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Section 40: Notice of change in conditions of service

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

Statutory Mandate
Chapter V: Notice of Change
Competent Labour Forum
Act No. 35 of 2020
Section 39 All 104 Sections of Industrial Relations Code, 2020 Section 41

Legal Commentary & Landmark Judgments: Section 40

Section 40 of the Industrial Relations Code, 2020 creates an absolute statutory prohibition barring employers from unilaterally effecting any change in the conditions of service applicable to any worker concerning Third Schedule matters without issuing 21 days' advance written notice in the prescribed manner, rendering any premature or unnotified alteration illegal and void ab initio.

  • Mandatory 21-Day Advance Notice Precondition: An employer proposing any alteration in conditions of service concerning Third Schedule matters is statutorily prohibited from effecting such change without serving written notice on affected workers and waiting twenty-one days after notice delivery.
  • Substantive Scope of the Third Schedule: Encompasses eleven vital terms of employment: wages (including period and mode of payment), contribution to provident fund/pension, compensatory and other allowances, hours of work and rest intervals, leave with wages and holidays, shift working, classification of grades, rationalisation/standardisation of workload, and withdrawal of customary concessions.
  • Voidness of Unilateral Alteration & Unfair Labour Practice: Any unilateral change introduced in violation of Section 40 constitutes an illegal change, void ab initio; workers are entitled to resist compliance, claim full back-wages, and invoke unfair labour practice penal proceedings against management.
Key Landmark Precedents:
  • Tata Iron & Steel Co. Ltd. v. The Workmen (1972) 2 SCC 383: Supreme Court held that altering a weekly day of rest from Sunday to another day touches conditions of service covered by the statutory Schedule, mandating compliance with Section 9A (now Section 40); failure to give notice rendered the change illegal.
  • Hindustan Lever Ltd. v. Ram Mohan Ray (1973) 4 SCC 141: Supreme Court ruled that rationalisation, reorganisation, or modernised operational systems likely to lead to retrenchment or increase in workload strictly require notice of change; absence of notice invalidates managerial restructuring.
  • Life Insurance Corporation of India v. D.J. Bahadur (1981) 1 SCC 315: A 3-Judge Bench held that conditions of service established by awards or settlements continue as binding terms of employment and cannot be unilaterally modified or dismantled without adhering to statutory notice requirements.
Courtroom Practice & Strategic Litigation Guidance:

Management seeking to alter shift rosters, introduce automated attendance algorithms, restructure allowance buckets, or introduce productivity norms must issue Form Section 40 notices 21 days in advance, serving copies simultaneously upon the negotiating union, registered trade unions, and the Conciliation Officer. Trade unions should immediately raise an industrial dispute before the Conciliation Officer upon receiving notice, which activates a statutory freeze under Section 55 and Section 90.

Section 39 All 104 Sections of Industrial Relations Code, 2020 Section 41