Domestic Enquiry After Labour Codes

Adv Govind Bali
Labour Law
August 20, 2026

Labour Law • Industrial Relations Code • Disciplinary Proceedings • HR Compliance

Employee misconduct and domestic enquiry after the Labour Codes

Disciplinary action in India is no longer governed by the pre-2025 labour-law framework alone. The four Labour Codes came into force on 21 November 2025, and the Industrial Relations (Central) Rules, 2026 together with the Model Standing Orders, 2026 were notified on 8 May 2026.

For employers, HR teams and workers, this materially changes the compliance framework surrounding misconduct, suspension pending enquiry, subsistence allowance, standing orders and dismissal.

The central statutory provision is now Section 38 of the Industrial Relations Code, 2020, read with the applicable standing orders and the Model Standing Orders, 2026. At the same time, long-settled Supreme Court principles of natural justice continue to govern the fairness of domestic enquiries.

The critical point is simple: even where misconduct appears serious, the disciplinary action can become vulnerable if the employer fails on charge framing, notice, evidence, cross-examination, impartiality, subsistence allowance, reasoned findings or proportionality of punishment.

Industrial Relations Code is now in force

The Industrial Relations Code, 2020 was brought into force with effect from 21 November 2025 by notification S.O. 5320(E). The Central Government subsequently notified the Industrial Relations (Central) Rules, 2026 and Model Standing Orders, 2026 on 8 May 2026.

This means employers should not continue to run disciplinary proceedings merely on templates drafted under the Industrial Disputes Act, 1947 or the Industrial Employment (Standing Orders) Act, 1946 without checking the current Code, applicable rules and standing orders.

Primary source: Industrial Relations Code, 2020 — India Code.

Does the new disciplinary framework apply to every employee?

No. The first classification question is whether the person is a “worker” within the Industrial Relations Code and whether the relevant Chapter on standing orders applies to the establishment.

Chapter IV of the Industrial Relations Code, dealing with standing orders, applies to industrial establishments employing 300 or more workers, or which employed that number on any day in the preceding twelve months, subject to the statutory exclusions and the appropriate-government framework.

For managerial, administrative or other employees falling outside the statutory definition of “worker”, disciplinary action may instead be governed principally by:

the employment contract;
company service rules;
HR policies;
certified or adopted standing orders where legally applicable;
sector-specific legislation;
constitutional or public-law service rules in government or public employment; and
general principles of natural justice where the nature of the employment and governing law require them.

An employer should therefore determine the employee’s legal status before choosing the disciplinary route.

What amounts to misconduct?

Misconduct should ordinarily be anchored in an identifiable rule, standing order, policy or contractual obligation. Common categories include:

theft, fraud or dishonesty;
wilful insubordination or disobedience of lawful orders;
habitual absence or late attendance;
violence, threats or riotous behaviour;
wilful damage to employer property;
falsification of records;
unauthorised disclosure of confidential information;
conflict of interest;
data theft or unauthorised transfer of company information;
serious safety violations;
sexual harassment;
unauthorised absence;
serious breach of workplace security rules; and
other conduct expressly defined as misconduct in the applicable standing orders or service rules.

The employer should avoid inventing a misconduct only after the event. The safer approach is to identify the exact provision allegedly violated and reproduce it in the charge-sheet.

Preliminary investigation is not the domestic enquiry

A preliminary investigation is ordinarily used to determine whether there is sufficient material to frame a disciplinary charge. It may involve preservation of CCTV, emails, access logs, financial records, witness accounts, device records, attendance data or internal audit material.

It is not a substitute for the formal domestic enquiry where disputed charges are to be adjudicated.

Material collected behind the employee’s back cannot ordinarily be treated as conclusive proof in the formal enquiry without giving the employee a fair opportunity to confront the evidence where natural justice requires it.

How should a charge-sheet be drafted?

A disciplinary charge-sheet should be specific enough to enable the employee to understand and answer the allegation. Each charge should identify:

the date or period of the alleged act;
the place or system involved;
the specific conduct alleged;
the rule, standing order or policy said to have been violated;
the material particulars necessary for defence;
the documents or broad evidentiary basis relied upon, where appropriate; and
the time allowed for submission of a written explanation.

Charges such as “serious misconduct”, “loss of confidence” or “behaviour against company interest” are weak if they are not supported by factual particulars.

Can multiple charges be included?

Yes, but they should be separately framed and separately proved. Where several events are relied upon, the employer should avoid collapsing them into one vague omnibus allegation.

The enquiry officer’s report should likewise record findings charge by charge.

Suspension pending enquiry

Suspension pending disciplinary enquiry is not the same as punishment. Its purpose is ordinarily preventive: to protect the investigation, workplace, witnesses, records or operational integrity while the charges are examined.

Suspension should therefore be considered where continued presence of the worker may:

interfere with evidence;
influence witnesses;
create safety or security concerns;
risk further loss or data compromise; or
materially disrupt the enquiry.

The order should identify that the suspension is pending investigation or enquiry and should comply with the applicable standing orders and subsistence-allowance requirements.

Section 38: 90-day ordinary timeline

Section 38(1) of the Industrial Relations Code, 2020 provides that where a worker is suspended pending investigation or enquiry into complaints or charges of misconduct, the investigation or enquiry—or both where investigation is followed by enquiry—shall ordinarily be completed within 90 days from the date of suspension.

This does not mean that every enquiry automatically becomes void on the ninety-first day. The statutory expression is “ordinarily”. However, delay beyond the period should not be treated casually. The employer should document why additional time was necessary and whether the worker contributed to the delay.

Subsistence allowance: 50% and 75%

Section 38 also requires the standing orders to provide subsistence allowance during suspension pending investigation or enquiry.

The statutory structure provides:

50% of wages for the first 90 days of suspension; and
75% of wages for the remaining period where delay in completion of the disciplinary proceedings is not directly attributable to the worker.

Payment of subsistence allowance is not merely an accounting issue. Where non-payment materially prevents the worker from defending the proceedings, it can become a serious natural-justice objection.

Model Standing Orders, 2026

The Central Government’s Model Standing Orders, 2026 provide separate sectoral schedules for mining, manufacturing and services. They contain detailed provisions dealing with misconduct, suspension, disciplinary action, punishment, appeals and display of standing orders.

Among other things, the model framework addresses:

classification of workers;
defined categories of misconduct;
suspension pending enquiry;
subsistence allowance;
disciplinary procedure;
consideration of gravity, antecedents and mitigating or aggravating circumstances;
supply of the punishment order to the worker; and
an internal appellate mechanism against punishment.

Employers should not assume that the Model Standing Orders automatically answer every establishment-specific issue. The applicable certified standing orders, adoption status, establishment threshold and appropriate-government rules must be checked.

Natural justice: minimum ingredients of a fair domestic enquiry

The Supreme Court in Sur Enamel and Stamping Works (P) Ltd. v. Their Workmen, AIR 1963 SC 1914, identified core safeguards of a proper enquiry. In substance, the worker should be clearly informed of the charges, prosecution witnesses should ordinarily be examined in the worker’s presence, the worker should receive a fair opportunity to cross-examine them, should be permitted to lead defence evidence, and the enquiry officer should record findings with reasons.

These principles remain highly relevant under the current Code because statutory reform has not displaced the basic requirement of a fair disciplinary process.

Appointment of an enquiry officer

The enquiry officer should be impartial and should not combine incompatible roles. An individual who is a material witness to the alleged misconduct, who conducted the investigation in a manner that makes them personally committed to the accusation, or who has already prejudged the employee should ordinarily not act as the adjudicating enquiry officer.

Depending on the establishment, the enquiry may be conducted by an internal officer, external enquiry officer, committee or other authority permitted by the applicable standing orders.

Presenting officer and management evidence

Where the disciplinary process is contested, the employer should identify who will present the management case. The management should lead evidence supporting each charge rather than expect the enquiry officer to independently build the case.

Documents should be marked systematically, witnesses should identify their records, and the worker should receive the opportunity required by the governing procedure to question adverse witnesses.

Can the employee have a lawyer?

There is no universal rule that every domestic enquiry carries an absolute right to representation by an advocate. The answer depends on the applicable standing orders, service rules, contractual framework, complexity of the matter, representation permitted to the employer and governing precedent.

Where management is represented by a legally trained presenting officer and the worker faces a complex enquiry, refusal of reasonable assistance may become a fairness issue in an appropriate case.

The applicable standing orders should be checked before deciding representation rights.

Cross-examination and defence evidence

Where witness testimony is relied upon to prove disputed facts, meaningful opportunity to cross-examine is a central component of fair enquiry procedure.

The worker should also be given a reasonable opportunity to produce defence witnesses and relevant documents. The enquiry officer may regulate irrelevant, repetitive or abusive questioning, but should not prevent the worker from testing material evidence.

Digital evidence in workplace misconduct

Modern disciplinary cases frequently turn on:

emails;
WhatsApp or internal chat messages;
ERP or CRM logs;
access-control records;
GPS or fleet-management data;
CCTV;
cloud-download history;
USB or device logs;
financial system audit trails; and
company-device forensic material.

The employer should preserve the source data, access chain, timestamps and audit trail. A screenshot detached from its source may be much weaker than properly preserved system records.

Where employee monitoring or personal data is involved, the employer should also consider applicable privacy, data-protection and workplace-policy requirements.

Sexual-harassment complaints require the POSH route

Where the allegation is sexual harassment covered by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the statutory Internal Committee process must be respected. The disciplinary framework cannot be used to bypass the mandatory POSH inquiry mechanism.

For broader compliance, see POSH Compliance for Companies in Delhi NCR: Internal Committee, Policy, Inquiry, Annual Report, SHe-Box & Penalties.

Standard of proof in a domestic enquiry

A domestic enquiry is not a criminal trial. The employer is not ordinarily required to prove misconduct beyond reasonable doubt. Industrial adjudication generally examines whether the charge was established on legally sustainable material under the applicable civil or disciplinary standard and whether the enquiry was fair.

However, the seriousness of the allegation affects the quality of evidence reasonably expected. A charge of theft, fraud, data exfiltration or sexual misconduct should not be sustained on mere suspicion or conclusory assertion.

The enquiry report should be reasoned

A defensible enquiry report should contain:

the charges framed;
the employee’s response;
management evidence;
defence evidence;
material admissions or contradictions;
assessment of each charge; and
a clear finding of proved, not proved or partly proved, supported by reasons.

The enquiry officer should not recommend punishment unless the governing procedure authorises or requires that role. The disciplinary authority should independently consider the enquiry findings before imposing penalty.

Supply of enquiry report and prejudice

In ECIL v. B. Karunakar, (1993) 4 SCC 727, the Supreme Court examined the right to receive the enquiry officer’s report where the disciplinary authority is different from the enquiry officer. The broader principle is that the delinquent employee should receive a fair opportunity to answer material adverse findings before final punishment where the governing legal framework requires it.

At the same time, procedural objections are not assessed in a vacuum. In State Bank of Patiala v. S.K. Sharma, (1996) 3 SCC 364, the Supreme Court emphasised the role of prejudice in evaluating many violations of procedural rules and natural justice.

Can dismissal be imposed immediately after the report?

The disciplinary authority should first examine whether the charge is proved and whether the proposed punishment is proportionate to the misconduct.

Relevant factors may include:

gravity of misconduct;
financial or operational loss;
position of trust;
past record;
length of service;
repetition or habitual conduct;
mitigating circumstances;
aggravating circumstances;
impact on safety or data integrity; and
consistency with punishment imposed in comparable cases.

The Model Standing Orders, 2026 expressly require consideration of gravity, antecedents and mitigating or aggravating circumstances before punishment.

Proportionality of punishment

Even where misconduct is proved, dismissal is not automatically the only lawful penalty. Depending on the standing orders and facts, lesser penalties may include warning, censure, fine where legally authorised, suspension, withholding of increment, demotion or another prescribed penalty.

However, serious dishonesty, theft, fraud, violence, deliberate data theft, grave safety misconduct or other misconduct destroying the employment relationship may justify severe punishment on the facts.

Industrial Tribunal scrutiny of dismissal

The Supreme Court’s decision in Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. Management, (1973) 1 SCC 813, remains foundational on the scrutiny of domestic enquiries and dismissal in industrial adjudication.

Under the current Industrial Relations Code, the Tribunal’s statutory powers in discharge or dismissal disputes must now be read through the Code, including Section 50.

An employer should therefore prepare the enquiry record on the assumption that the entire process may later be tested before the Industrial Tribunal.

Disciplinary action during pending industrial proceedings

Where an industrial dispute is already pending before a conciliation officer, arbitrator, Tribunal or National Industrial Tribunal, Section 90 of the Industrial Relations Code imposes restrictions on prejudicial alteration of service conditions and disciplinary action in specified circumstances.

For misconduct connected with the pending dispute, written permission of the authority may be required. For misconduct unconnected with the dispute, the Code contains a separate approval framework, including the one-month-wage requirement in applicable dismissal cases.

This is a high-risk area. Employers should verify Section 90 before dismissing a worker who is connected with a pending industrial dispute.

Protected workers require additional caution

Trade-union office-bearers recognised as protected workers receive additional statutory safeguards during the pendency of industrial proceedings. Disciplinary action against such workers should not be taken without checking the special restrictions in Section 90.

What if the employee refuses to participate?

A worker cannot ordinarily defeat an enquiry merely by refusing to participate after proper notice. The employer should maintain proof of service, record adjournments reasonably, and give a final opportunity before proceeding ex parte where the governing procedure permits.

An ex parte enquiry must still be proved on evidence. The employee’s absence does not convert allegations into automatic proof.

What if the employee refuses to accept the charge-sheet?

Refusal to physically accept a document does not necessarily prevent service. The employer should use the modes permitted by the standing orders, contract, rules or accepted practice, such as personal tender with witness endorsement, registered or speed post, official email or other authorised electronic method.

The objective is to establish reliable proof that the employee was given notice of the charges and opportunity to respond.

Domestic enquiry checklist for employers

Identify whether the person is a “worker” under the Code.
Check whether Chapter IV standing-orders provisions apply.
Identify the applicable certified/adopted standing orders or service rules.
Preserve evidence before issuing charges.
Frame precise charges linked to specific misconduct provisions.
Allow reasonable time for written explanation.
Decide whether suspension is genuinely necessary.
Pay subsistence allowance correctly.
Track the Section 38 ninety-day ordinary timeline.
Appoint an impartial enquiry officer.
Provide documents and witness opportunities required by the procedure.
Permit meaningful cross-examination and defence evidence.
Maintain a complete enquiry record.
Obtain a reasoned finding on each charge.
Consider gravity, past record and proportionality before punishment.
Check Section 90 if industrial proceedings are pending.
Serve the final order and preserve proof of service.
Follow any internal appeal mechanism under the standing orders.

Common employer mistakes

terminating first and trying to justify misconduct later;
using vague charge-sheets;
relying on undisclosed documents;
appointing a biased enquiry officer;
denying cross-examination without legal basis;
not paying subsistence allowance;
allowing suspension enquiries to drift indefinitely;
treating screenshots as self-proving evidence;
ignoring POSH procedure for sexual-harassment allegations;
failing to consider proportionality;
ignoring a pending industrial dispute under Section 90; and
using pre-Labour-Code HR templates after the 2025–26 changes.

Common employee objections

An employee challenging disciplinary action may examine whether:

the alleged act was actually defined as misconduct;
the charge-sheet was vague;
relevant documents were withheld;
material witnesses were not produced;
cross-examination was denied;
the enquiry officer was biased;
subsistence allowance was unpaid or deficient;
the enquiry was unreasonably delayed;
the findings are unsupported by evidence;
the punishment is disproportionate;
comparable employees were treated differently without reason;
Section 90 restrictions were violated; or
the employer ignored the applicable standing orders.

Relationship with employment contracts and appointment letters

An appointment letter remains important, but it should not conflict with mandatory statutory provisions or applicable standing orders. Employers should align appointment letters, HR policies, disciplinary SOPs and standing orders so that they do not prescribe inconsistent procedures.

See Appointment Letter and Employment Contract Compliance in Delhi NCR.

Fixed-term workers and disciplinary action

Fixed-term status does not create immunity from misconduct proceedings, nor does it allow employers to disguise a punitive termination as simple expiry where the real foundation is alleged misconduct and the governing law requires disciplinary safeguards.

See Fixed-Term Employment in India After Labour Codes.

Frequently asked questions

Is a domestic enquiry compulsory before every termination?

No. The answer depends on the employee’s legal status, the reason for termination, applicable standing orders, contract, service rules and statute. A misconduct-based punitive dismissal of a covered worker is very different from lawful expiry of a fixed-term contract, resignation, redundancy or another non-punitive separation.

What is the 90-day rule for disciplinary enquiries?

Section 38(1) of the Industrial Relations Code provides that where a worker is suspended pending investigation or enquiry into misconduct, the investigation or enquiry should ordinarily be completed within 90 days from the date of suspension.

How much subsistence allowance is payable?

The statutory framework provides 50% of wages for the first 90 days and 75% thereafter where the delay is not directly attributable to the worker, subject to the governing standing orders and statutory conditions.

Can an employee be dismissed for theft or fraud?

Yes, where the misconduct is legally covered and proved through a fair process. Serious dishonesty may justify dismissal, but suspicion alone is not enough.

Can the employer rely only on CCTV or email records?

Digital evidence can be important, but the source, authenticity, context and opportunity to answer the material should be preserved. The evidentiary value depends on the nature of the record and the disciplinary procedure.

Can a domestic enquiry proceed ex parte?

Yes, where the employee, despite proper notice and reasonable opportunity, refuses or fails to participate and the applicable procedure permits an ex parte enquiry. The employer must still prove the charges through evidence.

Can a lawyer appear in a domestic enquiry?

Not automatically in every case. Representation rights depend on the applicable standing orders, service rules, employer representation and the facts.

Can a worker challenge dismissal before the Industrial Tribunal?

Yes, where the dispute falls within the Industrial Relations Code and the statutory forum has jurisdiction. The legality of the enquiry, evidence and punishment may become relevant before the Tribunal.

Key legal authorities

Industrial Relations Code, 2020 — particularly Sections 38, 50 and 90.
Industrial Relations (Central) Rules, 2026.
Model Standing Orders, 2026.
Sur Enamel and Stamping Works (P) Ltd. v. Their Workmen, AIR 1963 SC 1914.
Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. Management, (1973) 1 SCC 813.
ECIL v. B. Karunakar, (1993) 4 SCC 727.
State Bank of Patiala v. S.K. Sharma, (1996) 3 SCC 364.

Conclusion

The Labour Codes have made disciplinary compliance more structured, not less important. For covered industrial establishments, the current framework now expressly addresses the ninety-day ordinary timeline for suspension-based enquiries and the statutory subsistence-allowance structure, while the 2026 Model Standing Orders provide a modernised misconduct and disciplinary framework.

For employers, the safest approach is to treat every serious misconduct case as a potential future Tribunal record: preserve evidence, frame precise charges, conduct a neutral enquiry, pay subsistence allowance, complete proceedings promptly and pass a proportionate, reasoned final order.

For employees, the strongest challenge is not a general assertion of unfairness but a precise identification of the rule violated, the evidence withheld, the opportunity denied, the prejudice caused and the statutory consequence.

This article is for legal education and general information only. It is not solicitation or case-specific legal advice. The applicable procedure depends on the employee’s legal status, establishment threshold, standing orders, appropriate-government rules, employment contract, sector and facts of the disciplinary proceeding.

Fastrack Legal Solutions