Waiver of statutory rights in employment agreements in India
The doctrine of waiver is recognised under the Indian Contract Act 1872. The general principle of waiver is that a law made specifically for the benefit and protection of an individual can be waived by him in his private capacity, without infringing any public right or policy. If the general welfare of the society is involved, it is difficult to put an estoppel on such relinquishment. However, if only the right of the party is affected, then such right is capable of being abnegated by way of an agreement in writing or conduct. Therefore, a party for whom certain statutory rights are granted, such party can waive those rights if no public interest is involved. The burden of proof lies on the party pleading the waiver, to show that an agreement waiving the right in consideration of some compromise came into existence.
As regards the waiver of rights in employment agreements is concerned, it is permissible for an employee to waive off contractual rights to potential employment claims. However, an employee is not permitted to waive off statutory rights by way of a contractual agreement with an employer. There are specific provisions in the labour legislation in India which state that the provisions of the respective legislation shall supersede and have an overriding effect over anything contained in any instrument or contract which is inconsistent with provisions of such legislation. The relevant provisions of such labour legislation are set out below:
1. Section 14 of the Payment of Gratuity Act 1972 states that “the provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract to have effect by virtue of any enactment other than this Act.”
2. Section 27(1) of the Maternity Benefit Act 1961 states that “the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service..”
3. Section 30 of the Contract Labour (Regulation and Abolition) Act 1970 states that “the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any agreement or contract of service, or in any standing orders applicable to the establishment…”
4. Section 34-A of the Payment of Bonus 1965 states that “…the provisions of this Act, shall have effect notwithstanding anything inconsistent therewith contained any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service.”
The courts in India have held that an agreement whereby an employee relinquishes any statutory right, including the right to receive a gratuity, statutory bonus, maternity benefit, over time, such a waiver would be void.
The main drawback of employment agreements in India is that there exists a vast disparity in the bargaining positions of the employer and the employee. The employer has a considerably higher bargaining power and therefore an employment agreement which waives the statutory rights of the employee may be considered as voidable on the grounds that the consent of the employees, for such waiver, was obtained by way of coercion.
Source: BW People.in