the striking workers, to stop the strike from ever happening. Factories employing less than 300 workers can be shut down with ease, and their owners can register a new one without any hassle.
Thus, while the Code speaks of regulating industrial relations, its cumulative effect is to remove restrictions in the form of labor rights faced by capitalists that hinder the profitability of capital, and defangs the working-class by effectively criminalizing the right to strike, which is by far the most powerful weapon the working-class wields.
The 1978 Supreme Court judgment and the meaning of “industry”
The question of what constitutes an “industry” has historically been extremely important because the definition determines which workers and establishments fall within the protection of industrial-relations law. In Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978), a seven-judge bench of the Supreme Court gave the term “industry” a broad interpretation. That judgement developed what became known as the triple test: there must be a systematic and organised activity; there must be cooperation between employer and employee; and the activity must involve the production or distribution of goods or services to satisfy human wants or wishes. The existence of a profit motive or capital investment was not treated as essential. The importance of this judgment was that labour laws were not restricted simply to the traditional factory. The character of the institution or the absence of a profit motive did not, by itself, determine whether its employees were workers entitled to labour-law protection.
Why is the new framework dangerous in the era of neoliberal globalisation?
The central issue is not an abstract legal dispute over the meaning of one word. It is the changing relationship between labour and capital.
Neoliberal globalisation has placed enormous pressure on workers across countries to accept insecure employment, contractualization, outsourcing, temporary employment, impossible conditions for unionisation, resulting in the systematic weakening of the ability of the working class to organise. Capital seeks mobility and flexibility: it wants to be able to relocate production, reorganise enterprises, reduce its workforce and change employment conditions rapidly in response to market conditions. The working class, however, experiences this "flexibility" very differently. For the working class, flexibility means the loss of permanent employment and increased job and income insecurity. It means replacement of permanent workers by fixed-term or contract workers. It means weaker trade unions or no trade unions at all, greater fear of dismissal and greater difficulty taking collective action. The Industrial Relations Code institutionalises this "flexibility" in the interests of capital.
The question of “industry” in this context
The debate over the interpretation of “industry” is particularly important because labour rights depend upon the scope of the institutions to which labour law applies. The Industrial Relations Code creates numerous arbitrary exclusions from its scope like institutions substantially engaged in charitable, social or philanthropic services, sovereign government functions, domestic service and other activities. This list can be increased to include other activities which will be notified by the Central Government itself!
With the latest ruling, the Supreme Court has basically shown a green signal to the government to run amok and arbitrarily define where the Industrial Relations Code itself can be applied, which opens the door to arbitrary exclusion of workers belonging to any industry from whatever labor regulation still remains.
Scrap the Four Labour Codes and fight for working-class oriented labour laws
The demand must therefore be clear: scrap the four Labour Codes and fight for a genuinely pro-working-class labour-law framework. The answer to the present crisis cannot be to merely reproduce every provision of the pre-Labor Code framework. The old labour laws themselves were the product of particular historical circumstances and contained serious limitations. Nor can the working class accept the false choice between the new Codes and an uncritical return to the past.
The labour laws required by workers today must address the realities of neoliberal capitalism: contractualization, fixed-term employment, outsourcing, platform work, informal employment and the fragmentation of workplaces.
Such a framework must strengthen, rather than weaken, the right to organise. It must make permanent employment the norm rather than institutionalising insecurity. It must place strict limits on arbitrary retrenchment and closure. It must guarantee meaningful protection against victimisation of union members and organisers. It must make the right to strike a real collective right rather than one surrounded by procedural barriers. It must also ensure that workers in hospitals, educational institutions, welfare activities, public bodies, new forms of service-sector employment, in fact any “wage relation” are not left outside labour protection merely because the institution employing them is labelled charitable, social, governmental or non-industrial.
The struggle against the four Labour Codes must therefore not be reduced to defending the past. It must be a struggle to establish new, comprehensive and genuinely pro-working-class labour laws that expand collective power, strengthen employment security and place the interests of working people above capital's insatiable lust for ever-increasing profits.
RWPI holds that the Supreme Court judgement goes against the interests of the working class, and appeals to all working masses to unite in opposing it, and demanding far-reaching changes in the legal framework that guarantees a life of dignity for every working person!
