How to Handle Two Employees Refusing Wage Settlement: Legal Concerns and Advice Needed

Dear professionals, I have recently joined a new company, and here 18(1) settlements have been made regarding wage increases. There is no union, but there is a 5-member committee. Currently, all employees have signed the settlement except for two, and these two individuals are still being paid the old salary. The settlement that was agreed upon offers many benefits to employees. Despite numerous attempts by management to persuade these employees, they are refusing to sign.

Concern About Legal Implications
My concern is whether this situation could have any adverse legal implications under the principle of "equal pay for equal work." Please advise.

The accepted position of the law is that a settlement is effective only on the parties to the settlement. If somebody openly resents the settlement, then that employee cannot derive its benefits. There is a legal principle called "One cannot approbate and reprobate in the same breath," meaning that one cannot derive benefits while taking exception to the terms; one has to accept or reject the total package.

Even if the employee claims on the basis of equal work, there is a sound case to defend the action. You need to be sure that you have the documents to prove the employee's refusal to go by the settlement.

If any one or two of the employees, being a minority, do not agree to a settlement, it is good to involve the Conciliation Officer and the Labour Officer to make it a settlement under section 12(3) of the ID Act. The officer will obviously decide considering the majority. A settlement under section 12(3) will become binding on all employees.

To avoid such issues, it is always suggested to have a 12(3) settlement as recommended by Mr. Madhu, which is a safer and binding agreement on both existing and future employees during the valid period.

Good discussions.

Regards, Ram K Navaratna