Jairam Ramesh Flags Supreme Court Shift on Labour Rights

NEW DELHI, August 22, 2026: Congress leader Jairam Ramesh has criticised the Supreme Court’s recent judgment in State of Uttar Pradesh v. Jai Bir Singh, expressing concern that its reformulation of the long-standing “Triple Test” for determining what constitutes an “industry” could create uncertainty over workers’ labour protections.

In a statement, Ramesh said the issue had assumed greater significance against the backdrop of the Modi government’s Industrial Relations Code, 2020, which he alleged had weakened important safeguards for workers.

A five-judge majority of the Supreme Court on August 20, 2026, “hypothesised” a reformulation of the Triple Test laid down in the landmark 1978 judgment in Bangalore Water Supply & Sewerage Board v. A. Rajappa.

The 1978 judgment identified three broad elements for determining whether an activity constitutes an industry: systematic activity; cooperation between employers and employees; and the production or distribution of goods or services intended to satisfy human wants and wishes, excluding purely spiritual or religious services.

The court had also held that the absence of a profit motive did not by itself exclude an activity from the definition of an industry, meaning charitable institutions and public bodies could fall within its ambit. Core sovereign functions, including the judiciary, law and order and defence, were treated as exceptions.

Ramesh said the Triple Test had provided a broad and settled framework for nearly five decades under the Industrial Disputes Act, 1947, bringing a wide range of workers within the protection of labour law.

According to Ramesh, the Supreme Court’s 2026 majority opinion narrows that approach in two significant respects. First, it requires an activity to possess a “discernible commercial character” resembling trade or business. Second, it expands the scope of the exemption for sovereign functions, potentially taking a wider range of government activities outside the definition of “industry”.

The Congress leader acknowledged that the Supreme Court had clarified that the reformulation would not affect concluded or pending proceedings under the erstwhile Industrial Disputes Act. He also noted that the judgment would not govern the interpretation of the new Industrial Relations Code.

However, Ramesh argued that leaving the proposed reformulation on record could create an “interpretive vacuum”, potentially leading to further litigation and uncertainty before Labour Courts and Industrial Tribunals.

He warned that the uncertainty could become particularly significant because the Industrial Relations Code gives the Central Government powers to exclude additional categories of establishments from its ambit.

Ramesh also praised Justice B.V. Nagarathna’s dissenting opinion, describing it as “courageous, clear and compelling”. He said the judge had correctly maintained that the Triple Test in the Bangalore Water Supply case did not require reconsideration and had emphasised the importance of judicial certainty.

According to Ramesh, Justice Nagarathna had also observed that established jurisprudence under the old law could help inform the interpretation of the new Code, rather than the new Code being used to reopen settled legal principles under the previous legislation.

Ramesh said the August 2026 judgment was concerning because it introduced uncertainty into labour relations at a time when clarity was essential for maintaining industrial peace.

He further argued that in an increasingly open economy, where private entities are delivering a growing range of services, any narrowing of the definition of “industry” could potentially reduce the number of workers covered by labour protections.