OFFENCES AND PENALTIESCentral
Section 89 of The Industrial Relations Code, 2020
- (1)Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Code, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may, on an application of the accused person, either before or after the institution of any prosecution, be compounded by a Gazetted Officer, as the appropriate Government may, by notification, specify, for a sum of fifty per cent. of the maximum fine provided for such offence punishable with fine only and for a sum of seventy-five per cent. provided for such offence punishable with imprisonment for a term which is not more than one year or with fine, in the manner as may be prescribed: Provided that such amount of composition shall be credited to the Social Security Fund established under section 141 of the Social Security Code, 2020.
- (2)Nothing contained in sub-section (1) shall apply to an offence committed by a person for the second time or thereafter within a period of three years from the date---
- (a)of commission of a similar offence which was earlier compounded;
- (b)of commission of similar offence for which such person was earlier convicted.
- (3)Every officer referred to in sub-section (1) shall exercise the powers to compound an offence, subject to the direction, control and supervision of the appropriate Government.
- (4)Every application for the compounding of an offence shall be made in such manner as may be prescribed.
- (5)Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, against the offender in relation to whom the offence is so compounded.
- (6)Where the composition of any offence is made after the institution of any prosecution, such composition shall be brought by the officer referred to in sub-section (1) in writing, to the notice of the adjudicating officer appointed under sub-section (1) of section 85 before whom the prosecution is pending and on such notice of the composition of the offence being given, the person against whom the offence is so compounded shall be discharged.
- (7)Any person who fails to comply with an order made by the officer referred to in sub-section (1), shall be liable to pay a sum equivalent to twenty per cent. of the maximum fine provided for the offence, in addition to such fine.
- (8)No offence punishable under the provisions of this Code shall be compounded except under and in accordance with the provisions of this section.
Summary
- Certain offenses can be "compounded", which means settled by paying a fee instead of going through a full criminal trial.
- Offenses that only result in jail time, or both jail and a fine, cannot be compounded.
- Compounding is forbidden if the person committed a similar offense within the previous 3 years.
- The money collected from these settlements is sent to a specific Social Security Fund.
Practical examples
1An employer was facing a potential 2 lakh rupee fine for a first-time offense under Section 85. On August 12, 2026, he applied for compounding under Section 89. Since the offense was fine-only, he paid 1 lakh rupees (50 percent) and the case was closed.
2A company tried to settle a violation by paying a fee in 2026. However, records showed they had been convicted of a similar violation in 2024. Because it was within 3 years, Section 89 prohibited them from compounding the new offense.
FAQ
1. Where does the money from these settlement fees go?
It is credited to the Social Security Fund established under the Social Security Code, 2020.
2. What happens if I settle after a court case has already started?
If the offense is compounded while a case is pending, the officer informs the judge, and you are discharged (cleared of the charge).
Test yourself
Q1.Under Section 89 of The Industrial Relations Code, 2020, what is the settlement fee for an offense that is punishable by fine only?
Q2.Under Section 89 of The Industrial Relations Code, 2020, which fund receives the money from compounded offenses?
Q3.Under Section 89 of The Industrial Relations Code, 2020, a person cannot settle an offense if they committed a similar crime within what time period?
Q4.Under Section 89 of The Industrial Relations Code, 2020, what is the extra penalty if a person fails to comply with a compounding order?