Resignation During One Year Bond - CiteHR
Kamalkantps
Advocate
Arun Kumar Maitra
Presently Working As Company Secy. In Old
Lakshmi87*
Agm - Hro, Compensation & Benefit Mgt,
Trrajeesh
Labour Enforcement
+4 Others

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Hi,

Am a HR in a small organization there are only 5 people so we are not issuing any payslips for the employee and we are issuing only appointment letter.

Employee in my organization who joined on 1st june 2012. Still she in the probationary period of six month and she have applied for a resignation on 12th October 2012. MD accepted the resignation and asked her to complete all the work immediately now she serving her notices period only for 18days..

As per the appointment letter these are the terms & conditions for the employee.

1. Bond for one year and probation for six months.

2. In they have leave the service during the bond period they have to pay a two months salary in lieu of the signed bond.

3. Notice period for 30 days.

Resignation has been accepted now she is asking for a relieving letter & payslips immediately.

She has drawn a Rs.9300/- in his previous company and got appraisal Rs.12000/- she has never submitted his appraisal letter from his previous company still. Now her drawn salary is Rs.15K….

we have to collect the two month salary for breaking the bond.

Please clarify what to do in this situation….

Regards,

Manju

Dear Manju,

From the case cited above I presume there are lot of flaws from your company's end in the policies. The clause mentioned are not specific and precise. And in addition even your query is not clear. What is it that you would like to be guided upon??

Beginning from the end you have mentioned "She has drawn a Rs.9300/- in his previous company and got appraisal Rs.12000/- she has never submitted his appraisal letter from his previous company still. Now her drawn salary is Rs.15K….". What has her salary in previous organization to do now when she has put up her resignation. You should have verified her salary docs starting from her 1st salary to the appraised salary when she left her previous organization at the time you were to give her offer to join your organization. On what grounds did you offer her 15000??? Pl clarify.

Secondly, you said "As per the appointment letter these are the terms & conditions for the employee.

1. Bond for one year and probation for six months.

2. In they have leave the service during the bond period they have to pay a two months salary in lieu of the signed bond.

3. Notice period for 30 days."


Are you aware whether bond are really feasible. Keeping that aside if you've made a mutual agreement then why is it not mentioned clearly that one year will start from date of confirmation or from date of joining inclusive of 6 months probation i.e. a person is liable to serve only 6 months post confirmation. This clarity will not only help the company but also to employees and yourself.

If the employee in this quote is ready to pay penalty amount what is the issue. You have not mentioned that the employee is not agreeing to pay the amount. And is the notice period of 30 days for both probationary and confirmed employee??? Pl clarify.

If issuing a relieving letter is your concern then you should issue one as your MD has accepted 18 days notice in lieu of 30 days or instead of issuing relieving letter you can mention her DOJ and LWD in the F'n'F statement and tell her that yet your company does not have practice of issuing relieving letter of probationary employees.

Pay slips you must issue her that.

Still I suggest, if you mention your point of worry with more clarity it would help others to advice.

Regards,

Hiral

Dear Ms. Manju,
The damages sought must be certain to the bonafide situation. As per your situation, an employer claiming practical distress as a result of losing the business would have to have clear evidence of this bureau distress. The nonbreaching party also has a duty to mitigate any loss by attempting to minimize any damage.
One certain thing that when your management at prudence accepted the employee's resignation, she should be sanguinely giving her 30 day notice period as she was in her probationary period. Since she served for 18 days she would be liable as good as breaching a contract with the employer. It doesnot really need for her to complete a year, hence the management agreed.
You may send out a letter to her stating the pros and con of breaching the contract and the notice in lieu. Along with the clause mentioned in the offer to her. You may ask her to complete serving the period of resignation and relieve her services with the resignation letter and F&F.

Hi Manju,

According to the situation that you have described in this case, I guess your concern is mainly that the employee broke the bond and now you wish to claim the two months salary which the employee was liable to pay against breaking the bond.

Now, First of all just to bring this to your information, bonds are illegal according to the Indian Penal Court. Supreme Court of India has mentioned that no employee can be forced to work against his/her will.

Trying to extract money from the employee can lead to company into direct trouble. Sec 368 of Indian Penal Code talks about extortion by the threatening to file a legal suit. The minimum punishment under this act is 2 two years.

According to the labour laws, any contract that is one sided doesn't hold any relevance in the court and is considered to be null and void.

As far as notice period is concerned you can only ask the employee to complete the same and not force it on her. She has resigned formally and the resignation accepted and before leaving she is also completing her responsibilities. Notice period is generally meant for this only.

Hope your query has been cleared :)

Nisha

Dear Manju,
Please understand that the bond term cannot be arbitrarily decided by the management on their own. It is only sustainable when you provide any training for which you actually spent a significant amount of money to raise the skill level of the employee. If tried to force the bond otherwise, not only the same shall be illegal but also may open a Pandora Box upon you on the contrary. When you have already accepted her resignation as evident in your query, it is imperative upon you to issue her the reliving letter if she gives proper handover in the agreed time between the management and the employee. Just because an employee has signed a bond does not means it becomes a valid and legal bond.

Dear Ms. Manju,
Actually you have no right to claim 2 months of salary from an employee for breaking a bond. REMEMBER supreme court recently stated that illegal bonds are covered under Bonded Labour Act and the violating employer is liable to be prosecuted. Also such illegal bonds amounts to violation of IPC.
Notice period is only applicable as per the provisions of Shop and Establishment Act and Approved Standing Orders provisions.
Rajeesh

Dear Nisha,

Please let me clarify two things here

1. Do not confuse yourself between Bonded Labour System, which is illegal in India and the valid contract bond which is executed validly in lieu of any training provided to the employee by the employer.

2. The purpose of this contract bond is to recover the cost of such training which the employer incurred on the training of an employee as the same is an investment from employer to generate revenue, which he is validly and legally entitled.

I am mentioning this link and please read the experience of Rekha Bhanu on page 6 of the thread and decide for yourself. Bond is not illegal per se. You can break the bond but you will have to pay the amount the employer has spent on your training. It is a two way system and not a one sided agreement. Nobody is forcing you to work for a management and if somebody does, that is illegal. If their bond is legal they need not to worry about the consequences you mentioned.

https://www.citehr.com/423676-legali...anisation.html

Hi,
In addition to all the great responses you have received I would like to add a few points.
By now I'm sure you must have realized that you have to do away with the Bond clause in your appointment letter. You may like to take up the following tasks on an immediate basis
a. Relook at your appointment letter and all the clauses. While doing so ask yourself if these are Ethical, Practical, one sided - only favoring the management or employee too.
b. Begin with payslips immediately
c. Make a check list of essential documents to keep in all personnel files for future reference
d. Lastly, do sit with your MD to understand exactly what culture do you wish to have in your organisation and going forward do look at framing policies, which will encourage this.
Regards
Richard

Yes, agree with Mr. Kamal Kant Tyagi.

To append further, there are various types of Contracts/ Agreements that an employee may sign at will.

- Insurance contracts for the benefit of the employee - Small businesses usually give two basic choices for insurance. It's usually all right with the employer if the new employee takes some time to decide on insurance contracts.

- Confidentiality agreement - This contract will make sure that the employee does not pass on business information which is vital and fleeting it to some one (competitor).

- Probationary-period contract- These are usually given to new employees which allows the employer and employee to see if the relationship is working out within the first few months. As we all know, this is to keep the employee under performance system to constantly make sure that he is flexible and happy working. Getting this in writing helps avoid confusion later on. It also serves to let the employee know that he must do his best at his job.

Some small-business owners choose to have behavioral contracts. If the employee gets written up a certain number of times for breaking business policy, procedures or rules, employment may be terminated.

I have seen many of the queries arise on contracts of bonded labour and employee contracts. I say it, we learn to differentiate and keenly observe the prespectives, sure to avoid any confusions in CiteHR to CiteHRians.

Hi,
Thanks Mr Kamal for the link. Read it thoroughly and learnt a lot from the same. I agree with the clause related to the bond against the training which is very much valid.
But now, going by the terms mentioned in the thread by Ms. Manju, there has been no mention of training. It simply says:
Going by this in my opinion there has been no training involved, which was the basis of my response.
Though I am definitely not a legal expert so, I may be wrong.
Thanks again for the valuable input. This has definitely increased my knowledge regarding the case.
BR
Nisha


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