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.
Who counts as a "worker" decides who can raise an industrial dispute, join a Trade Union and claim lay-off or retrenchment protection under the Industrial Relations Code, 2020. This article explains four definitions in section 2: employee (clause (l)), employer (clause (m)), fixed term employment (clause (o)) and worker (clause (zr)), including the supervisory wage limit of eighteen thousand rupees.
A worker under s.2(zr) is a person employed in any industry to do manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, including working journalists and sales promotion employees, but not armed forces personnel, police or prison staff, persons mainly in a managerial or administrative capacity, or supervisors drawing wages above Rs 18,000 per month (or an amount the Central Government notifies). The employer includes the occupier of a factory, the person with ultimate control, and a contractor. A fixed term worker must get pay and benefits not less than a permanent worker and gratuity after one year of service under the contract.
Employee (s.2(l))
"Employee" is the wider word. It means any person, other than an apprentice engaged under the Apprentices Act, 1961, employed by an industrial establishment to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment are express or implied. It also includes a person the appropriate Government declares to be an employee, and it excludes members of the Armed Forces of the Union.
For role-by-role classification, our employment and labour law advisory team can help. Note what "employee" adds over "worker": managerial and administrative work. A manager is an employee but, if employed mainly in a managerial or administrative capacity, is not a worker.
Worker (s.2(zr))
Who is included
"Worker" means any person, except an apprentice as defined in clause (aa) of section 2 of the Apprentices Act, 1961, employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment are express or implied. The definition expressly includes:
- working journalists as defined in clause (f) of section 2 of the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955; and
- sales promotion employees as defined in clause (d) of section 2 of the Sales Promotion Employees (Conditions of Service) Act, 1976.
For the purposes of any proceeding under the Code about an industrial dispute, it also includes a person who has been dismissed, discharged or retrenched or otherwise terminated in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute. So a person whose services have ended does not lose standing to raise the dispute.
Who is excluded
| Excluded person | Text of the exclusion |
|---|---|
| Armed forces | Subject to the Air Force Act, 1950, the Army Act, 1950 or the Navy Act, 1957 |
| Police and prisons | Employed in the police service or as an officer or other employee of a prison |
| Managerial or administrative staff | Employed mainly in a managerial or administrative capacity |
| High-paid supervisors | Employed in a supervisory capacity drawing wages exceeding eighteen thousand rupees per month or an amount notified by the Central Government from time to time |
The supervisory limit is a wage test: it looks at "wages" as defined in s.2(zq). See the definition of wages and average pay to see what goes into that figure. The exclusion for managerial and administrative staff turns on the word "mainly": it is about the main nature of the job, not the job title.
The Chapter III proviso
For the purposes of Chapter III (Trade Unions), "worker" means all persons employed in trade or industry and includes a worker as defined in clause (m) of section 2 of the Unorganised Workers' Social Security Act, 2008. So for trade union membership the net is wider than the general definition. The Code therefore gives two readings of "worker": the general one in s.2(zr) and the broader Trade Union one.
Employer (s.2(m))
"Employer" means a person who employs, whether directly or through any person, or on his behalf or on behalf of any person, one or more employee or worker in his establishment. The definition then adds specific cases:
- Government establishments. Where the establishment is carried on by a department of the Central or State Government, the authority the head of the department specifies, or failing that the head of the department. For a local authority, its chief executive.
- Factory. The occupier of the factory as defined in clause (n) of section 2 of the Factories Act, 1948 and, where a person has been named manager of the factory under clause (f) of sub-section (1) of section 7 of that Act, the person so named.
- Any other establishment. The person or authority having ultimate control over its affairs and, where affairs are entrusted to a manager or managing director, that manager or managing director.
- Contractor.
- Legal representative of a deceased employer.
Inclusion of the contractor means a contractor who engages workers is an employer for the Code's purposes, even where the principal establishment is someone else. This links with the contractor proviso in s.2(b) on jurisdiction.
The Central Rules add detail for government establishments
Rule 3(2) of the Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026) specifies the employer for some Central-sphere cases "with reference to clause (m) of section 2". For an industry carried on by or under the authority of a Ministry or Department of the Central Government or a State Government (and not an industry "referred to in sub clause (ii)" as the rule words it), the officer-in-charge of the industrial establishment is the employer. For railways under a Central Ministry or Department, the rule names the General Manager for regular railway servants of a Zonal Railway, the officer-in-charge for establishments independent of a Zonal Railway, and the District Officer-in-charge, Divisional Personnel Officer or Personnel Officer for casual labour. Those Rules apply to Central-sphere establishments; State Governments make their own rules elsewhere.
Fixed term employment (s.2(o))
"Fixed term employment" means the engagement of a worker on the basis of a written contract of employment for a fixed period, subject to a proviso with three guarantees in law:
| Proviso | Requirement |
|---|---|
| (a) | Hours of work, wages, allowances and other benefits must not be less than those of a permanent worker doing the same work or work of similar nature. |
| (b) | The worker is eligible for all statutory benefits available to a permanent worker proportionately according to the period of service, even if the employment does not reach the qualifying period the statute requires. |
| (c) | The worker is eligible for gratuity if he renders service under the contract for one year. |
Two points follow. First, the definition requires a written contract; an oral fixed-term arrangement does not meet it. Second, the end of a fixed term is not retrenchment: s.2(zh) excludes termination as a result of completion of tenure of fixed term employment. See the definition of retrenchment and our note on gratuity for fixed term contract employees.
Example. A warehouse hires a picker on a written eleven-month contract at the same rate and shift pattern as permanent pickers. At the end of eleven months the contract ends. Clause (o)(c) does not itself give gratuity eligibility on these facts, because the service under the contract was less than one year, but the picker must have received proportionate statutory benefits during service. Had the contract run for twelve months, clause (o)(c) would make the picker eligible for gratuity.
Need help classifying your workforce?
Whether a role is a worker, an excluded supervisor or a manager, and whether your contractors count as employers, affects standing orders, union rights and dispute exposure. Our employment and labour law advisory team can review your role matrix and contracts against these definitions. Share your job descriptions and salary bands to start.
Key takeaways
- "Employee" (s.2(l)) is wider than "worker" (s.2(zr)); managers are employees but mainly managerial or administrative staff are not workers.
- A supervisor drawing wages above Rs 18,000 a month (or the notified amount) is outside the worker definition.
- For Trade Union purposes (Chapter III) "worker" covers all persons employed in trade or industry.
- An employer includes a contractor and, for factories, the occupier.
- Fixed term employment needs a written contract, parity of pay and benefits with permanent workers, and gratuity after one year.
Read next
- Definitions of wages and average pay
- Definitions of industry, industrial dispute and establishment
- Section 4: the Grievance Redressal Committee
- Contract labour 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.