KK!HR
Management Consultancy

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Dear All, Can we maintain the service agreement with employees mentioning that "if they break the agreement period they will not get the experience/relieving letters if they want these letters they should compensate 6 months salary"; will it be accepted by labor law.
Can someone let me know the proper answer.
Thank you..


In labour laws there is nothing which goes against such a clause, but as per Contract Act 1872 such clauses are unconscionable wherein one party has an unreasonable advantage over the other. An unconscionable contract may not be illegal in terms of subject matter, but instead is unenforceable due to the circumstances in which the contract was entered into by the parties. In other words, a perfectly legal contract might be considered unconscionable based on the way that one party obtained the consent of the other. The classical case decided by the Supreme Court is the Central Water Inland Corporation vs. Brijo Nath Ganguly decided on 6th April 1986 {1986 AIR 1571, 1986 SCR (2) 278} held that a clause providing for termination of the services of a permanent employee by serving a three months notice on him is arbitrary, unreasonable, opposed to public policy and thus unconscionable. Such clauses are held to be unfair, arbitrary and unconscionable.
From India, Mumbai
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