Who Draws the Line of Labour Law? Section 2(p) Moves the Pen From the Court to the Executive

From Judicial Test to Executive Switch: The Clause That Decides Who Is a Worker Section

2(p) of the Industrial Relations Code, 2020 defines "industry". Because the Code's protections apply only inside that definition, it decides who can form a union under the Code, who can raise an industrial dispute and who is protected against arbitrary retrenchment.

The most consequential words in it are not the definition but its last exclusion: any other activity the Central government notifies. That clause moves the boundary of labour law from a test applied by courts to a switch held by the executive.

The rule as it used to work Under the Industrial Disputes Act, 1947, Section 2(j) defined industry broadly and listed no explicit exclusions.

In 1978, a seven-judge bench in Bangalore Water Supply v. A. Rajappa, speaking through Justice V.R. Krishna Iyer, gave it a triple test. Any activity that is:

• systematic, - carried on through cooperation between employer and worker and - aimed at producing or distributing goods or services that satisfy human wants is an industry, whether or not it makes a profit. Hospitals, schools and municipal bodies came inside the protection. Parliament pushed back. The Industrial Disputes (Amendment) Act, 1982 tried to exclude hospitals, educational and research institutions and charities. It was never brought into force, reportedly because no alternative grievance machinery was created for the workers it would have shut out.

The rule as it now works Section 2(p) of the 2020 Code enacts much of what 1982 attempted.

It excludes institutions wholly or substantially engaged in charitable, social or philanthropic service and government activities relatable to sovereign functions. Then it goes further than 1982 ever did by letting the Centre exclude any other activity by notification. The text says Parliament defines industry. In practice, the executive can now redraw that definition without returning to Parliament.

Why that raises a constitutional question Two settled principles meet here:

• Delegated legislation has limits. Since In re Delhi Laws Act (1951), the Supreme Court has held that a legislature may delegate details but not its essential function of laying down policy. An exclusion clause with no stated criteria arguably hands over the policy itself.
• Article 14 forbids arbitrariness. Article 14 guarantees equality before the law and equal protection of the laws and since E.P. Royappa (1974) arbitrariness has been read as a violation of equality. An unguided power to remove whole classes of workers from protection invites exactly that challenge. The Court has already signalled that the old reading does not control the new text. Its nine-judge bench in August 2026 kept the triple test for disputes still pending under the repealed Act, but said Section 2(p) must be interpreted on its own terms. The AITUC petition is where that interpretation begins. For GS2, this case is a clean example of a familiar shift: the hard question has moved from what the law says to who gets to change it.