Section 218 of the Companies Act, 2013
Section 218 of the Companies Act, 2013 deals with the protection of employees during legal proceedings involving the company, especially during investigations or prosecutions.
✅ Section 218 – Protection of Employees During Investigation or Proceedings
Purpose:
To protect employees of a company from being unfairly removed, suspended, dismissed, demoted, or harassed during the pendency of any investigation, inquiry, or prosecution under the Companies Act.
Key Provisions:
Prior Approval Required:
If any investigation or prosecution is pending under the Act against a company, no employee (including directors, managers, etc.) can be:
Dismissed
Discharged
Suspended
Punished or demoted
Application to Tribunal:
The company must make an application to the Tribunal stating the action it wants to take against the employee.
The Tribunal may give the employee a chance to be heard before deciding.
Tribunal's Role:
It will decide whether the proposed action is justified or if it should be disallowed to prevent victimization or misuse during investigations.
Time Limit:
The Tribunal must communicate its decision within 30 days from the date of receipt of the application.
📌 Objective:
This section ensures that employees are not targeted or harassed under the guise of disciplinary action during a legal proceeding or investigation related to the company.
⚖️ Example:
If a company is under investigation for financial fraud and it wants to suspend a senior employee (who might be a whistleblower or witness), it must first get approval from the NCLT under Section 218.
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