I was recently selected for an organization where in the Offer Letter there was a clause of Breach of Contract. It said that if I do not join I will have to pay 8% of the annual CTC. I took the job because I liked the role but I did oppose the clause, since as a candidate I wanted to look at other options which suited my career path too. They did not agree and said they put this clause since many people do not inform or do not report on the date of joining without intimation. But now before 3 weeks of my joining I want to inform them that I wish to decline since I got an offer from my dream company yesterday.
My question is that if they do not agree and I cannot pay the amount can they file a case against me. This may be termed unprofessional but I signed because at that time I did not have any other offer. I had been waiting for his other company's call and now that I have it I do not want to miss it.

From India, Mumbai
Labour Law & Hr Consultant
Bharat Gera
Principal Hr Consultant
Retired Government Servant/advocate
Deputy Commissioner Of Labour..a.p.
Soical Compliance Auditing
Ir Manager
Training, Recruitments
Insolvency N Gst Professional
Nagarkar Vinayak L
Hr And Employee Relations Consultant
Aniket Pathak
Sr. Executive Hr
+2 Others

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Dear Friend,
Yes. As you signed the contract with that particular clause so you need to abide and clear the amount failing which they have every right to proceed legally. Let us wait for the inputs from other senior professionals.

From India, Hyderabad
Strictly speaking the company can initiate action and claim cost of recruitment.
It will be difficult to quantify how much money was spent to select you only.
But proving such costs is not easy.
Asking you to pay 8% of CTC is an ad hoc figure and can be contested.
No one can predict whether company will act legally if you do not join.
Send them a polite letter expressing your inability to join now and take the plunge to join where you feel fit.
Put up the clause of 8% CTC for us to read and understand.

From India, Pune

Having signed the offer, you have accepted it as it is and also effectively communicated your acceptance to the offeror. Just because now you have a better offer, you can not rescind it.
From India, Salem

Dear Archisa,
The Company can not claim the same from your side because you have joined the organisation but now going to resign from the post. As per your statement you have said that the clause stated that It said that if I do not join I will have to pay 8% of the annual CTC, but do not mentioned that you are bound to work for a certain period.

From India, Faridabad

Thanks everyone for your valuable inputs.
Shubham: I did not join this company as I got better prospects elsewhere.
Everyobe: What if the offer letter was contingent on medical check ups, background verification etc. Is it not a conditional offer which has not been completed. Will the penalty still apply? Suggestions and comments please.

From India, Mumbai

Acceptance must be absolute and unconditional.
The company had given you an offer which you had accepted, but some stipulations like verification, medical are there from company side.
They have given an conditional offer
Your acceptance has been unconditional and you are bound by it.(But also read my answer above)
The company can still reject you as they have made a conditional offer of medicals and verification.

From India, Pune
Aniket Pathak

Dear Archisa,
If you feel that you are getting better opportunity elsewhere and you are certain about it please go for it now instead of joining here due to threat of getting dragged in court. You can't live in fear.
surely company can go legal but it has been seen that usually companies don't prefer doing it.
Also, if they put such clause in the offer letter they must have experienced such situations when would be employees didn't show up on DOJ and they sure are prepared for that. Usually recruiters for such situations always shortlist 2-3 people to whom they can extend offer to.
Now you still have 3 weeks be sure first and let them know about your incapacity of joining their company keeping it documented. you should inform them well in advance so that they can work on plan B.
All the Best...
To Respected seniors,
I know that my suggestion could seem far from right but sometimes opportunity cost is just unbearable. Also, fortune favors the Brave.

From India, Pune
The said particular clause is to create a fear only.... You can very well proceed towards the better opportunity..... The company will not waste their time, money and energy by bringing you under law on these lines.
Princely Raj

From India, Chennai
Nagarkar Vinayak L

Dear Colleague, Though my advice is not in good taste, to wriggle out of the possible deadlock, I suggest you join for a day and quit. Regards, Vinayak Nagarkar HR-Consultant
From India, Mumbai

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