The current archaic 29 federal labor laws in India are awaiting at the departure lounge, ready to be replaced by four new labor codes (“NLC”) that are expected to land soon! Indian industry is intrigued and anxious on the potential impact of the NLC. Will there be a paradigm shift in our employment laws or will it be a case of old wine in new bottle?
Directors are a vital part of any company’s key managerial personnel (“KMP”). Directors have a fiduciary responsibility to ensure that the company complies with applicable laws and can be held liable in case of non-compliance. In, this article, we have analysed the impact of the NLC on the liabilities of directors.
The current labor laws hold inter alia the director responsible for any non-compliances on the part of the company. For example, as per the (Indian) Industrial Disputes Act, 1947[i],
"32. Offence by companies, etc.- Where a person committing an offence under this Act is a company, or other body corporate, or an association of persons (whether incorporated or not), every director, manager, secretary, agent or other officer or person concerned with the management thereof shall, unless he proves that the offence was committed without his knowledge or consent, be deemed to be guilty of such offence."
Similarly, the NLC continue to hold inter alia directors liable in case of an offence committed by the company. The corresponding provision under the NLC...
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