Section 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 2 of the Industrial Relations Code, 2020 is the definition clause, and its most practical definition is "appropriate Government" in clause (b). It decides whether the Central Government or the State Government makes the orders, appoints the officers and frames the rules for your establishment. This article also covers the definitions of the appellate authority, certifying officer, conciliation officer, conciliation proceeding, controlled industry, National Industrial Tribunal and Tribunal.
Under s.2(b)(i) the Central Government is the appropriate Government for establishments carried on by or under its authority, for specified controlled industries, and for railways (including metro railways), mines, oil fields, major ports, air transport service, telecommunication, banking and insurance companies, Central Act corporations, central public sector undertakings and companies in which it holds not less than fifty-one per cent. of the paid-up share capital. For any other industrial establishment the State Government is the appropriate Government (s.2(b)(ii)). The Central Rules, 2026 apply to the first group; State rules apply to the second.
Section 2(b): who is the appropriate Government
Central Government (s.2(b)(i))
The Central Government is the appropriate Government in relation to an industrial establishment or undertaking:
- carried on by or under the authority of the Central Government;
- concerning any controlled industry the Central Government specifies for this purpose;
- being an establishment of railways including metro railways, mines, oil fields, major ports, air transport service, telecommunication, banking and insurance company;
- being a corporation or other authority established by a Central Act, a central public sector undertaking, subsidiary companies set up by the principal undertakings, or autonomous bodies owned or controlled by the Central Government, including establishments of the contractors for the purposes of such establishment, corporation, authority or undertaking; or
- any company in which not less than fifty-one per cent. of the paid-up share capital is held by the Central Government.
Explanation to clause (b)(i). The Central Government continues to be the appropriate Government for central public sector undertakings even if its holding falls below fifty per cent. equity after the commencement of the Code. A disinvestment that takes the government stake below half does not, by itself, move such an undertaking to State jurisdiction.
State Government (s.2(b)(ii))
For any other industrial establishment, including State public sector undertakings, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the State Government, the appropriate Government is the State Government. A private factory, a shop, a hotel or an IT services firm that does not fall in the Central list above is therefore a State-sphere establishment.
The contractor proviso
The proviso to clause (b) deals with contract labour. In a dispute between a contractor and the contract labour employed through the contractor in an industrial establishment where the dispute first arose, the appropriate Government is the Central Government or the State Government, as the case may be, which has control over that industrial establishment. So the jurisdiction follows the principal establishment, not the contractor's own registered location. See our note on contract labour under the new labour codes.
| Establishment | Appropriate Government |
|---|---|
| Public sector bank or insurance company | Central Government |
| Mine, oil field or major port | Central Government |
| Private company with 51% or more Central Government shareholding | Central Government |
| Private manufacturing unit, shop or service company not in the Central list | State Government |
| State public sector undertaking | State Government |
| Contractor's workers at a Central-sphere plant (contract dispute) | Government controlling the plant where the dispute first arose |
Why it matters. The appropriate Government appoints the conciliation officers, certifying officers and Tribunals, sets up the Worker Re-skilling Fund, gives or withholds prior permission for lay-off, retrenchment and closure, and makes the rules. The Central Rules, 2026 (G.S.R. 342(E), 8 May 2026) cover Central-sphere establishments. For a State-sphere establishment, look at your State's own industrial relations rules. If you are unsure which category you fall in, our legal consultation team can help you read clause (b) against your ownership and activity.
The authority definitions that go with it
| Clause | Term | What the Code says |
|---|---|---|
| 2(a) | Appellate authority | An authority appointed by the appropriate Government to exercise such functions in such area as that Government specifies by notification in the Official Gazette. |
| 2(g) | Certifying officer | Any officer appointed by the appropriate Government, by notification, to perform the functions of a certifying officer under Chapter IV (standing orders). |
| 2(i) | Conciliation officer | A conciliation officer appointed under section 43. |
| 2(j) | Conciliation proceeding | Any proceeding held by a conciliation officer under the Code. |
| 2(k) | Controlled industry | Any industry the control of which by the Union has been declared by any Central Act to be expedient in the public interest. |
| 2(y) | National Industrial Tribunal | A National Industrial Tribunal constituted under section 46. |
| 2(zn) | Tribunal | An Industrial Tribunal constituted under section 44. |
How these fit into the Code's machinery
- Certifying officer and appellate authority work in Chapter IV. The certifying officer examines draft standing orders; an appeal goes to the appellate authority. See the certifying officer's powers and appeals.
- Conciliation officers receive grievance applications forwarded after the Grievance Redressal Committee stage and conduct conciliation proceedings. See the Grievance Redressal Committee.
- Tribunal in the Code means the Industrial Tribunal under s.44. The National Industrial Tribunal is constituted by the Central Government under s.46. Do not use the two interchangeably: each has its own section, bench and reference route.
- Controlled industry matters only through s.2(b)(i): an industry becomes Central-sphere when the Central Government has specified it for this purpose, and the control must have been declared by a Central Act to be expedient in the public interest.
Two things the definitions do not say
- They do not list which specific industries are "controlled industries". Clause (k) defines the term and clause (b)(i) lets the Central Government specify the ones it wants. Check the current notification rather than assuming a sector is included.
- They do not give one fixed test for "control" of a contractor's establishment. The proviso and clause (b)(i) speak of establishments "of the contractors" and of the Government that "has control over such industrial establishment". Where ownership is layered, the answer turns on the facts.
Example. A logistics company has a warehouse inside a major port. Its own employees' disputes may fall in the State sphere if the company is a private company outside the Central list. But the clause (b)(i) list includes major ports and the establishments of contractors for the purposes of such establishments, so the company should examine whether it is a contractor for the port establishment before deciding which Government's rules apply.
Need help with jurisdiction questions?
A wrong guess about the appropriate Government means filing with the wrong authority or following the wrong rules. Our legal consultation team can review your shareholding, sector and contractor arrangements and tell you which Government's machinery applies. Bring your incorporation papers and any contract with the principal establishment.
Key takeaways
- Clause 2(b)(i) lists the Central-sphere establishments; every other industrial establishment is State-sphere under 2(b)(ii).
- The 51% paid-up capital test applies to companies; central public sector undertakings stay Central even if the holding drops below fifty per cent.
- For contractor and contract labour disputes the Government controlling the establishment where the dispute first arose is the appropriate Government.
- Tribunal (s.44) and National Industrial Tribunal (s.46) are separate bodies; certifying officers and conciliation officers are appointed by the appropriate Government.
- The Central Rules, 2026 apply to Central-sphere establishments only.
Read next
- Commencement and repeal: sections 1 and 104
- Employer, employee, worker and fixed term employment
- Section 3: the Works Committee
- Industrial disputes under the new labour codes
Disclaimer: Based on the Industrial Relations Code, 2020 (as enacted) and, where noted, the Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.