Dinesh Divekar
Business Mentor, Consultant And Trainer
Jeevarathnam
Sr. Manager Hr/admin
Gpagarwal
Ngo Kastaharan (for Legal Help )
Purchase@sajjalabio.com
Manager - Purchase & Hr
AgentA1
Chowkidar
+3 Others

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Dear Forum Memebers,

I am Staffing manager at one of the leading (MNC) IT companies. I have a case at hand wherein one of our employee has refued to respect the notice period obligation and need some legal guidance on that.

As a company, we had a policy of 2 months of notice period at the time when the employee in the question joined the organization (around a year back). Then, after the employee worked for around 7 months, the company decided to change the notice period to 3 months (from the earlier 2 months). At that time, my team sent across an email to the whole organization intimating all the employees about the change and offered them an option to resign from services if they do not accept the new notice period policy.

At the time when employee joined the company the notice period was of 2 months, the employment agreement signed by the employee mentions "2 Months of notice period". As HR team, we made a mistake of not asking the existing employees to sign a new agreement which mentioned 3 months of notice period when we changed the notice period length. We assumed that sending across an email to all the employees will work in legal context.

Now the employee has approached HR team (during his notice period) that I never signed any agreement which mentioned 3 months of notice period and hence as per the agreement signed at the time of joining, my notice period stands to be of only 2 months. He is telling that he will explore legal options if we do not release him at the end of 2 months.

So, before we proceed further, I wanted to have some suggestions on where does the law stand in this situation?

Thanks in advance for any pointers and inputs.
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Dear Agenta1,

Appoint letter is construed as "contract" between employer and employee under the provisions of Indian Contract Act, 1827. Contracts are formed when both the parties mutually agree to work together under certain terms and conditions. If either party wishes to change the terms and conditions, it communicates this change. If the change is acceptable, contract continues, else another party quits and the contract cease to exist. In your case what has happened is one-way communication.

You have changed the terms and conditions of contract. These terms and conditions were about the conditions of employment in the company. You have communicated this change through e-mail. However, then the pertinent question arises is whether you had obtained approval from the labour department for the electronic communication. Sans this approval, whether the contents of communication are enforceable by law is a moot point.

Secondly, you had given option to the employees to continue with the increased notice period or resign. But then while circulating your mail, did you include the statements "If the employee does not want to agree with the increase in the number of days of the notice period then he/she has to either submit resignation or approach HR department with his/her concerns. If no communication is received or if letter of resignation is not received by __________ (date), then it will be construed that employee has accepted the changes in the terms and conditions of employment and no correspondence will be entertained thereafter." Inclusion of these sentences would have made your case stronger.

Lesson from the incident: - Anyway, one learns after mistakes. Even now also, you may take the printout of the mail and obtain sign of each employee on acceptance of the increased notice period. File the acceptance letter in the file of the respective employee.

Solution: - Barking dogs seldom bites goes the famous idiom. Take lesson from this idiom and you may test the nerve of the employee. For this, you may send letter on acceptance of resignation. In this letter, write to him about requirement of completion of the notice period of 90 days. In case he abandons duty before completion of 90-day notice period, write that it will be considered as "misconduct' and disciplinary action would be initiated against him. If the employee has some legal adviser, then he may send you the lawyer's notice. On receipt of the notice, you may give a proper reply. However, before giving reply call the employee and find out his mental preparedness for the litigation. If you get a feeler that he has determination to fight the court case vigorously, then you may climb down from the position and allow him to quit the company with 60-day notice period.

Lessons for other HR: - Many times in my previous replies, I have laid emphasis on importance of organisational communication and how it should be given preference over personal communication. Unfortunately, for the modern workforce, all that communication means is eye contact and body language. However, flaws in the organisational communication vitiate the organisation's culture, strains the relations between the two parties and occasionally lower down the brand image of the company in the eyes of the customers or employees. Lot of informality has crept in the routine administration of the company. However, such informality has no room in the labour laws. HR professionals may note about it.

Thanks,

Dinesh Divekar
Dear Mr. Divekar,

Appreciate your detailed reply with lessons to be learned from this incident. We have certainely learned many things from this incident and we are planning now for the next steps to correct the mistake by taking written acceptance from all the remaining employees.

The employee in the question is serving in 'Managerial' capacity. Does this give any relief? I read somewhere that the clauses mentioned under Industrial Disputes Act doesn't cover employees in 'Managerial' capacity? So, can you please share some insights on this?

Unfortunately, we did not include the statement about implicit acceptance if the employee doesn't raise concern or resign. So, I think legally, this will make our case a bit weak.

The manager is working on a very important project which is critical to companies business. So, I have tremendous pressure from the management to retain employee by exploring all possible legal alternatives.

The employee has also sent a written communication informing us that he is willing to 'buy-out' notice period and he will leave by serving just 20 days (not even 2 months which is mentioned in his employment agreement). Can we refuse to accept the payment for notice period 'buy-out' and stop his Experience/Relieving letters?

Many thanks in advance!!
Dear AgentA1,

If the employee in question belongs to managerial capacity and if he resigns from the company in year's time then this speaks of your company's employee engagement activities. You could have taken precaution in identifying special category employees whose retention was critical to your business. Yours is a problem of HR Management but now you are finding legal remedy for it! Quite unfortunate!.

Anyway, let us discuss about legal issues. Firstly, issues related to notice period are not covered under Industrial Dispute Act, 1947. Therefore, there is no need to look for a solution under this law, irrespective of the designation of the employee.

Now comes the second legal remedy. How many employees work in your company? Do you have Standing Orders approved by the labour department? If yes, then I recommend you checking the clauses of the standing orders. Generally in most of the standing orders, a clause is inserted stating that it is the duty of each employee to read the notices displayed at the notice board. In your case, you might not have displayed notice about the terms and conditions of employment, however, you have sent the individual mail. Therefore, you have done more than displaying notice on the notice board. This mail to the individual was sufficient to communicate the changes.

Going further, few companies add the clause about the reading the notice board even in the appointment letter also. Have you done that? Employee has to keep himself abreast with the notices issued from time to time. What about Employee Manual? Do you have anything written about the notice board?

You have written that "The manager is working on a very important project which is critical to companies business. So, I have tremendous pressure from the management to retain employee by exploring all possible legal alternatives". If the employee is that important then why are you seeking legal remedies? You may use law as a ploy to deter him but you cannot depend exclusively on the law for retention of the employee. For a while, let us keep aside the number of days that he ought to complete before his resignation. What if employee quits after 90 days instead of 60-day notice period? Will those extra 30 days reduce your company's dependence on him?

At this stage, you may call employee and start negotiations. You need to understand why was he so mentally misaligned or disengaged so that he started looking for change after serving seven months in your company. Try to understand and remove the causes of his frustration. Secondly, to retain him, you might to give him raise. However, this could set dangerous precedent and every other employee may resort to this arm-twisting tactic.

The last solution is little vindictive. Tell the employee that if he does not serve for 90 days, he might have to forfeit his employment-cum-service certificate. He will not be issued even "No Dues Certificate" also. Tell him that legally it is no mandatory to issue these certificates. Find out whether this threat mellows him!

Thanks,

Dinesh Divekar
Dear Ajenta
Office staff & Managers are not covered under ID act but still the contract (Appointment Letter) is clear as 60 days notice period. So employee has rights to quit on completion of 60 days form the date of resignation.
If at all you have any policy of having buy-out then you can consider that else employee don't have option for buy-out if at all management is not willing to relive him/her. Yes you can refuse to accept the payment for notice period & stop his final settlement & put hold of his relieving process
If you are doing any changes in Appointment letter/contract clause you have to sign amendment for the same.
Now Do not force him to serve 90 days notice period & also employers have rights to refuse buy-out option ..S ask him to serve his full 60 days notice period along with complete his project.
Thank you Mr. Jeevarathnam and Aklakk. It is relief to know that as an employer we can refuse to accept payment towards buying-out notice period and stop the release formalities.
Can you please share the legal rules / acts which enables an employer to do this. Assessing employee's preparedness for initiating a legal suit, we will need to start exploring legal provisions for our rights as an employer. So, I will really appreciate if you can please share legal provisions which can be used in this case.
Dear Agenta1,

Amendment in service agreement is subjected to employees discretion if the employee is categorized as workman u/s 2(S) of ID act. 1947 then you have to serve the Notice of your intention atleast before 21 days to all the concern employees u/s 9A of ID act. 1947.

However if any employees disagree to amend in service agreement even then legally you cannot ask them to resign there is any policy of ask to leave.

Also you cannot hold the any employee to serve their employment forcefully. Article 19 of indian constitution which provide thr right to every citizen to do any occupation, trade or practics in any profession No employer can bound the employees to do any work not even for single day. In one of the land mark judgement wherein the supreme court held that No employee can be employed forcefully against her/his wish.

With regard to holding salary and relieving letter & Experience certificate is also unethical practics. In the land mark judgement of karnataka high court in the case of RACHAN RAJESHEKAR V BHARATH EARTH MOVERS LIMITED the court had directed the Company to issue the relieving and experience certificate on the same day to the engineer (employee) with out paying any damage to company Hence in the view of courts judgements employer never can force the employees to accept the amendmend in service condition holding salary and relieving & experience is illegal practics?

Thanks & Regards

V SHAKYA

HR & Labour, Corporate Laws Advisor
Dear Dinesh Your advice needs an appreciation. Regards G.V.Rama Krishna 9394098836
Dear V Shakya,
Appreciate your valuable inputs. I understand that based on earlier judgements by the honourable courts, the amendments in notice period might not be enforceable (in our case from 2 months to 3 months). But, what about the original notice period which the employee agreed and signed to while joining the organization. The employee is refusing to honor even that commitment. He wants to leave the organization after serving one month's of notice period instead of the two months mentioned in the employment agreement (though he has offered to pay for the 2nd month which he is not serving). Does law allow this? And the employee in the question is not covered under IDA as he does not fit into worksman category.
Can withhelding relieving/experience letters be challenged legally if employee is not serving the notice period mentioned and agreed in employment agreement?
Thank you.
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