Introduction
The framework governing industrial employment is undergoing a fundamental structural change. As we move through 2026, the traditional reliance on certified Standing Orders is being steadily replaced by individualized, private contracts. This transition signifies a deeper shift in the legal philosophy of the employer-employee relationship, a move away from state-mandated “status” toward private “contract.” For decades, the law treated the workforce as a collective entity, protected by uniform statutory standards that applied across the board. Today, the legislative trend across major jurisdictions, from the Indian subcontinent to the European Union, emphasizes freedom of contract and operational agility. While this allows for more bespoke employment terms, it effectively dismantles the collective safeguards that once served as the non-negotiable floor for industrial labor.
The Jurisprudential Shift from Status to Contract
In the mid-twentieth century, the prevailing legal doctrine recognised the inherent power imbalance between capital and labour. Statutory instruments like the Industrial Employment (Standing Orders) Act, 1946, were enacted to provide a statutory flavour to employment terms, ensuring they were not left solely to the whims of private negotiation. This framework mandated that employers with a specific headcount threshold define and certify the conditions of service, thereby creating a uniform floor of rights. However, the modern legal environment is pivoting toward the Henry Maine principle of social evolution. The movement of progressive societies from Status to Contract. In this new era, the individual employment agreement is being elevated as the primary source of rights and obligations, effectively bypassing the collective safeguards once provided by centralised, certified orders. The enforcement of the Industrial Relations Code, 2020 (“IR Code”), which has come into effect as of 21st November, 2025, serves as the most prominent example of this legislative deconstruction. By increasing the threshold for mandatory Standing Orders from 100 to 300 workers, the state has effectively exempted a vast majority of the industrial workforce from the protective umbrella of certified service conditions. This deregulation is framed as an effort to promote the Ease of Doing Business, yet it leaves thousands of workers in small and medium-sized enterprises governed solely by private contracts. Without the statutory standing of the 1946 Act, these workers find themselves in a pre-protectionist era where the terms of their dismissal, discipline, and leave are dictated by the fine print of an appointment letter rather than a public-law standard.
Fixed-Term Employment: The New Regulatory Standard
A central pillar of this rethinking is the statutory formalisation of Fixed-Term Employment (“FTE”). Previously, the law viewed repetitive short-term contracts with suspicion, often regularising such workers if the nature of their work was perennial. Under the current IR Code, FTE is now a recognised, legal category of engagement. While Section 2(o) of the IR Code provides that FTE workers must receive pro-rata benefits, such as gratuity after just one year of service, the legal reality remains that the security of tenure has been replaced by the sanctity of the term. The contract now carries within it an inherent expiry date, which allows the employment relationship to dissolve ex proprio vigore without the need for retrenchment notice or compensation under traditional industrial dispute laws. The move toward individualised contracts has profound implications for the collective power of trade unions. Standing Orders served as a unifying baseline for all workers in a factory or establishment, facilitating collective bargaining because the conditions of work were a shared, transparent reality. When the terms of service are individualised, the workforce becomes atomized. In a contractual regime, an employer can negotiate different notice periods, confidentiality clauses, and performance metrics for different employees, even within the same grade. This fragmentation makes it nearly impossible for a union to present a unified front. The legal focus shifts from collective disputes to individual grievances, thereby diluting the statutory protections against unfair labour practices that were once the bedrock of the Trade Unions Act and the Industrial Disputes Act.
The Rise of Mandatory Arbitration and Individual Grievances
As contracts take precedence over Standing Orders, we are witnessing a shift in how industrial disputes are resolved. Standing Orders are typically interpreted by specialised Labour Courts or Industrial Tribunals, which operate on principles of equity and social justice. Conversely, individual employment contracts often contain mandatory arbitration clauses or choice-of-law provisions that move disputes into the realm of private civil law. In these forums, the social justice lens is often replaced by a strict constructionist approach to the contract. The worker is no longer viewed as a vulnerable party needing statutory protection but as a contracting party who is presumed to have understood every clause of a thirty-page legal document. This procedural shift increases the cost of justice and reduces the likelihood of reinstatement as a remedy for wrongful termination. The global trend toward flexicurity, as seen in the EU Directive on Transparent and Predictable Working Conditions, attempts to bridge this gap by mandating that even contractual workers receive clear, written information about their working conditions from day one. However, even these modern protections often fall short of the security provided by the old Standing Orders regime. The challenge is to ensure that contractual flexibility does not become a tool for statutory evasion. We must develop a New Model of Standing Orders that can be incorporated into digital-age contracts, ensuring that core protections remain non-negotiable regardless of the employment model.
AMLEGALS Remarks
The debate between Contracts Over Standing Orders is not merely a choice of administrative forms. It is a choice about the type of industrial society we wish to build. While the rigidity of mid-twentieth-century laws may be ill-suited for the gig economy and high-tech sectors, the total abandonment of collective protections risks creating a precariat class that lacks any long-term stake in the industrial enterprise. As a matter of legal policy, the way forward requires a synthesis of the adoption of Model Standing Orders that apply to all workers regardless of establishment size, combined with the flexibility of Fixed-Term Contracts that are strictly monitored to prevent the perennialization of temporary labour. Only by embedding a statutory floor into every private contract can we protect the dignity of the lab or while meeting the demands of a 21st-century economy. The rethinking of collective protections must not lead to their extinction, but to their evolution into a more agile framework.
For any queries or feedback, feel free to connect with Hiteashi.desai@amlegals.com or Khilansha.mukhija@amlegals.com