A sales or marketing employee is now a worker under the Industrial Relations Code, 2020 unless they are employed mainly in a managerial or administrative capacity, or are employed in a supervisory capacity drawing wages above eighteen thousand rupees a month. That is a genuine change, not a restatement. Section 2(zr) names sales promotion employees in the definition itself, which removes the obstacle that decided these cases for the previous thirty years.
Part of the employment and labour law practice at S Jain & Attorneys, Bangalore.
The change matters because it decides the forum. A worker goes to conciliation and then to the Industrial Tribunal, with the retrenchment protections attached. Everyone else is left with a civil suit on the contract, which is slower and delivers damages rather than the job.
The case that shut the door in 1994
In H.R. Adyanthaya v. Sandoz (India) Ltd., decided on 11 August 1994, a bench of five judges of the Supreme Court considered whether medical representatives were workmen under Section 2(s) of the Industrial Disputes Act, 1947. The Court held that they were not. The reasoning was narrow and it was fatal. To be a workman a person had to be employed to do work of one of the listed kinds, and the Court held that the work of canvassing and promoting sales could not be included in any of those classifications.
Adyanthaya reaffirmed the older approach in May and Baker (India) Ltd. v. Workmen and rejected the wider readings that had appeared in some later decisions. The practical consequence was that a person whose main job was to promote sales sat outside the protective statute altogether, however modest the salary and however long the service. Parliament had already recognised the gap in one sector by passing the Sales Promotion Employees (Conditions of Service) Act, 1976, but that Act applied in the first instance only to establishments engaged in the pharmaceutical industry.
Key takeaway. The old exclusion of sales staff was never about seniority or pay. It was a drafting problem. Promotion of sales was simply missing from the list of categories, and five judges declined to read it in.
What Section 2(zr) now says
The Code takes the direct route. After setting out the familiar categories of manual, unskilled, skilled, technical, operational, clerical or supervisory work, the definition of worker continues, and includes working journalists as defined in clause (f) of section 2 of the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 and sales promotion employees as defined in clause (d) of section 2 of the Sales Promotion Employees (Conditions of Service) Act, 1976.
That inclusion does the work that the Supreme Court declined to do by interpretation. Promotion of sales no longer has to be squeezed into one of the listed categories, because sales promotion employees are named separately and brought in by the definition itself.
The exclusions still apply on top, and there are four. Armed forces personnel, police and prison staff, anyone employed mainly in a managerial or administrative capacity, and anyone employed in a supervisory capacity drawing wages exceeding eighteen thousand rupees a month.
| Question | Industrial Disputes Act, 1947 | Industrial Relations Code, 2020 |
|---|---|---|
| Is sales promotion work covered? | No. Adyanthaya held canvassing and promoting sales fell outside the listed categories | The question does not arise. Sales promotion employees are named in the inclusion in Section 2(zr) |
| Supervisory cut off | Ten thousand rupees a month | Eighteen thousand rupees a month, or as notified |
| Where the sales definition sits | Sales Promotion Employees Act, 1976, with a cut off of sixteen hundred rupees | That Act is repealed, and the OSH Code carries the same definition with the cut off at eighteen thousand rupees |
| Sector limits | The 1976 Act applied in the first instance to the pharmaceutical industry | The Code applies across industry, subject only to the four exclusions |
Three numbers carry most of the analysis for a sales or marketing employee.
Eighteen thousand
Only a supervisor above this monthly figure is excluded. A sales executive on a much higher salary who does not supervise is still a worker.
Mainly managerial
The exclusion is for those employed mainly in a managerial or administrative capacity. Occasional managerial tasks do not convert an executive into a manager.
One year and fifteen days
One year of continuous service brings Section 70 into play, and the compensation is fifteen days' average pay for every completed year.
A wrinkle worth understanding, and why it does not defeat the point
There is a loose end in the drafting. Section 2(zr) borrows its definition of sales promotion employees from the Sales Promotion Employees (Conditions of Service) Act, 1976. That Act stands repealed by the Occupational Safety, Health and Working Conditions Code, 2020, which lists it among the enactments it replaces. Both codes commenced on 21 November 2025, so on the day the Code took effect it was pointing at a statute that had ceased to exist.
The answer is straightforward, and it comes from two directions. First, the OSH Code re-enacts the definition. Its Section 2 defines sales promotion employees in the same terms, as any person employed or engaged in any establishment for hire or reward to do any work relating to promotion of sales or business, or both, excluding those in a supervisory capacity drawing wages above eighteen thousand rupees a month and those employed mainly in a managerial or administrative capacity. The old figure of sixteen hundred rupees has been brought up to eighteen thousand, which aligns it with the supervisory line in the Industrial Relations Code.
Second, Section 8(1) of the General Clauses Act, 1897 supplies the rule of construction. Where a Central Act repeals and re-enacts, with or without modification, any provision of a former enactment, references in any other enactment to the provision so repealed shall, unless a different intention appears, be construed as references to the provision so re-enacted. The reference in Section 2(zr) is therefore read as a reference to the definition now carried in the OSH Code.
Common mistake. Treating the repeal of the 1976 Act as if it deleted sales staff from the Code. It does the opposite. The definition survives in the OSH Code, and the supervisory threshold inside it rose from sixteen hundred rupees to eighteen thousand.
Two routes in, not one
It helps to see that a sales or marketing employee can qualify as a worker in either of two ways, and the second is often the stronger.
The first is the inclusion route just described, which was designed for sales promotion work. The second is the main limb of Section 2(zr) itself. A great deal of modern marketing work is operational, technical or clerical in substance. Running campaign tooling, maintaining a customer database, producing content to a brief, preparing reports, handling inside sales queues and processing orders all sit comfortably within the listed categories, quite apart from anything to do with promotion of sales.
That second route avoids the sectoral question entirely. If a dispute ever arises about how far the borrowed 1976 definition reaches beyond the industries it was written for, an employee whose actual daily work is operational or clerical does not need to answer it. The safer case is usually built on what the person did rather than on the label attached to the role.
Designation is not the test
Job titles in sales are inflated by convention. Business Development Manager, Territory Manager, Key Account Manager and Regional Head are frequently given to people who supervise nobody, approve nothing and carry an individual target. The exclusion in the Code is not triggered by the word manager. It is triggered by being employed mainly in a managerial or administrative capacity, which is a question about authority.
The practical questions are simple. Do you have people reporting to you, and can you hire, appraise or discipline them? Can you approve expenditure, discounts or credit without a further sign off? Do you set the plan or execute one that is set for you? An employee who answers no to all three is very unlikely to be excluded, whatever the visiting card says.
The same reasoning cuts the other way, which is why it is worth being realistic. In Mphasis Limited v. Ashok S Narayanpur, decided by the Karnataka High Court on 25 January 2024, a project lead was held not to be a workman. The Court looked at the principal nature of the duties, found that preparing estimates, designing solutions and sharing domain knowledge amounted to managerial work involving decision making, and set aside the reinstatement order for want of jurisdiction. That case was decided under the old Act, but the categories carried into Section 2(zr) are the same, and the dominant duties approach carries over with them.
What worker status actually gets you
The protections are procedural, and that is their strength, because procedure is easy to prove and hard to excuse.
- Section 70 requires one month's written notice indicating the reasons, or wages in lieu, before a worker with one year of continuous service can be retrenched.
- The same section requires compensation of fifteen days' average pay for every completed year of continuous service, and for any part beyond six months, paid at the time of retrenchment.
- It also requires notice to the appropriate Government in the prescribed manner.
- Section 71 requires the employer ordinarily to retrench the last person employed in that category, unless reasons are recorded for choosing someone else.
- Section 72 gives a retrenched worker preference if the employer takes on people again for that category.
Missing a target is not misconduct, and this distinction is regularly blurred. If a company treats underperformance as a disciplinary matter it must run an inquiry and observe natural justice. If it treats it as a business decision to let someone go, that is a termination for a reason, which is retrenchment under Section 2(zh), and Section 70 applies. What an employer cannot do is take the informality of the first route and the cost of neither.
Three practical points decide most sales and marketing exits once status is settled.
Target is not misconduct
Treated as a business decision it is retrenchment under Section 2(zh). Treated as misconduct it needs an inquiry and natural justice before dismissal.
Commission runs separately
Unpaid incentive is a wages claim under the Code on Wages and travels separately from the termination dispute, so keep the plan and payout history.
Designation is not decisive
A manager title without authority to hire, appraise or approve spending does not trigger the managerial exclusion. Authority is the test, not the visiting card.
Scale, and one provision that will not help
Chapter X of the Code, which requires prior government permission before retrenchment, applies only where not less than three hundred workers are employed. It is also confined by Section 77(3) to a factory, a mine or a plantation. A sales office, a distribution business or a marketing team therefore sits outside it regardless of headcount. The conditions in Section 70 are the ones that do the work, and they apply to establishments generally.
The Karnataka route, and the clock
For anyone who falls outside the definition of worker, Section 39 of the Karnataka Shops and Commercial Establishments Act, 1961 remains available. It is State legislation and appears in none of the four repeal lists. It bars removal or dismissal of an employee with six months of continuous service except for a reasonable cause and without one month's notice or pay in lieu, gives an appeal to the prescribed authority, allows compensation not exceeding one month's pay for every year of service, and preserves any more favourable terms available elsewhere.
Whichever route applies, the timing is now unforgiving. Under the proviso to Section 53(1) the conciliation officer cannot hold proceedings more than two years after the dispute arose, and Section 53(6) requires the Tribunal application within ninety days of receiving the failure report.
Deadline warning. The three year window under the old Act is gone. Two years to conciliation, then ninety days to the Tribunal, and both run from events that are easy to miss while a settlement is being discussed.
Frequently Asked Questions
I am a Business Development Manager on a good salary. Am I still a worker?
Possibly, yes. Salary alone does not exclude you. The eighteen thousand rupee figure applies only to someone employed in a supervisory capacity, so a high earning individual contributor who supervises nobody is not excluded by it. The separate exclusion is for those employed mainly in a managerial or administrative capacity, which is about authority rather than pay.
Does this only apply to pharmaceutical companies?
The 1976 Act applied in the first instance to the pharmaceutical industry, and that history is why the question is asked. The Industrial Relations Code is not confined that way. In any event most marketing and inside sales work also falls within the operational, technical or clerical categories in the main part of Section 2(zr), which does not depend on the 1976 Act at all.
My targets were unrealistic and I was let go for non-performance. What is the claim?
Frame it correctly first. If the company treated it as misconduct it needed an inquiry. If it treated it as a business decision it was a retrenchment, and Section 70 required notice, compensation and notice to the Government. Failure to follow that procedure is the claim, and it does not require you to prove the targets were unfair.
Can the company withhold my commission when I leave?
Unpaid commission is a wages claim and it travels separately from the termination dispute, under the Code on Wages. Keep the incentive plan, the achievement statements and the payout history, because these claims usually turn on the plan's own wording about what happens on exit.
Is a sales employee on a fixed term contract covered?
Expiry of a fixed term is carved out of the definition of retrenchment, so the Section 70 protections do not attach on a genuine expiry. A fixed term used as a device to defeat protection is a different matter. Fixed term employees do now receive pro rata gratuity without the usual five year qualifying period.
What is a supervisory capacity?
Broadly it means directing and overseeing the work of others, with some authority over how they do it. A person who reports on their own numbers, or who coordinates without any power to direct, is not usually in a supervisory capacity merely because juniors ask them questions.
Does the change apply to a termination that happened before 21 November 2025?
No. The codes commenced on 21 November 2025 and the earlier law governs earlier terminations, which for a sales role means the position under Adyanthaya. Check the date of termination before anything else, and check the limitation position at the same time.
I work in marketing for a company with fewer than three hundred employees. Does that matter?
Not for these protections. The three hundred figure belongs to Chapter X, which requires prior government permission and is confined to factories, mines and plantations. The Section 70 conditions apply irrespective of that threshold.
This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.
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