A decade ago, there was no or little protection for employees. Earlier, employers had the freedom to treat their employees in any way they wanted to. Low wages in spite of long hours of work was not uncommon. Moreover, working conditions were also absolutely filthy, and workers were not offered with any complimentary benefits like worker’s compensation or health insurance.
According to the general rule, any stipulation in an agreement that denies an employee the right to initiate a legal action against their employers is illegal. Even after getting a fixed compensation from the employer, the employee can complain to an employment court regarding any kind of inconveniences caused by the employer. However the cases where the employee and employer decide to settle on a compromise agreement that fulfils the statutory requirements are exception to the rule.