Query: “Our employees are looking at some provision of the labour code and are stating that if they resign their settlement need to happen within two days of resignation”

Relevant Acts: Code on Wages 2019, Section 18- Time limit for payment of wages

Advisory: The aforementioned labour codes are still in draft rules stage and are yet to be notified. It will get notified in the near future.

Two days is the time defined in Central Act. The states have been given the powers to define their own time. Only when the Act gets notified, can we articulate on what the Time for our state is.

Relevant Act: ESI Act Section 45AA, EPF Act Section 7B

Advisory: These two Sections are not comparable. ESI Act Section 45AA, is a process of approaching an appellate authority for an interim appeal against an order passed under Section 45A, after paying 25% of the order value as deposit.

This interim appeal cannot be rejected by the authorities. They will anyway enquire the matter, provided the 25% of the order value is paid as deposit. And then pass an order under Section 45AA.

Whereas in EPF Act Section 7B is not an appeal, but it is a request for review of the order passed under Section 7A.

In the request for review, the error (like a mathematical mistake) in the 7A order has to be clearly narrated or produce some crucial information that was missed during the 7A enquiry which is substantially affecting the order.

If the request for review is not strong enough, the authorities have the right to reject the 7B request. And if we want to challenge the matter in court, we cannot take the 7B rejection to court, as it is not a new order. Only the 7A order can be challenged in court.

So the two Act Sections are not comparable.

Relevant Act: Contract Act, Section 27

Advisory: In Indian context, the employer and employee are not seen on an equal footing by the courts. An employee’s employment is seen as a source of his survival and basic need.

In that context, an employer cannot curtail an employee’s future by stating that he cannot work for a competitor in future. Such a non-compete clause will be outrightly rejected by our courts.

The practical way would be to ring-fence certain positions where an employee is in a sensitive role, handling trade secrets. If employees in such positions are moving to a new organisation and if we can prove that they are exploiting those trade secrets and sensitive information to the detriment of your organisation, then we can enforce non-compete within the ambit of contracts Act.

For violations in such sensitive positions, we can override the trade infringement clause (which states that other businesses cannot be unduly disturbed as it infringes on their trade) of the Contract Act and enforce non-compete clause as the company trade secrets are being exploited.