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Section 38: Time limit for completing disciplinary proceedings and liability to pay subsistence allowance

The Industrial Relations Code, 2020 (Act No. 35 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IV: Standing Orders
Competent Labour Forum
Act No. 35 of 2020
Section 37 All 104 Sections of Industrial Relations Code, 2020 Section 39

Legal Commentary & Landmark Judgments: Section 38

Section 38 of the Industrial Relations Code, 2020 prescribes a mandatory 90-day statutory time ceiling for completing domestic disciplinary inquiries against suspended workers, while creating an enforceable graded statutory liability for subsistence allowance—mandating 50% wages for the first 90 days and stepping up to 75% thereafter if inquiry delay is not attributable to the worker.

  • Mandatory Graded Subsistence Allowance: The employer is statutorily obligated to pay subsistence allowance at the rate of fifty percent of wages for the initial ninety days of suspension, escalating to seventy-five percent for any subsequent period if the delay in concluding the inquiry is not directly attributable to the conduct of the worker.
  • Statutory 90-Day Inquiry Completion Benchmark: Establishes a statutory norm that internal disciplinary proceedings must ordinarily be completed within ninety days from the date of suspension, eliminating indefinite suspensions used as instruments of industrial coercion.
  • Constitutional Nexus with Right to Livelihood: Affirms the worker's fundamental right under Article 21 of the Constitution to receive sustenance during inquiry; non-payment or delayed payment of subsistence allowance vitiates the domestic inquiry and renders any resultant disciplinary order void ab initio.
Key Landmark Precedents:
  • State of Maharashtra v. Chandrabhan Tale (1983) 3 SCC 387: Supreme Court struck down a service rule granting nominal subsistence allowance of one rupee per month, holding that subsistence allowance is an integral facet of the right to life and livelihood under Article 21 of the Constitution and must be meaningful.
  • Capt. M. Paul Anthony v. Bharat Gold Mines Ltd. (1999) 3 SCC 679: Supreme Court held that non-payment of subsistence allowance during suspension deprives the delinquent employee of the financial capability to defend himself in domestic proceedings, vitiating the entire inquiry for violation of natural justice.
  • Fakirbhai Fulabhai Patel v. Presiding Officer (1986) 3 SCC 131: Ruled that an employer is legally bound to pay subsistence allowance pending approval proceedings under industrial law, ensuring the employee does not succumb to starvation during delayed adjudication.
Courtroom Practice & Strategic Litigation Guidance:

HR departments and inquiry officers must strictly log daily proceedings during domestic inquiries. If a suspended employee seeks adjournments, file formal interlocutory orders recording that the delay is employee-induced, thereby legally protecting management against the 75% step-up liability under clause (b). Disburse subsistence allowance on normal wage payment dates via electronic bank transfer to pre-empt natural justice challenges.

Section 37 All 104 Sections of Industrial Relations Code, 2020 Section 39