Corporate Amicus, March 2026

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Article

New Labour Codes: Settlement Agreements and Contracting Out – Is it a possibility?

By Asish Philip, Astha Sinha, Rishita Sethi and Suryansh Baswan

With the coming into force of the new Labour Codes on 21 November 2025, the revised definition of ‘wages’ has assumed critical importance for the computation of statutory dues. Noting that settlement agreements, for engagement of blue‑collar workers, frequently include clauses providing that certain payments made thereunder shall not be taken into account for the computation of statutory dues or benefits. The article in this issue of Corporate Amicus analyses the question as to whether pending re-negotiation of such settlement agreements in alignment with the new regime, the settlement agreements can override statutory mandates or whether the labour codes must prevail. The authors discuss various judicial precedents and various issues on the Code on Social Security with respect to ‘contracting out’. According to them, this remains a nuanced issue and warrants closer examination, particularly in balancing contractual autonomy with the underlying objectives of labour welfare legislation. 

Notifications and Circulars
 

• Companies (Accounting Standards) Amendment Rules, 2026 notified
• RBI (Non-Banking Financial Companies – Miscellaneous) Amendment Directions, 2025 amended
• SEBI notifies disclosure requirements on social media platforms for regulated entities and their agents
• SEBI notifies revised regulatory reporting framework for alternative investment funds (AIFs)
• RBI (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026 notified
• RBI (Non-Banking Financial Companies - Concentration Risk Management) Second Amendment Directions, 2026 notified
• RBI (Core Investment Companies) Amendment Directions, 2026 notified
• RBI (Commercial Banks - Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026 notified
   

Ratio decidendi
 

• Dismissal of a suit for default does not constitute a ‘decision on merits’ and therefore cannot, by itself, operate as res judicata under Section 11 of the Code of Civil Procedure, 1908 – Supreme Court
• A party to a contract cannot unilaterally determine breach when liability is disputed – Supreme Court
• Contractual clauses cannot exclude all legal remedies so as to create a vacuum – Supreme Court
• Delay in filing a written statement within the 120-day period under Order VIII Rule 1 CPC (as applicable to commercial disputes) can be explained even beyond such period – Andhra Pradesh High Court
• A decree for specific performance directing execution of a sale deed does not become inexecutable merely due to absence of an express order extending time for deposit of balance sale consideration – Kerala High Court
• High Court cannot reappreciate evidence under Article 227 where concurrent findings of fact exist, and issues of title are pending before the civil court – Chhattisgarh High Court
   

News Nuggets
 

• Corporate Laws (Amendment) Bill, 2026 introduced in Lok Sabha
• SEBI Board approves major ease-of-doing-business reforms in its 213th meeting
• SEBI launches ‘Verified Label’ for stock trading apps
• Insolvency and Bankruptcy Code (Amendment) Bill, 2025 passed by Lok Sabha
• CCI advises companies to conduct self-audits on AI tools to avoid competition risks