Labour Law

Implications of the Labour Codes on existing settlements under the Industrial Disputes Act, 1947

January 7, 2022

In case of Social Security Code and OSH Code if the settlement has provisions that are more favourable to the employee compared to the provisions of the Codes, then, the provisions of the settlement that are favourable to the employee will continue to operate and the remainder of the provisions of the settlement agreement will cease to have effect given the overriding effect that the respective Codes have envisaged for its provisions.

Let me start by saying that the issue of validity of the existing statutory settlement vis-à-vis the Labour Codes is a grey area. A lot will depend on if and how the Courts deal with this issue. Nevertheless, it is a subject that merits bestowing some thought to.

Before we get into the implications of the Labour Codes on existing statutory settlements, a little understanding of the relevant statutory provisions will be apposite.

Let me point out that the Industrial Relations Code (“IRC”) has similar provisions compared to Industrial Disputes Act on how settlement is to be made, on whom the settlement is binding, when does a settlement take effect and for how long it remains in force, once a valid settlement agreement comes into existence.

Under the Scheme of IDA as well as the IR Code, employers and their workers are free to enter into a settlement. Such settlement can be entered into without or without involvement of any formal mechanism under the IDA/IRC.

Based on the definition of the term “Settlement” given in section 2(p)...

Ranjan Mukherjee

Head Legal of the Defence Business of diversified Indian conglomerate L&T. Ranjan excels in strategic advisory, risk management & compliances, litigation and complex transactions, amongst others. With 21 years of experience, he is a consummate legal professional with experience in diverse industries and legal practice.

View all posts