Introduction

Standing Orders have always played a foundational role in defining the relationship between employers and employees in India, especially in the industrial and manufacturing sectors. They serve as the rulebook that governs the conditions of employment, ensuring clarity on matters such as working hours, leave, misconduct, suspension, termination procedures, and grievance redressal. With the new labour codes, particularly the Industrial Relations Code, 2020, the rules governing Standing Orders have undergone substantial changes. These new rules have sparked debate across industries, especially among small and medium businesses, about whether they would ease compliance burdens or introduce new complexities.

1.1 Understanding Standing Orders in India

Standing Orders essentially act as the terms and conditions of service mandated by law. Unlike appointment letters or HR policy manuals, they have statutory force and must be certified by designated authorities. They were introduced to bring uniformity, reduce ambiguity, and prevent exploitation in workplaces, particularly those engaged in industrial activities. Every establishment above a certain workforce threshold must define and publish their Standing Orders, ensuring that employees clearly understand what constitutes misconduct, how disciplinary processes operate, what rights they have regarding leave or wages, and what responsibilities they carry. Over the years, Standing Orders have been recognized as one of the most effective tools for maintaining transparency and reducing industrial disputes.

1.2 Why the New Rules on Standing Orders Matter

The introduction of the new rules under the Industrial Relations Code, 2020 is significant because it marks the first major reform in decades. The earlier legal framework, governed by the Industrial Employment (Standing Orders) Act, 1946, was considered outdated in the context of modern workplaces, digital work models, and the rise of service-sector jobs. The new rules attempt to bring clarity, simplify procedures, and align workforce regulations with contemporary business needs. They also aim to standardize the compliance burden across states and industries by introducing Model Standing Orders and by increasing the applicability threshold from 100 employees to 300. This change has raised important questions about how small enterprises will adapt and whether the compliance burden will actually reduce or simply shift in a different form.

1.3 The Debate on Whether Small Companies Will Face Higher Compliance

The new rules have led to contrasting interpretations among business owners, HR professionals, and legal experts. While raising the threshold to 300 employees seems to relieve many small and mid-sized companies from mandatory certification requirements, the broader implications are more complex. Small companies that operate with contract labour, gig workers, or project-based teams may still fall under the ambit of certain provisions indirectly. Moreover, even if Standing Orders are not legally mandated for establishments employing fewer than 300 workers, the expectations of formal HR processes, structured disciplinary systems, and clear employment terms remain high in a competitive and legally aware labour environment. As a result, the debate continues on whether small companies will experience practical ease or hidden compliance pressures under the new rules.

2. Historical Context of Standing Orders in India

Understanding the historical evolution of Standing Orders is essential for interpreting the current reforms. The legal framework governing employment conditions was shaped during the industrialization era in India, when disputes between workers and employers were common due to lack of standardized terms of service. Over time, challenges emerged as industries evolved, the workforce diversified, and business scales expanded.

2.1 The Industrial Employment (Standing Orders) Act, 1946

The 1946 Act was introduced to bring legal uniformity and transparency to employment conditions. Under this Act, every employer covered by its provisions was required to draft Standing Orders and have them certified by the Labour Commissioner’s office. The Standing Orders had to comprehensively define matters such as classification of workmen, holidays, attendance, leave rules, wage periods, misconduct, disciplinary procedures, and termination norms. The purpose was to ensure fairness, prevent arbitrary actions by employers, and reduce industrial conflicts. Industries were expected to maintain their own customized Standing Orders, ensuring they reflected the specific needs of each establishment.

2.2 Original Thresholds and Coverage

Under the 1946 Act, establishments employing 100 or more workers were required to frame Standing Orders. However, states were given the flexibility to alter this threshold, and many increased it to 150 or reduced it to 50 depending on local industrial needs. This created a patchwork of rules across the country, generating confusion for companies operating in multiple states. Small establishments often struggled to meet the compliance requirements due to limited administrative staff or lack of HR expertise, even though the intent of the law was primarily to regulate medium and large industries.

2.3 Long-Standing Challenges Under the 1946 Framework

The 1946 regime became progressively difficult to implement in the modern context. The requirement for individualized Standing Orders meant that every establishment had to draft detailed documents, submit them for certification, and undergo several rounds of amendments before approval. This process was often slow, paper-based, and bureaucratic. Many small businesses lacked the legal knowledge to draft compliant Standing Orders, resulting in delays or errors. Further, inconsistent interpretations by certifying officers made the process unpredictable. The lack of digital infrastructure also prolonged certification, while inspections and dispute resolution often involved lengthy procedures. These constraints made the framework inflexible for emerging sectors like IT, e-commerce, and startups.

2.4 Why Reforms Became Necessary

India’s economic landscape changed drastically over the decades, demanding labour reforms that could support rapid business expansion, digital work models, and increasing formalization of the workforce. The outdated structure of the 1946 Act hindered ease of doing business and added unnecessary compliance burdens. Policymakers realized that a more uniform, modern, and simplified system was needed. The push to integrate multiple labour laws under four broader labour codes, including the Industrial Relations Code, was aimed at enhancing transparency, reducing compliance fragmentation, and creating a national-level regulatory environment suitable for contemporary industries.

3. The Shift Under the Industrial Relations Code, 2020

The Industrial Relations Code (IRC), 2020 replaced three earlier laws—Trade Unions Act, Industrial Employment (Standing Orders) Act, and Industrial Disputes Act. This consolidation aimed to streamline employer and employee relations while reducing excessive litigation and bureaucratic hurdles. Within this code, Standing Orders received a fresh legal framework that significantly altered compliance expectations.

3.1 Objectives of the Code

The primary objective of the Industrial Relations Code, 2020 is to balance the interests of employers and workers while promoting economic growth and flexibility. It seeks to simplify industrial relations, promote ease of doing business, reduce disputes through clear guidelines, and modernize legal processes such as certification and dispute resolution. The reforms also aim to enhance workforce formalization and reduce the regulatory burden on growing establishments without compromising employee protections.

3.2 Key Definitions and Structural Changes

The IRC introduces several updated definitions that impact the scope and interpretation of Standing Orders. Terms such as “worker,” “employee,” “industrial establishment,” “fixed-term employment,” and “gig and platform workers” reflect modern employment realities. These expanded definitions ensure that the regulation covers evolving categories of labour while maintaining clarity. Further, by streamlining processes and reducing the discretionary powers of authorities, the Code aims to bring greater consistency and predictability to compliance.

3.3 The Raised Applicability Threshold: From 100 Workers to 300

One of the most significant reforms is the increase in the threshold for mandatory certification of Standing Orders from 100 workers to 300. This change is intended to reduce compliance responsibilities for MSMEs and mid-sized enterprises, allowing them more freedom to grow without excessive regulatory constraints. Policymakers argue that establishments with fewer than 300 employees often lack the administrative bandwidth to handle detailed certification processes. However, critics believe that raising the threshold may weaken worker protections in smaller establishments unless they voluntarily adopt clear policies aligned with the Model Standing Orders.

3.4 Centralization and Uniformity of Standing Orders

The introduction of national Model Standing Orders ensures a uniform structure that establishments can adopt with minimal changes. This replaces the earlier state-level variations and provides a standardized baseline across the country. By centralizing the framework, the government intends to remove ambiguity, reduce compliance confusion, and create predictability for companies operating across multiple states. This uniformity is expected to particularly benefit small companies that do not have access to specialized legal or HR advisory services.

4. Decoding the New Rules on Standing Orders

The new rules under the Industrial Relations Code introduce procedural and structural changes that reshape how establishments frame, publish, and implement their Standing Orders. These rules aim to simplify compliance while ensuring that the essential protections for workers remain intact.

4.1 What the New Rules Introduce

The new rules introduce a more streamlined process for drafting and submitting Standing Orders, emphasizing digital submission, time-bound approvals, and uniform templates. Establishments can now rely on centrally drafted Model Standing Orders, reducing the need for extensive customization unless required by industry-specific needs. The rules also clarify timelines for certification, dispute handling, and approvals, reducing the procedural vagueness that existed earlier.

4.2 Types of Standing Orders Under the New Regime

Under the new system, Standing Orders are broadly categorized into three industry-specific Model Standing Orders: those for the manufacturing sector, those for the service sector, and those for mining establishments. This categorization acknowledges the different nature of operations across industries and ensures that the rules remain relevant and practical. Employers not falling under specialized models may still use the general Model Standing Orders as the default template, ensuring compliance without drafting policies from scratch.

4.3 The Concept of Model Standing Orders

Model Standing Orders serve as ready-to-use frameworks created by the central government. If an employer does not submit their own customized Standing Orders, or if they fail to get certification, the Model Standing Orders automatically apply to them by default. This approach ensures that no establishment remains without a legal framework for employment conditions. It also standardizes protections and obligations, reducing disputes and ambiguity. The availability of these models significantly reduces complexity for small companies that lack the resources to draft detailed Standing Orders.

4.4 Role of Certifying Officers and Digital Submission

The new rules introduce clear roles and responsibilities for certifying officers, requiring them to review, approve, or suggest modifications to submitted Standing Orders within defined timelines. The emphasis on digital submission is intended to reduce delays, minimize paperwork, and prevent discretionary hurdles. Online certification platforms also allow establishments to track the status of submissions, receive updates, and maintain digital records, eventually contributing to a more transparent and efficient compliance ecosystem.

5. Applicability to Small Companies

The new rules on Standing Orders have generated considerable interest among small companies because the raised applicability threshold appears, on the surface, to exempt them from mandatory compliance. However, small companies operate within diverse labour conditions and employment structures, and the practical influence of these rules can extend beyond headcount-based mandates. Understanding how the law defines small establishments and how these rules indirectly affect them is essential for evaluating the true compliance burden.

5.1 Definition of Small Companies and Small Establishments

In the context of Indian labour law, the term “small establishment” often varies depending on the statute, with some laws referring to companies with up to 40, 50, or 100 employees. However, under the Industrial Relations Code and the rules on Standing Orders, the key determinant is whether an establishment employs 300 workers or more. Small companies traditionally refer to those that operate with lower workforce numbers, minimal administrative structures, and limited HR personnel. These establishments are usually part of the micro, small, and medium enterprise (MSME) category and often include startups, small manufacturers, service providers, and local businesses. Although the rules do not define “small company” as a legal category, the effect of the raised threshold indirectly places most small businesses outside the direct requirement of certifying Standing Orders.

5.2 Whether Firms With Less Than 300 Employees Are Still Impacted

While small firms with fewer than 300 employees are not mandated to draft or certify Standing Orders under the new rules, they are not completely untouched by their implications. Many provisions of the Industrial Relations Code apply irrespective of the threshold, particularly those related to dispute resolution, employment conditions, and worker rights. Additionally, the Model Standing Orders serve as a default reference point for courts and labour authorities when interpreting employment disputes involving smaller establishments. This means that even without mandatory certification, small companies are expected to maintain processes that resemble the structure and clarity of Standing Orders. The increasing awareness among employees regarding workplace rights further compels small companies to adopt formal policies aligned with the spirit of the law.

5.3 The Grey Area: Contract Labour, Gig Work, and Temporary Workforce

A significant grey area in applicability concerns establishments that rely heavily on contract labour, gig workers, temporary employees, or outsourced manpower. Many small companies operate with a stable core team of fewer than 50 employees but hire contractors or freelancers for seasonal or project-based requirements. When viewed collectively, this extended workforce may create situations where elements of the Standing Orders framework become relevant, especially during disputes, disciplinary issues, or claims of unfair practices. Furthermore, contractors themselves may be required to follow Standing Orders if their own workforce exceeds the threshold, thereby indirectly influencing the practices of the small principal employer. In modern industries where gig and platform workforces are common, small establishments may also face expectations to provide structured terms and conditions similar to those found in Standing Orders.

5.4 State-Level Deviations and Their Impact on Small Units

Although labour laws have been consolidated into national codes, Indian states retain significant autonomy in framing rules and determining thresholds. Some states may reduce the threshold from 300 to a lower number in the future, similarly to how thresholds were varied under the 1946 Act. Small companies operating in multiple states may therefore face inconsistencies that require attention, especially if one state enforces a lower applicability limit while another adheres to the national standard. Even within the current regime, states may issue additional guidelines or sector-specific requirements that indirectly influence the compliance expectations of small establishments. These variations can complicate operations for small businesses that lack dedicated compliance resources.

6. Compliance Requirements Under the New Rules

Even for establishments where Standing Orders are mandatory, the rules place significant emphasis on clarity, documentation, transparency, and accessibility. For small companies that voluntarily choose to adopt Standing Orders or mirror their structure through HR policy manuals, these requirements help formalize employment relationships and reduce disputes. Understanding the underlying compliance expectations is therefore valuable for all companies irrespective of headcount.

6.1 Documentation and Record-Keeping Standards

The new rules place strong emphasis on maintaining accurate and up-to-date records of employment conditions, disciplinary actions, leave rules, wage details, and work classifications. Even if certification is not required for small companies, labour inspectors and dispute resolution authorities expect employers to produce consistent documentation that aligns with fair employment practices. Digitalization has further increased expectations that companies maintain structured, easily retrievable records. Small establishments that rely on informal or verbal agreements may find themselves at a disadvantage in litigation or audits, making documentation an essential part of compliance readiness.

6.2 Requirements for Employment Terms and Service Conditions

The new rules reinforce the importance of clearly defined employment terms, including job roles, working hours, leave entitlements, wage periods, overtime rules, conduct expectations, and termination procedures. For establishments above the threshold, these must be explicitly stated in the Standing Orders. For smaller organizations, the absence of mandatory certification does not eliminate the need for clarity, especially as labour disputes increasingly hinge on the interpretation of employment terms. Employees now expect written contracts or policy documents that outline their rights and responsibilities. Small companies that fail to define these conditions often face greater legal exposure, even though they are exempt from the certification requirement.

6.3 Display, Dissemination, and Employee Awareness Obligations

The rules require establishments to prominently display Standing Orders or bring them to the notice of employees in an accessible manner. This includes physical display boards at the workplace or digital access through internal portals. Even for small companies, creating awareness of employee rights and obligations helps reduce conflicts and enhances organizational transparency. Employees who are well-informed about attendance norms, misconduct definitions, grievance procedures, and disciplinary processes are more aligned with organizational expectations, reducing friction and misunderstandings.

6.4 Technology Use in HR for Standing Orders

The increasing push toward digital governance is reflected in the new rules that encourage digital submission, online tracking, and electronic communication of Standing Orders. Small companies adopting modern HR technologies such as cloud-based HR systems, digital attendance tools, online leave management platforms, and document repositories can align more easily with compliance expectations. Technology also reduces human errors, speeds up record-keeping, and improves audit readiness. As labour laws evolve, the integration of HR tech will become indispensable even for small establishments that are not legally required to certify Standing Orders.

7. Impact on HR Operations and People Management

The new Standing Orders framework influences HR practices across industries by reinforcing formalization and promoting structured management. For small companies, this impact may appear indirect, but it plays a significant role in shaping modern HR expectations.

7.1 Formalization of HR Processes

One of the most profound impacts of the new rules is the push toward formalization of HR processes. For decades, small businesses have operated with informal hiring practices, verbal agreements, and ad-hoc disciplinary approaches. However, the new framework encourages clarity and accountability by expecting uniformity in employment conditions. Even without mandatory certification, small companies must adopt formal HR documentation to remain competitive and legally protected. This shift aligns smaller establishments with larger corporate practices, ultimately improving workplace efficiency and reducing inconsistencies.

7.2 Greater Accountability and Transparent Practices

The new rules emphasize transparency in working conditions, conduct expectations, and disciplinary procedures. For HR teams, this translates to improved internal systems, structured investigations, and standardized actions when handling employee misconduct or grievances. Small companies that adopt these practices build trust among employees and reduce exposure to wrongful termination claims, harassment complaints, or arbitrary disciplinary actions. Transparency also enhances organizational culture, making workplaces more predictable and fair.

7.3 Implications for Hiring, Disciplinary Actions, and Termination

Hiring processes under the new framework must ensure that employment terms are clearly communicated and documented. In disciplinary matters, the rules encourage employers to follow consistent procedures such as issuing show-cause notices, conducting domestic enquiries, and documenting findings. These steps reduce the likelihood of disputes escalating into legal battles. Termination processes require similar clarity, including notice periods, severance rules, and documentation of misconduct if termination is disciplinary. Small companies that adopt such structured processes find it easier to handle employee exits with fewer conflicts.

7.4 Aligning HR Policy Manuals With Standing Orders

Even if Standing Orders are not mandatory for smaller establishments, aligning HR policies with the Model Standing Orders strengthens legal defensibility. This alignment ensures that internal manuals cover essential elements such as working hours, misconduct definitions, leave rules, and grievance procedures. When disputes arise, labour authorities often compare company policies to the Model Standing Orders, making alignment a practical necessity. Small companies that revise their HR manuals accordingly create a more robust governance structure that supports sustainable growth.

8. Will Compliance Increase for Small Companies?

Whether compliance burdens will increase for small companies under the new rules is a complex question influenced by legal, operational, and industry-specific realities. While some reforms reduce formal requirements, others introduce expectations that indirectly increase compliance responsibilities.

8.1 Arguments Suggesting Higher Compliance Burdens

Some experts argue that the new rules indirectly increase compliance burden for small companies by pushing them toward formalized HR structures. The expectations to maintain detailed documentation, follow structured disciplinary processes, and adopt fair employment practices require small businesses to invest in HR expertise or digital tools. Small companies that previously relied on informal systems may find themselves compelled to adopt more complex procedures to avoid disputes. Additionally, the rising awareness among workers regarding their rights makes it more important for small establishments to follow the Model Standing Orders as a reference point, thereby increasing de facto compliance obligations.

8.2 Arguments Suggesting Relief for Smaller Firms

On the other hand, raising the threshold from 100 to 300 employees significantly reduces the number of establishments that must legally certify Standing Orders. Many MSMEs and startups fall well below this threshold and therefore enjoy freedom from time-consuming drafting and certification procedures. The use of Model Standing Orders also eliminates the need for small firms to create customized documents or navigate bureaucratic approval processes. This reduction in regulatory rigidity aligns with the government's broader push to support ease of doing business for small enterprises.

8.3 The Reality: Compliance Beyond Headcount

In practice, compliance is no longer purely determined by workforce size. Even without legal mandates, small companies must adopt formal HR systems to remain competitive, attract talent, and respond to employee expectations. Labour disputes do not discriminate based on establishment size, and authorities increasingly evaluate company practices against standards similar to the Model Standing Orders. This means that while the legal compliance burden may have decreased, practical compliance expectations have risen. Companies that proactively adopt structured processes are better protected against legal risks and enjoy greater operational stability.

8.4 Sector-Wise Impact on MSMEs, Startups, and Manufacturing Units

The impact of the new rules varies significantly by sector. Manufacturing units, even small ones, often operate with larger workforces, contract labour, and complex operational structures, making them more sensitive to Standing Orders-related compliance expectations. MSMEs in manufacturing may still need to mirror the structure of Standing Orders even without the certification requirement. Startups in the IT or services sector typically have smaller teams but face competitive pressures to adopt formal HR processes that attract skilled employees and reduce attrition. Small units in the gig economy or e-commerce logistics may find that contractor-related obligations indirectly push them toward the standards set by the new rules.

9. Advantages of the New Standing Orders for Small Companies

The introduction of new Standing Orders under the Industrial Relations Code has brought a fresh perspective to how employment terms and workplace practices are structured in India. While much of the discourse focuses on the compliance challenges, small companies also stand to gain several advantages from this reformed framework. These advantages relate to operational flexibility, administrative simplicity, clearer legal expectations, and a more predictable employment environment. Even though Standing Orders apply mandatorily only to establishments with 300 or more workers, the overall spirit of the new rules benefits smaller establishments through a more streamlined labour compliance ecosystem.

9.1 Flexibility for Growing Establishments

One of the most significant advantages for small companies is the flexibility that the raised threshold provides. Under the earlier regime, establishments employing 100 workers or more had to comply with stringent drafting and certification requirements, which could be a barrier to expansion. Small companies often avoided growing their workforce beyond 90–95 employees in fear of triggering additional compliances. The new threshold of 300 allows these companies to expand more confidently without the administrative burden of drafting, negotiating, and certifying Standing Orders. This flexibility also gives them time to stabilize operations and gradually implement structured HR frameworks as they scale. Small establishments can now focus on business growth without feeling constrained by compliance-triggering headcount milestones.

9.2 Reduction of State-by-State Fragmentation

Another advantage is the reduction in fragmentation of rules across states. Under the old Standing Orders Act, states had the authority to prescribe different thresholds, formats, and approval processes, making compliance difficult for companies operating across multiple regions. The new framework under the Industrial Relations Code introduces greater uniformity, and the Model Standing Orders further standardize expectations. For small companies, this means fewer discrepancies between state laws and reduced confusion about what constitutes compliant employment terms. Uniformity in rules also supports smoother internal policy development, particularly for companies planning to expand into new regions.

9.3 Lower Litigation Risk Through Clear Rules

Clearer definitions of misconduct, grievance procedures, working hours, and disciplinary processes reduce the likelihood of disputes escalating into legal conflicts. Even if small companies are not required to certify Standing Orders, they benefit from the availability of detailed Model Standing Orders that serve as a guideline for structuring employee policies. When expectations are clearly documented and consistently communicated, misunderstandings reduce significantly. Employees also feel more secure when workplace rules are transparent, which contributes to fewer grievances. Small companies benefit from these reduced litigation risks because they often lack the resources to manage prolonged legal proceedings.

9.4 A More Predictable Industrial Relations Environment

The new rules contribute to a predictable industrial relations environment by establishing clearer standards of workplace behaviour and employer–employee interactions. Predictability is essential for small companies that rely on stable relationships with their workforce and cannot afford operational disruptions caused by disputes. When the legal framework provides certainty regarding employment conditions, termination procedures, and disciplinary rules, employers can manage their operations with greater confidence. This predictability also enhances investor confidence, particularly for startups seeking funding, as structured HR practices signal maturity and stability.

10. Challenges Small Companies May Face

Despite the advantages, the new Standing Orders framework also presents several challenges for small companies. These challenges stem not from the mandatory requirements themselves, but from the growing expectations around documenting, communicating, and standardizing employment practices. Small businesses often lack sophisticated HR departments, legal expertise, and digital tools, making it difficult to adopt the structured approach the new rules encourage.

10.1 Lack of HR Infrastructure and Expertise

Many small companies operate with limited HR staff or rely on office administrators who may not have formal training in labour law. This lack of HR infrastructure makes it difficult to adopt the structured processes expected under the new labour regime. Drafting employment policies, tracking disciplinary actions, maintaining digital records, and ensuring transparency require competencies that small establishments may not possess. Without proper guidance, small companies may struggle to implement practices that align with the Model Standing Orders, leaving them vulnerable to operational inconsistencies and compliance gaps.

10.2 Complexity of Legal Compliance in Emerging Businesses

Startups and MSMEs often operate in fast-changing environments where roles evolve, job descriptions shift quickly, and teams expand or contract based on projects. Such fluidity makes it challenging to maintain structured service conditions or update employment terms regularly. The new rules expect clarity and uniformity, but emerging businesses often work in dynamic contexts where standardization feels difficult. Furthermore, small companies may find it hard to interpret legal language or understand the practical implications of the new rules, especially in the absence of in-house legal counsel.

10.3 Risks of Non-Compliance and Penalties

Even though Standing Orders are not mandatory below the threshold, non-compliance with fundamental labour obligations—such as undefined employment terms, arbitrary disciplinary actions, or lack of documented procedures—can result in disputes and penalties. Labour authorities may review employment practices during inspections or dispute hearings, and companies that fail to maintain proper records may find themselves at a disadvantage. Courts tend to interpret unclear or unwritten employment terms in favour of employees, increasing the risks for employers. Small establishments therefore face implicit pressure to follow practices aligned with the Standing Orders framework even without formal certification.

10.4 Difficulty in Adapting to Digital Processes

The new rules encourage digital submission, online authentication, and electronic communication of Standing Orders. While this modern approach improves efficiency, small companies that lack digital infrastructure may find it challenging to adapt. Businesses that still rely on manual attendance registers, paper-based records, and traditional filing systems may struggle to meet expectations of digital record-keeping and documentation. Migrating to digital HR systems requires investment in technology, staff training, and process overhaul—elements that many small companies may find costly or time-consuming.

11. Case Studies and Practical Scenarios

To understand the practical impact of the new Standing Orders framework, it is helpful to examine real-world scenarios that small companies commonly face. Each scenario reveals how the new rules influence operations, workplace practices, and long-term compliance readiness.

11.1 A Small Manufacturing Firm Crossing 100 Employees

Consider a manufacturing unit employing around 90 workers. Under the earlier 1946 Act, approaching 100 employees meant preparing for mandatory Standing Orders certification, which discouraged expansion. Under the new rules, this company can continue growing without worrying about compliance until it reaches 300 employees. This allows management to focus more on scaling operations, improving processes, and hiring workers based on need rather than compliance avoidance. However, as the workforce size increases, expectations for formal HR systems also rise, even before the threshold is crossed. When the company eventually grows to 150 or 200 employees, it will still need to adopt structured policies, grievance mechanisms, and conduct rules that resemble the Model Standing Orders, even if certification is not required.

11.2 A Startup Scaling From 50 to 300 Workers

Startups often experience rapid hiring, especially after securing funding. A technology startup growing from 50 to 200 workers within a year may find itself navigating complex HR challenges even though it is below the threshold for mandatory Standing Orders. Investors expect the company to maintain robust HR documentation, clearly defined roles, and fair employment practices. Employee expectations in the tech sector are also high, leading startups to adopt policies that closely mirror formal Standing Orders. As the organization approaches the 300-employee mark, the need to draft and certify Standing Orders becomes unavoidable. Companies that gradually adopt structured HR practices during their growth phase find themselves better prepared for certification when the threshold is eventually crossed.

11.3 Contract-Heavy Workforces and Compliance Confusion

Many small companies rely heavily on contract labour, outsourcing agencies, and temporary workers. For example, a logistics company may have only 40 permanent employees but manage over 200 contract workers through third-party vendors. In such scenarios, confusion arises over whether the principal employer must adhere to Standing Orders. While the headcount for mandatory certification is based on directly employed workers, contract workers still influence overall employment practices. If contractors cross the threshold, they must implement Standing Orders, indirectly affecting the small principal employer. Moreover, disputes involving contract workers often refer to Model Standing Orders for clarity, compelling small companies to maintain consistent workplace practices.

11.4 Lessons From States That Earlier Had a 300 Threshold

States such as Rajasthan had already raised the threshold to 300 even before the new Codes were introduced. Their experience provides useful insights for small companies across India. In these states, companies reported greater ease of doing business and improved industrial relations due to the reduced compliance burden. Small establishments used the flexibility to grow without fear of sudden compliance triggers. At the same time, many companies voluntarily adopted structured HR processes for operational efficiency. These experiences suggest that while the higher threshold reduces legal compliance, good HR governance gradually becomes a business necessity regardless of establishment size.

12. Industry Perspectives and Expert Opinions

Understanding the broader implications of the new Standing Orders requires examining how various stakeholders—legal experts, HR leaders, MSME associations, and employees—interpret the changes. Their perspectives reveal that the reform is not merely administrative but also cultural, shifting workplaces toward clarity, accountability, and structured governance.

12.1 Views From Labour Law Experts

Labour law experts largely view the new Standing Orders positively, particularly because of the increased threshold and the reduction of procedural complexities. They argue that the old 100-worker requirement constrained business growth and led to widespread under-reporting of workforce numbers. Experts also appreciate the introduction of Model Standing Orders, which provide a ready-made reference for both employers and employees. However, some caution that small companies may misuse the flexibility to maintain informal employment practices, which could lead to disputes. They emphasize that while legal compliance may be reduced, the expectations for fair and transparent workplace practices remain strong.

12.2 HR Leaders on Operational Impact

HR leaders believe that the new Standing Orders promote a culture of formalization in HR operations. Even in small companies, well-defined rules for conduct, leave, disciplinary actions, and grievance redressal improve transparency and reduce confusion. HR professionals note that while certification may not be mandatory for smaller establishments, adopting policies aligned with the Model Standing Orders enhances workplace efficiency. Some HR leaders also highlight that digitalization expectations may pose challenges for smaller firms, but they see this as a positive push toward modernization.

12.3 MSME Associations on Ease of Business

MSME associations generally welcome the raised threshold as a relief for small industries struggling with compliance overload. They argue that labour law complexity has been a long-standing barrier to growth and that the new framework gives smaller firms breathing space. Associations particularly appreciate the uniformity brought by the centralized rules, noting that smaller businesses often lack the resources to interpret state-specific variations. However, they also warn that small companies may still face practical compliance expectations from employees, auditors, and clients, which means HR literacy and documentation must improve.

12.4 Employee Perspectives on Uniform Working Conditions

From an employee’s point of view, the new Standing Orders represent a shift toward greater clarity, predictability, and fairness in the workplace. For years, workers in smaller establishments often faced inconsistencies in service rules, disciplinary procedures, working hours, or leave management, mainly because such firms either followed informal HR practices or relied on loosely written policies with little employee involvement. Standing Orders offer a standardized, legally backed framework that employees can rely on regardless of the size of the organization. Employees generally perceive this uniformity as a safeguard against arbitrary decisions, particularly in areas such as job classification, disciplinary hearings, or termination. The predictability around leave entitlements, grievance redressal mechanisms, and misconduct definitions also enhances a sense of security. Many employees favour the model standing order format because it creates a baseline for working conditions, which reduces dependence on employer discretion. At the same time, some employees express concern that raising the threshold to 300 workers may delay these protections for smaller firms where informal practices are more common. Nevertheless, uniform working conditions under a standardized legal framework contribute to strengthening trust between employers and workers, ultimately supporting a more harmonious industrial environment.

13. Comparison With Global Standards

13.1 Standing Orders and Work Rules in Other Countries

Globally, many countries have structured and codified rules governing workplace conduct, service conditions, and employee rights. For instance, Japan follows the ‘Work Rules’ framework, where employers are mandated to create a written set of rules and file them with labour authorities once they cross a certain employee threshold. These rules cover working hours, discipline, pay, and grievance procedures—similar to India’s Standing Orders. Western countries like Germany also enforce detailed “Works Agreements,” which are negotiated between employers and employee councils and form part of the legally binding employment framework. In contrast, the United States relies more on contract-driven employment, with fewer statutory obligations for uniform work rules, reflecting its “employment-at-will” system. India’s Standing Orders regime aligns more closely with the structured frameworks of East Asian and European countries rather than with the more flexible American approach.

13.2 Workforce Formalization Patterns in Global HR Systems

As economies grow, there is a natural progression from informal to formal employment structures, driven by both legal mandates and the need for efficient workforce management. Countries that transitioned faster into formal HR systems—such as South Korea and Singapore—achieved stability in labour markets through detailed service rules, digital recordkeeping, and strong enforcement. These nations emphasize standardized working conditions across industries, which helped reduce disputes and promote fair competition among employers. India’s move toward uniform Standing Orders falls within this global pattern of formalization. Although the scale of India's informal sector presents additional challenges, the heightened focus on predictable employment terms positions India within global trends of modernizing labour markets.

13.3 What India Can Learn From International Frameworks

India can draw several lessons from global labour frameworks. First, countries with successful work-rule systems invest heavily in employee awareness campaigns and employer education, ensuring both sides understand their rights and obligations. Second, digitalization of HR records and submissions—common in advanced economies—reduces paperwork, accelerates compliance, and increases transparency. Third, grievance mechanisms in countries like Germany or Japan often involve neutral mediators or works councils, which reduce litigation and encourage dialogue. India’s labour compliance system can evolve by adopting similar mechanisms to prevent disputes at their earliest stage. Finally, clear implementation guidelines, sector-specific rules, and periodic review of thresholds—features observed internationally—can support India in refining its Standing Orders regime to match modern workforce requirements.

14. The Future of HR Compliance for Small Companies

14.1 Gradual Informal-to-Formal Workforce Transition

The future of HR compliance for small companies in India is closely tied to the country’s ongoing shift from informal employment to structured and legally compliant workplaces. As organizations grow, invest in technology, or interact with global clients, they face higher expectations for consistency in employment practices. Even firms below the 300-employee threshold may gradually adopt elements of Standing Orders voluntarily, simply to establish better HR discipline and avoid disputes. The push for formalization is also being driven by the gig economy, contract staffing agencies, and increasing expectations from a more informed workforce. Over time, small companies are likely to treat compliance not as a burden but as a fundamental business requirement.

14.2 Need for HR Technology Adoption

As Standing Orders create more structured compliance expectations, small companies will increasingly rely on digital HR systems to manage documentation, attendance, leave, payroll, and grievance workflows. Technology adoption reduces human error, simplifies audits, and ensures that employee information is well-organized. Small companies that incorporate HR software early are likely to experience smoother transitions when they grow and eventually cross compliance thresholds. Platforms that facilitate digital onboarding, instant policy dissemination, and real-time recordkeeping will become essential tools for maintaining compliance with ease and efficiency.

14.3 The Role of Labour Codes in Standardizing Compliance

India’s four Labour Codes—including the Industrial Relations Code—are intended to harmonize and streamline compliance requirements across states and industries. For small companies, this could bring substantial relief by reducing the confusion created by varying state regulations. Uniform templates, central registration processes, and simplified digital filings will make compliance more accessible for organizations without dedicated legal teams. Over the next decade, the success of labour reforms will depend on how consistently these Codes are implemented across states, how clearly rules are communicated, and how effectively MSMEs are supported through training and technology. If executed well, the Labour Codes will make India’s compliance ecosystem more predictable and business-friendly.

14.4 Possibility of Further Revisions and Clarifications

Labour reforms are an evolving process, and future amendments are likely as the government assesses economic conditions, business needs, and worker protections. The threshold of 300 workers itself may be reviewed in the future depending on how industries adapt. Clarifications may also emerge regarding gig workers, platform workers, hybrid work arrangements, and contract staffing—areas where the current rules leave room for interpretation. Policymakers could introduce sector-specific exemptions, simplified compliance paths for micro businesses, or stricter requirements for high-risk industries. Ultimately, the future trajectory of Standing Orders will be shaped by continuous dialogue between government, employers, and worker representatives.

15. Government’s Perspective and Policy Intent

15.1 The Goal of Reducing Red Tape

A key government objective behind raising the Standing Orders threshold and introducing uniform model Standing Orders is to reduce administrative burden for employers. Earlier, firms crossing 100 employees had to undergo an extensive certification process, which was often slow and inconsistent across states. By increasing the threshold to 300 workers, the government aims to allow small businesses and startups more flexibility during their growth stage. This aligns with India’s broader agenda of improving its ease-of-doing-business ranking and encouraging entrepreneurship.

15.2 Encouraging Growth and Job Creation

The government believes that allowing firms greater flexibility in workforce management during their early phases encourages them to hire more confidently. Businesses that fear compliance burdens often hesitate to hire, leading to slower job creation. By reducing such fears through relaxed thresholds, policymakers hope to incentivize scaling and expansion. The government also anticipates that formalization driven by technological adoption and natural business growth will eventually bring small firms into compliance at a pace they can manage comfortably.

15.3 Balancing Employer Flexibility With Worker Protection

While easing compliance for small companies, the government maintains that workers’ rights must still be protected, especially in rapidly evolving industries. The introduction of Model Standing Orders ensures that minimum service conditions are preserved even if certification is not mandatory for companies below 300 workers. Simultaneously, states retain the power to impose stricter rules if necessary. This dual approach allows for a flexible yet protective framework that reflects India’s diverse labour landscape.

15.4 The Need for Clear Guidelines for Small Firms

Despite good intentions, many small companies find the Standing Orders framework difficult to interpret without legal assistance. The government therefore faces pressure to issue clearer guidelines, sector-wise FAQs, and simplified compliance tools. As the Labour Codes roll out, the need for digital support platforms, helplines, and standardized templates will become increasingly important. Transparent communication will be crucial to ensuring that small companies can adopt the Standing Orders framework without confusion or fear of penalties.

16. Recommendations for Organizations

16.1 Preparing for Future Compliance Even Below the Threshold

Even though the new Standing Orders apply mandatorily only to establishments employing 300 or more workers, organizations with smaller workforces cannot afford to stay complacent. Growth in employee strength often happens quickly and unpredictably, especially for startups, manufacturing clusters, and service firms dependent on seasonal or project-driven hiring. Companies that do not prepare in advance may find themselves crossing the threshold without the systems or documentation in place to meet legal requirements, which can lead to compliance violations and disputes during inspections. Preparing for future compliance means gradually integrating structured HR documentation into daily operations, such as maintaining proper employee records, defining job roles clearly, formalizing working hours, describing disciplinary procedures, and preserving attendance and leave registers. 

16.2 Building Scalable HR Policies

Scalable HR policies are essential for organizations intending to grow steadily and responsibly in the coming years. Startups or MSMEs often build policies reactively—modifying rules only when challenges arise or when employees demand clarification. While this approach may seem efficient in the short term, it becomes unsustainable as employee numbers increase and more complex workforce situations emerge. To avoid constant revisions, firms should design HR policies that are detailed, consistent, and flexible enough to accommodate organizational growth. This includes developing clear guidelines on work timings, leave structures, grievance handling, job classifications, performance management, and conduct standards..

16.3 Training HR Teams for Legal Compliance

One of the most challenging areas for small and growing companies is the limited availability of HR professionals who have a strong understanding of labour laws and compliance frameworks. HR teams in small firms often juggle multiple responsibilities, including recruitment, payroll, employee relations, and office administration, leaving little time for specialized legal learning. As a result, mistakes in documentation, incorrect interpretations of rules, or non-compliance with statutory requirements can easily occur. To avoid these pitfalls, companies must invest in training their HR teams in the basics and advanced aspects of labour law compliance. This includes understanding Standing Orders, employment contract design, record-keeping obligations, grievance mechanisms, termination protocols, and legal documentation standards. Regular workshops conducted by labour law consultants, online certification courses, and participation in HR forums can significantly enhance the competence of HR personnel. 

16.4 Conducting Regular HR & Legal Audits

Regular audits are essential for organizations aiming to maintain consistent compliance with employment laws and internal HR standards. An HR audit involves reviewing policies, records, processes, and documentation to ensure that they align with both statutory requirements and organizational goals. Legal audits, on the other hand, assess whether existing employment practices comply with labour regulations, identify gaps that may expose the company to penalties, and evaluate whether documentation is legally defensible in disputes. Small firms often overlook audits because they assume compliance issues arise only for larger organizations or because they lack dedicated resources. However, periodic audits—conducted internally or with the help of external consultants—help identify discrepancies long before they become serious problems. 

Conclusion

The new rules on Standing Orders under the Industrial Relations Code, 2020 represent a major shift in India’s labour regulatory landscape, especially for small and growing companies. While the raised applicability threshold from 100 to 300 workers appears to provide relaxation, the deeper reality is that compliance implications continue to extend far beyond formal headcount criteria. As India moves toward a more standardized, transparent, and technology-driven labour framework, the expectations placed on organizations—irrespective of size—are gradually increasing. Small companies will no longer be shielded by informality or flexible processes as they once were, because the workplace ecosystem is evolving toward greater documentation, clarity in employment terms, and uniformity of conduct rules. For most businesses, the new Standing Orders serve not merely as a legal requirement triggered at a specific employee threshold but as an indicator of the level of HR maturity needed to operate sustainably in a formalizing economy.

Ultimately, the new Standing Orders are part of a broader national effort to balance ease of doing business with fair treatment of workers. They encourage organizations to prepare for the future, anticipate compliance responsibilities, and adopt HR technologies that streamline processes. For small companies, the path forward lies in developing scalable HR policies, strengthening record-keeping practices, training HR teams in legal compliance, and conducting regular audits. When approached with foresight, the transition does not impose undue burden but instead strengthens organizational stability, reduces risk, and enhances workplace professionalism. In the evolving environment of Indian labour law, small companies that embrace structured compliance will not only meet legal expectations but also position themselves for stronger growth, improved employee trust, and long-term resilience.

 FAQ Section

1. What are Standing Orders, and why are they important for companies in India?
Standing Orders are legally mandated documents that outline the terms of employment, work rules, and conduct expectations within an industrial establishment. They cover essential aspects such as classification of workers, working hours, leave rules, disciplinary procedures, and termination processes. Their importance lies in the fact that they bring transparency, predictability, and uniformity to workplace governance. They reduce ambiguity for both employers and employees by clearly defining rights, obligations, and processes. In a country where labour disputes often arise from misunderstandings or undocumented practices, Standing Orders act as a foundational tool for ensuring fairness and operational clarity.

2. Do the new rules on Standing Orders apply to small companies?
The new Standing Orders under the Industrial Relations Code, 2020 officially apply only to establishments employing 300 or more workers. However, small companies are indirectly affected because the new rules raise expectations around workplace documentation and HR governance. Even though smaller firms are not legally required to certify Standing Orders until they cross the threshold, many elements of the rules—such as structured policies, clear grievance processes, and properly documented employment terms—are increasingly essential for smooth scaling, dispute prevention, and compliance readiness. Therefore, while the law explicitly applies at 300 workers, its impact begins much earlier.

3. Why was the applicability threshold increased from 100 to 300 employees?
The threshold was raised to reduce the compliance burden on smaller establishments and to encourage ease of doing business. Many states had already adopted the 300-worker threshold even before the central law was changed, and the central government extended this relaxation nationally to promote greater flexibility in hiring, firing, and business expansion. The policy objective is to create an environment where companies can scale more easily without being restricted by rigid procedural requirements at an early stage of growth.

4. What benefits do small companies gain from the new Standing Orders?
Small companies benefit from greater flexibility because they now have more time to grow before formal certification becomes mandatory. The availability of Model Standing Orders under the new rules also provides companies with a ready-made framework for internal policies, reducing the effort previously needed to draft complex documents from scratch. Additionally, standardized rules lower the risk of disputes and litigation by offering clear guidelines for workplace conduct, disciplinary action, and worker rights. Over time, these benefits help small companies operate more professionally and create a stable labour environment.

5. Will small companies face more compliance under the new rules?
The answer depends on how one defines “compliance.” Legally, smaller companies face less compliance because they are not required to certify Standing Orders until they reach 300 employees. Operationally, however, they may face greater expectations as the broader ecosystem of labour law moves toward formalization. Customers, investors, auditors, and workers increasingly expect structured HR systems even in smaller firms. Therefore, while the law does not force compliance early, business realities often do.

6. How do Standing Orders affect hiring and termination processes?
Standing Orders provide clarity on the rules governing employment, including the procedure for terminating services or initiating disciplinary action. For employers, this reduces the risk of wrongful termination claims because decisions are based on documented, uniform rules rather than ad hoc processes. For employees, Standing Orders ensure fairness by giving them a clear understanding of what constitutes misconduct and how disciplinary actions must be carried out. Overall, they bring structure to hiring and termination, reducing uncertainty for both parties.

7. What challenges do small companies face in complying with the rules?
Small companies often struggle with limited HR staff, lack of expertise in labour law, and minimal documentation systems. These issues make it harder to transition into a fully compliant environment when the workforce grows. Another challenge is the adoption of digital processes, especially for firms that operate largely offline or use manual record-keeping. Many small firms also face confusion about contract labour and temporary staff, especially when determining whether they contribute to the 300-worker threshold.

8. How do the new rules address contract labour and gig workers?
The new Standing Orders acknowledge the changing nature of work by incorporating provisions for fixed-term employment and digital employment records. However, contract labour and gig workers create a grey area for small companies because their inclusion depends on the nature of engagement and the interpretation of worker–establishment relationships. While these workers may not always count toward the threshold, companies still need clear internal rules to manage them effectively and avoid disputes.

9. Are there differences in how states implement Standing Orders?
Yes, labour laws in India often allow for state-level variations. Even though the Industrial Relations Code introduces uniformity, states retain the ability to introduce amendments or adopt different rules based on local industrial conditions. Some states had already raised the threshold to 300 workers long before the central reforms. Small companies must therefore stay informed about state-specific notifications, as compliance requirements may differ depending on where the establishment operates.

10. How can small companies prepare for future Standing Orders compliance?
Small companies can prepare by gradually formalizing HR processes, maintaining accurate employment records, creating clear internal policies, and training HR teams in labour law compliance. Conducting regular HR audits, adopting digital HR systems, and aligning company policies with the Model Standing Orders will make the transition smoother once the workforce expands. Preparing early avoids sudden disruptions, legal risks, and rushed documentation when the company crosses the threshold.