Navigating Settlement Under Section 18(1) of the Industrial Disputes Act: Key Steps to Consider

Steps for Settling Under Section 18(1) of the Industrial Disputes Act, 1947

1. Reviewing the terms and conditions of the settlement to ensure compliance with the law and company policies.
2. Consulting with relevant stakeholders, such as employees, trade unions, and legal advisors, to gather input and address any concerns.
3. Documenting the settlement agreement in writing, outlining the terms, conditions, and responsibilities of both parties.
4. Ensuring that the settlement is fair and equitable to all parties involved.
5. Obtaining necessary approvals and signatures from all parties involved in the settlement process.

By principal employer, you must mean the employer only. First, you need to have clarity about these concepts since they have specific meanings in law. A principal employer in law does not mean an immediate employer.

Basic Steps Preceding a Settlement Under Section 18(1) of the ID Act

1. There must be some demands from the union regarding terms of employment or conditions of service of workmen.
2. There must be negotiation between the management and the union on such demands.
3. There must be an agreement on all or some of the demands between the management and the union.
4. The management and the union shall agree that the matters with regard to which there is an agreement shall be deemed to have been settled.
5. The agreement shall be reduced to writing in the form of a settlement to be signed by the representatives of management and the union authorized to do so.

Hope this answers your question.

Regards,
B. Saikumar
In-House HR & IR Advisor

Mere reading between the lines of Sec. 18(1) may not serve your purpose. In fact, the whole of Chapter IV of the ID Act pertaining to the "Procedure and powers of the various authorities" needs to be read before making any interpretation of Sec. 18(1), ibid. Section 18(1) merely states about the persons on whom settlements and awards are binding and speaks only about settlements and awards which have already been arrived at or granted by the competent authority and have to be enforced. Section 11, ibid, provides details about the "procedure and powers of conciliation officers, Boards, Courts, and Tribunals" after observing which settlements and awards are made.

Understanding Section 18(1) Settlement

A Section 18(1) settlement is a mutual agreement between an employer and an employee, employees, or union representatives. It should be documented in Form-H, with the terms and settlement details clearly written down, specifying the period of the settlement. After verification, both parties should sign the settlement with witnesses. A copy of the agreement should also be submitted to the Labour Department Authorities for registration in their office.

I think learned friends M/s. Saikumar, Dhingra, and Gurumurthy have explained the prerequisites, form, and enforceability of a settlement arrived at under Sec. 18(1) of the I.D. Act, 1947. As Dhingra rightly pointed out, the proper understanding of this type of bilateral agreement, popularly called a "Sec. 18(1) settlement," would be possible only from a conjunctive reading of the sections noted by him. Particularly, the definition of the term 'settlement' u/s 2(p) is of wider import to the present discussion as it stipulates certain essential conditions from which a mere bilateral agreement becomes a settlement.