Section 58 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 58 answers two questions: when does a settlement or award begin to bind, and for how long? A settlement runs for the period agreed, or six months by default. An award runs for one year from enforceability, extendable to a maximum of three. Both continue after expiry until sixty days after a termination notice. Our legal dispute resolution team can help you track these dates.
A settlement starts on the agreed date, or else the date the memorandum is signed, and binds for the agreed period, or six months if none is agreed, continuing until sixty days after written notice of termination (s.58(1), (2)). An award stays in operation for one year from enforceability, which the Government may shorten or extend by up to one year at a time, to a total of three years (s.58(3)). Notice to terminate is effective only if given by a party representing the majority of those bound (s.58(7)).
Sub-sections at a glance
| Sub-section | Subject |
|---|---|
| 58(1) | Start of a settlement |
| 58(2) | Duration of a settlement; continuation until notice runs |
| 58(3) | Duration of an award; Government may reduce or extend; three-year cap |
| 58(4) | Reference to the Tribunal if circumstances materially change |
| 58(5) | Awards with no continuing obligation |
| 58(6) | Award continues until sixty days after termination notice |
| 58(7) | Notice only effective if given by the majority |
Settlements: s.58(1) and (2)
Start. A settlement "shall come into operation on such date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is signed by the parties to the dispute" (s.58(1)).
Duration. It is "binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months from the date on which the memorandum of settlement is signed". It then "continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of sixty days from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties" (s.58(2)).
So a settlement does not lapse automatically at the end of its term. It runs on until a written termination notice is given and sixty days pass. Employers and unions who want a clean end date should give the notice before the term ends.
Example (invented). A wage settlement is signed on 1 April for one year and says nothing more. It binds until 31 March of the next year. It then continues to bind until sixty days after either side gives written notice of termination. If the term has expired and a written notice is given on 15 April of the next year, the settlement stops binding sixty days after 15 April.
Awards: s.58(3), (5), (6)
Default term. An award "shall, subject to the provisions of this section, remain in operation for a period of one year from the date on which the award becomes enforceable under section 55" (s.58(3)). Enforceability is covered in section 55.
Government's power over the period.
- Reduce: the appropriate Government may reduce the period "and fix such period as it thinks fit" (first proviso).
- Extend: before expiry it may extend "by any period not exceeding one year at a time", but the total period of operation of any award "does not exceed three years from the date on which it came into operation" (second proviso).
Awards with no continuing obligation (s.58(5)). Sub-section (3) does not apply to an award which "by its nature, terms or other circumstances does not impose, after it has been given effect to, any continuing obligation". A one-time payment ordered by an award is the kind of case the text points to; once it has been given effect, nothing continues.
After expiry (s.58(6)). "Notwithstanding the expiry of the period of operation under sub-section (3), the award shall continue to be binding on the parties until a period of sixty days has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award."
Changed circumstances: s.58(4)
Where the appropriate Government, "whether of its own motion or on the application of any party bound by the award", considers that since the award was made "there has been a material change in the circumstances on which it was based", it may refer the award or part of it to the Tribunal, if the award was made by the Tribunal, "for decision whether the period of operation should not, by reason of such change, be shortened". The Tribunal's decision on the reference "shall be final". The power is to shorten the period. The text does not use it to rewrite the terms.
Who can give the termination notice: s.58(7)
"No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be." For settlements with a union, the union must represent the majority of the persons bound. An individual worker, or a small group, cannot end a settlement or award by giving notice. An employer is a single party and is covered by the wording "a party representing the majority of persons bound", so read the clause carefully where the settlement involves several unions or categories.
What to do as an employer or union
| Step | Why |
|---|---|
| Record the start date, term and whether a term was agreed | Default is six months for a settlement (s.58(2)) |
| Diarise the award's enforceability date and the one-year mark | Government may extend before expiry (s.58(3)) |
| Plan any termination notice early | Binding continues until sixty days after the notice (s.58(2), (6)) |
| Check that the notice comes from the majority | Otherwise it has no effect (s.58(7)) |
The Central Rules, 2026 (G.S.R. 342(E), 8 May 2026) do not change these periods in the text reviewed; rule 4 deals with the memorandum of settlement for Central-sphere matters, and State rules apply where the State is the appropriate Government. Strikes and lock-outs are barred while a settlement or award is in operation in respect of the matters it covers (s.62(1)(g), (2)(g)); see section 62 and sections 56 and 57.
Need help with a settlement or award?
Dates in s.58 decide when you can change, renew or end an arrangement. Our legal dispute resolution team can help you calendar the terms, draft termination notices and assess whether a change in circumstances justifies a reference.
Key takeaways
- A settlement starts on the agreed date or the date of signing, and binds for the agreed period or six months (s.58(1), (2)).
- It continues until sixty days after a written termination notice (s.58(2)).
- An award operates for one year from enforceability, extendable by up to one year at a time, to a maximum of three years (s.58(3)).
- The Government may refer a materially changed award to the Tribunal on whether the period should be shortened (s.58(4)).
- A termination notice is only valid if given by a party representing the majority bound (s.58(7)).
Read next
- Section 55: form of award and commencement
- Section 56-57: wages pending proceedings and persons bound
- Section 62: prohibition of strikes and lock-outs
- Industrial disputes under the new labour codes
Disclaimer: Based on the Industrial Relations Code, 2020 (as enacted) and, where noted, the Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.