Hi,
I have received a lawyer's letter (on behalf of my ex-employer) after I have been relieved with a relieving letter. There are 2 allegations:
1) 'Another company has paid approximately Rs. 8000 to my salary account'. This is for the travel made on the interview date, and I have all the bills. The interview date was an approved leave. The ex-employer's allegation is that I have shared information for money. They came to know of this transaction either from the bank or by checking my private email account. Is it legal for anybody to scrutinize the transactions of my salary account?
2) 'I have joined a competitor company within 1 year of relieving'. I have not signed any bond for this. This clause is as per the appointment letter on the company letterhead.
Based on these two aspects, they have asked me to pay compensation of 6 months' gross salary. Are these allegations enforceable by Indian Law? What is the outcome of such proceedings?
Moreover, I have mentioned in my resignation letter that I will serve a 45-day notice period. But they relieved me in 1 day. So, can I claim for 45 days' payment of notice?
Additionally, they have also held up my normal payments like a few days' salary, earned leaves, customer's dinner bill, etc. Is there any hope to get this money?
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I have received a lawyer's letter (on behalf of my ex-employer) after I have been relieved with a relieving letter. There are 2 allegations:
1) 'Another company has paid approximately Rs. 8000 to my salary account'. This is for the travel made on the interview date, and I have all the bills. The interview date was an approved leave. The ex-employer's allegation is that I have shared information for money. They came to know of this transaction either from the bank or by checking my private email account. Is it legal for anybody to scrutinize the transactions of my salary account?
2) 'I have joined a competitor company within 1 year of relieving'. I have not signed any bond for this. This clause is as per the appointment letter on the company letterhead.
Based on these two aspects, they have asked me to pay compensation of 6 months' gross salary. Are these allegations enforceable by Indian Law? What is the outcome of such proceedings?
Moreover, I have mentioned in my resignation letter that I will serve a 45-day notice period. But they relieved me in 1 day. So, can I claim for 45 days' payment of notice?
Additionally, they have also held up my normal payments like a few days' salary, earned leaves, customer's dinner bill, etc. Is there any hope to get this money?
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Forget about the notice; no legal action can be initiated against you for joining a competitor because clauses in an agreement extended beyond termination of employment are void. No employee can be prevented from taking up employment similar to the one he was doing with his previous employer.
In Sandhya Organic Chemicals v. United Phosphorous, the Gujarat High Court held that an employee cannot be prevented from utilizing the knowledge and experience gained while being in employment. In Ambiance India Pvt Ltd vs Naveen Jain, an agreement prohibiting an employee for two years from taking employment with a present, past, or prospective customer of the plaintiff was held to be void and contrary to section 27 of the Indian Contract Act.
Though post-termination restraint agreements are void, confidentiality and non-disclosure agreements are valid and effective when exercised during the employee's service. However, if you have proof that the amount you received was just a reimbursement of travel expenses paid by the present company, the lawsuit will not be maintainable.
Regarding notice pay payable to you, you can demand the amount since you opted to serve the entire notice period, but it was the company that relieved you earlier. You can also demand reimbursements for bills, etc. However, after sending a legal notice, the actual HR culture of the company could be assessed, and they may not pay immediately but hold the amount until a settlement is made. It would be beneficial to involve another person, not necessarily an advocate, to speak to the company and convince them. A proper conciliation should be attempted first, and only if they remain adamant after the conciliation, then consider legal action.
Madhu.T.K
From India, Kannur
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4490In Sandhya Organic Chemicals v. United Phosphorous, the Gujarat High Court held that an employee cannot be prevented from utilizing the knowledge and experience gained while being in employment. In Ambiance India Pvt Ltd vs Naveen Jain, an agreement prohibiting an employee for two years from taking employment with a present, past, or prospective customer of the plaintiff was held to be void and contrary to section 27 of the Indian Contract Act.
Though post-termination restraint agreements are void, confidentiality and non-disclosure agreements are valid and effective when exercised during the employee's service. However, if you have proof that the amount you received was just a reimbursement of travel expenses paid by the present company, the lawsuit will not be maintainable.
Regarding notice pay payable to you, you can demand the amount since you opted to serve the entire notice period, but it was the company that relieved you earlier. You can also demand reimbursements for bills, etc. However, after sending a legal notice, the actual HR culture of the company could be assessed, and they may not pay immediately but hold the amount until a settlement is made. It would be beneficial to involve another person, not necessarily an advocate, to speak to the company and convince them. A proper conciliation should be attempted first, and only if they remain adamant after the conciliation, then consider legal action.
Madhu.T.K
From India, Kannur
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Mr. Madhu has mentioned very rightly. However, I feel that the letter is not sent by the HR Head; the company has consulted with an advocate, hence they may try to harass you. They have taken the pain to find out from where the money has come to your account too.
I suggest that without quoting or responding to this letter, you can send a nice request letter to the company requesting them to settle your F&F. In this letter, you can ask for your notice period (whatever is mentioned in your appointment letter), your balance salary, other dues, etc. By doing this, they will understand that you also have some demands. Being an HR person, initially avoid quarrels with management and try to settle amicably. Though the management cannot stop your move or decision, after some time, you may receive a second legal notice. It is better to consult an advocate and respond back to that, quoting all the points, including how they collected your details.
Ramadas
From India, Chennai
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I suggest that without quoting or responding to this letter, you can send a nice request letter to the company requesting them to settle your F&F. In this letter, you can ask for your notice period (whatever is mentioned in your appointment letter), your balance salary, other dues, etc. By doing this, they will understand that you also have some demands. Being an HR person, initially avoid quarrels with management and try to settle amicably. Though the management cannot stop your move or decision, after some time, you may receive a second legal notice. It is better to consult an advocate and respond back to that, quoting all the points, including how they collected your details.
Ramadas
From India, Chennai
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Thanks Mr. Madhu and Mr. Ramdas. I have sent a lawyer’s letter asking my money and telling them to reveal, how they accessed my account. Thank you so much for your suggestions.
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Very well advised by Mr. Madhu. Certainly, you do not need to worry about points #1 and #2. However, it is absolutely necessary to give a reply (either by yourself or a lawyer) to the legal notice at the earliest.
From India, Kolkata
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From India, Kolkata
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Dear Learned members,
With regard to the above discussion, shouldn't the advocate be taken to task? My bank account and transactions therein are privileged information, and anyone being able to access my account with or without the bank's connivance is a huge security risk that needs to be addressed immediately.
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With regard to the above discussion, shouldn't the advocate be taken to task? My bank account and transactions therein are privileged information, and anyone being able to access my account with or without the bank's connivance is a huge security risk that needs to be addressed immediately.
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Useful article about negative covenants in contract of employment. Mentions a number of judgements of SC
https://drive.google.com/open?id=0BxP4Z8a7CqZGQ29WS2MybTlJbjA
Some more judgements. You can get many more by searching.
https://drive.google.com/open?id=0BxP4Z8a7CqZGSm9fTENNUEtFelk
https://drive.google.com/open?id=0BxP4Z8a7CqZGM2FMU01aeUtyWWc
https://drive.google.com/open?id=0BxP4Z8a7CqZGVUpFMHF4SWtwQXM
In a nutshell, nobody can enforce such a contract.
The company has to pay the notice period salary to the employee if they want to relieve early
The supreme court has dealt with Notice Period extensively in the case Punjab National Bank vs P.K. Mittal on 13 February, 1989: 1989 AIR 1083, 1989 SCR (1) 612 holding
“We are of the opinion that clause (2) of the regulation and its proviso are intended not only for the protection of the bank but also for the benefit of the employee. It is common knowledge that a person proposing to resign often wavers in his decision and even in a case where he has taken a firm decision to resign, he may not be ready to go out immediately. In most cases he would need a period of adjustment and hence like to defer the actual date of relief from duties for a few months for various personal reasons. Equally an employer may like to have time to make some alternative arrangement before relieving the resigning employee. Clause (2) is carefully worded keeping both these requirements in mind. It gives the employee a period of adjustment and rethinking. It also enables the bank to have some time to arrange its affairs, with the liberty, in an appropriate case, to accept the resignation of an employee even without the requisite notice if he so desires it. The proviso in our opinion should not be interpreted as enabling a bank to thrust a resignation on an employee with effect from a date different from the one on which he can make his resignation effective under the terms of the regulation”.
From India, Salem
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https://drive.google.com/open?id=0BxP4Z8a7CqZGQ29WS2MybTlJbjA
Some more judgements. You can get many more by searching.
https://drive.google.com/open?id=0BxP4Z8a7CqZGSm9fTENNUEtFelk
https://drive.google.com/open?id=0BxP4Z8a7CqZGM2FMU01aeUtyWWc
https://drive.google.com/open?id=0BxP4Z8a7CqZGVUpFMHF4SWtwQXM
In a nutshell, nobody can enforce such a contract.
The company has to pay the notice period salary to the employee if they want to relieve early
The supreme court has dealt with Notice Period extensively in the case Punjab National Bank vs P.K. Mittal on 13 February, 1989: 1989 AIR 1083, 1989 SCR (1) 612 holding
“We are of the opinion that clause (2) of the regulation and its proviso are intended not only for the protection of the bank but also for the benefit of the employee. It is common knowledge that a person proposing to resign often wavers in his decision and even in a case where he has taken a firm decision to resign, he may not be ready to go out immediately. In most cases he would need a period of adjustment and hence like to defer the actual date of relief from duties for a few months for various personal reasons. Equally an employer may like to have time to make some alternative arrangement before relieving the resigning employee. Clause (2) is carefully worded keeping both these requirements in mind. It gives the employee a period of adjustment and rethinking. It also enables the bank to have some time to arrange its affairs, with the liberty, in an appropriate case, to accept the resignation of an employee even without the requisite notice if he so desires it. The proviso in our opinion should not be interpreted as enabling a bank to thrust a resignation on an employee with effect from a date different from the one on which he can make his resignation effective under the terms of the regulation”.
From India, Salem
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It is worth appreciating that our learned and honorable members on this forum are prompt and very helpful. This type of situation needs to be addressed sincerely, and erring employers should be taught lessons. I appreciate.
From India, Vadodara
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From India, Vadodara
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Dear Mr. Madhu,
Congratulations on explaining the situation very well. However, what would be the situation if an employee leaves the company without completing the required mandatory notice period and without formally handing over charge? Does the company have an inherent right to insist that the employee must serve the entire notice period and not settle for monetary compensation for the balance days?
From India, Thana
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Congratulations on explaining the situation very well. However, what would be the situation if an employee leaves the company without completing the required mandatory notice period and without formally handing over charge? Does the company have an inherent right to insist that the employee must serve the entire notice period and not settle for monetary compensation for the balance days?
From India, Thana
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Hi Abhaydamle,
In this case, the company issues an initial offer letter and a Non-Disclosure Agreement (NDA) to be signed by the employee. This can also be a legal requirement to ensure that the employee serves the notice period. Some companies may deduct the last month's salary and penalties from the Provident Fund (PF) if applicable.
Best Regards,
Nauman Ahmad
Founder & CEO @ PeopleQlik
Cloud HR | Payroll | HRMS | HCM Software in Saudi Arabia
From Pakistan, Lahore
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In this case, the company issues an initial offer letter and a Non-Disclosure Agreement (NDA) to be signed by the employee. This can also be a legal requirement to ensure that the employee serves the notice period. Some companies may deduct the last month's salary and penalties from the Provident Fund (PF) if applicable.
Best Regards,
Nauman Ahmad
Founder & CEO @ PeopleQlik
Cloud HR | Payroll | HRMS | HCM Software in Saudi Arabia
From Pakistan, Lahore
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Employee Law.pdf