Sections 40 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 40 stops an employer from changing conditions of service on a Third Schedule matter without a notice to the affected workers and a wait of twenty-one days. It lists four situations where no notice is needed. Section 41 lets the appropriate Government exempt a class of establishments or workers where the section would prejudice employers so much that public interest requires it.
An employer proposing to change conditions of service on any matter in the Third Schedule must not make the change without giving notice of its nature to the workers likely to be affected, or within twenty-one days of giving it (s.40). No notice is needed where the change follows a settlement or award, affects civil-service-type workers, is an emergent shift change made in consultation with the Grievance Redressal Committee, or follows Government orders. Section 41 allows exemption by notification.
Section 40: the two conditions
Section 40: "No employer, who proposes to effect any change in the conditions of service applicable to any worker in respect of any matter specified in the Third Schedule, shall effect such change,— (i) without giving to the workers likely to be affected by such change a notice in such manner as may be prescribed of the nature of the change proposed to be effected; or (ii) within twenty-one days of giving such notice".
Two separate prohibitions follow:
- No notice, no change. The employer must give workers likely to be affected a notice of the nature of the proposed change, in the prescribed manner.
- No change within twenty-one days of the notice. The earliest the change can take effect is after the twenty-one days have passed.
The scope is limited to matters in the Third Schedule. A change in a matter that is not listed there does not need this notice, although other provisions of the Code, such as standing orders and the rules on unfair labour practices, may still bear on it. The Third Schedule's list is covered in the Third Schedule article. Employers who are planning a revision of pay structure, hours or shifts can get help from our labour law compliance team.
Example (invented). An employer wants to move the weekly off from Sunday to a rotating day. If that falls within a Third Schedule matter, it must give the affected workers a notice describing the change and cannot implement it until the twenty-first day after the notice is given. Giving notice on 1 May and changing on 15 May fails the second condition.
The four exceptions (proviso)
No notice is required for effecting a change:
| Clause | Situation |
|---|---|
| (a) | The change is effected in pursuance of any settlement or award |
| (b) | The workers likely to be affected are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Services Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code, or any other rules or regulations notified by the appropriate Government in the Official Gazette, apply |
| (c) | An emergent situation requires a change of shift or shift working, otherwise than in accordance with standing orders, in consultation with the Grievance Redressal Committee |
| (d) | The change is effected in accordance with the orders of the appropriate Government or in pursuance of any settlement or award |
Clauses (a) and (d) overlap on settlements and awards. Read each exception narrowly. The emergent-shift exception in (c) has three elements: an emergent situation, a change of shift or shift working, and consultation with the Grievance Redressal Committee. Without the consultation, the exception is not met. For the committee, see section 4.
How the notice is given: rule 19 and Form IV
Rule 19 of the Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026) sets the manner for Central-sphere establishments.
Rule 19(1). An employer who intends to change conditions of service on a Third Schedule matter gives notice in Form IV, "electronically or by speed post or in person", to the workers likely to be affected, and also uploads the notice on the designated portal, if any, of the establishment.
Rule 19(2). The notice is displayed conspicuously on the notice board, or the electronic notice board, at the main entrance of the establishment.
Proviso to rule 19(2). Where there is a registered Trade Union or Unions, or a negotiating union or council, relating to the establishment, a copy of the notice is also served, in the same manner, on the secretary of each such union, or the secretary of the negotiating union or constituent of the council.
| Step | Requirement | Source |
|---|---|---|
| Notice form | Form IV | Rule 19(1) |
| Delivery to workers | Electronically, speed post or in person | Rule 19(1) |
| Portal | Upload on the designated portal, if any | Rule 19(1) |
| Display | Notice board or electronic notice board at main entrance | Rule 19(2) |
| Unions | Copy to secretary of each registered union, or of the negotiating union or constituent of the council | Proviso to rule 19(2) |
| Waiting period | Twenty-one days before the change | s.40(ii) |
The Central Rules apply where the Central Government is the appropriate Government. Where the State Government is the appropriate Government, the State's own rules apply and may prescribe a different form. We do not reproduce the contents of Form IV here; employers should use the form as gazetted. See rule 19 and Form IV for the detail.
What the notice should say
Section 40(i) requires a notice "of the nature of the change proposed to be effected". A vague notice does not tell workers what is coming. State what is changing, from what, to what, and from which date. Keep proof of service on each worker and on each union secretary.
Section 41: exemption
"Where the appropriate Government is of the opinion that the application of the provisions of section 40 to any class of industrial establishments or to any class of worker employed in any industrial establishment affect the employers in relation thereto so prejudicially that such application may cause serious repercussion on the industry concerned and that public interest so requires, the appropriate Government may, by notification, direct that the provisions of the said section shall not apply or shall apply, subject to such conditions as may be specified in the notification, to that class of industrial establishments or to that class of workers employed in any industrial establishment."
The conditions for exemption are cumulative:
- The Government must form the opinion that section 40 affects the employers so prejudicially that it may cause serious repercussion on the industry concerned; and
- public interest so requires.
The power is exercised by notification, for a class of establishments or workers, and may be full (section 40 "shall not apply") or conditional ("shall apply, subject to such conditions"). An individual employer cannot claim exemption without a notification covering its class.
What this means for employers and workers
- Employers: map every proposed change against the Third Schedule before acting. If it is listed and no exception applies, serve Form IV, upload, display, copy the union secretary, and wait the twenty-one days.
- Workers and unions: the notice is the trigger to raise objections, for example through the Grievance Redressal Committee or conciliation.
- Practical risk: a change made without notice or within the twenty-one days is a contravention of s.40. The Code's penalty chapter sets the consequences; we cover it in our later articles and do not assume a figure here.
Payroll teams should link any pay-structure change to its notice date. Our payroll compliance audit looks at whether changes were implemented after proper notice.
Need help with a change of service conditions?
Serving Form IV correctly, to the right people, with the twenty-one days counted properly, is the difference between a clean change and a dispute. Our labour law compliance team can check your proposal against the Third Schedule and prepare the notice pack.
Key takeaways
- Changes on a Third Schedule matter need a notice of their nature and a wait of twenty-one days (s.40).
- No notice is needed for changes under a settlement or award, for excluded civil-service-type workers, for emergent shift changes with Grievance Redressal Committee consultation, or under Government orders.
- Central Rules: Form IV, delivered to workers, uploaded, displayed, and copied to union secretaries (rule 19).
- Section 41 lets the appropriate Government exempt a class by notification, on the stated conditions.
Read next
- Section 38-39: suspension pending enquiry and exemption
- Section 42: voluntary reference of disputes to arbitration
- Third Schedule: conditions of service requiring notice of change
- 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.