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Section 60: Contracting out

The Code on Wages, 2019 (Act No. 29 of 2019) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IX: Miscellaneous
Competent Labour Forum
Act No. 29 of 2019
Section 59 All 67 Sections of Code on Wages, 2019 Section 61

Legal Commentary & Landmark Judgments: Section 60

Section 60 of the Code on Wages, 2019 enacts an absolute statutory prohibition against contracting out, declaring null and void ab initio any contract or agreement, whether entered into before or after the commencement of the Code, whereby an employee relinquishes, reduces, or waives any right or statutory benefit conferred by the Code on Wages.

  • Non-Derogable Nature of Statutory Wage Rights: Section 60 embodies the fundamental public policy principle that statutory wage standards, minimum wages, overtime rates, and statutory bonuses are non-negotiable. Any agreement attempting to waive, settle below minimum rates, or surrender statutory entitlements is void under Section 23 of the Contract Act.
  • Retrospective and Prospective Nullity: The section covers both existing contracts entered into prior to the commencement of the Code and all future agreements. Clauses in appointment letters, separation agreements, full-and-final settlement forms, or collective bargaining settlements that purport to forfeit wages or bonuses are void as a matter of law.
  • Constitutional Underpinnings in Articles 21, 23, and 39(d): Contracting out of minimum wages amounts to extracting forced labor under Article 23. The statutory ban protects vulnerable workers from coerced waivers induced by unequal economic bargaining power.
Key Landmark Precedents:
  • Central Inland Water Transport Corp. Ltd. v. Brojo Nath Ganguly (1986) 3 SCC 156: Landmark ruling establishing that unconscionable, unfair, and one-sided contractual terms extracted from weaker employees violate public policy under Section 23 of the Indian Contract Act and Article 14 of the Constitution.
  • People's Union for Democratic Rights (PUDR) v. Union of India (1982) 3 SCC 235: The Supreme Court held that an agreement to work for less than minimum wages is void, as no individual can contractually surrender the constitutional guarantee against forced labor under Article 23.
  • Sanjit Roy v. State of Rajasthan (1983) 1 SCC 525: The Supreme Court reaffirmed that the State and private employers cannot rely on any contractual waiver or special statutory exemption to pay less than the statutory minimum wage.
Courtroom Practice & Strategic Litigation Guidance:

Corporate HR and legal counsel must eliminate boilerplate 'full and final settlement' clauses that state the employee 'waives all rights to claim statutory bonuses or minimum wage differentials.' Such waivers are legally worthless under Section 60 and will not prevent the Section 45 Authority from entertaining claims. Settlements are valid only if they provide benefits equal to or higher than statutory minimum standards.

Section 59 All 67 Sections of Code on Wages, 2019 Section 61