M&A deals face delays over India’s new labour codes, buyers factor in higher worker severance costs

Many mergers and acquisition (M&A) deals in sectors involving large blue-collar or contract-based workers have been delayed due to the implementation of new labour laws, sources tell Moneycontrol. Sonakshi Das, Partner at JSA Advocates & Solicitors said that to ensure timely closure of M&A transactions, parties can explore the option to include “mutually agreed resolution” clauses in transaction documents, agreeing to resolve future issues and cost implications arising out of compliance infractions under the Labour Codes, in due course, on a good-faith basis. “This of course, could be subject to deal-specific guardrails and additional considerations linked to specific indemnity, cap on liabilities and the like,” she added. Read more