I got selected for a Manager role in a small IT company in Bangalore but with a "No Show" clause which I have to sign when I accept the offer letter, due to my 3 monthly Notice period. Is that clause or letter legally valid?
The clause is supposed to say that if I accept the offer letter and sign the clause and don't join the said company, I have to pay 2 months of CTC. And if they revoke the offer, they are liable to pay 2 months of that CTC to me. If I sign it, then I guess it becomes legal. But what are the chances that such companies take legal action? Have you seen cases where such firms have taken legal action against candidates?


Dear Abhishek,

The first paragraph of your post reads "I got selected for a Manager role in a small IT company in Bangalore but with a "No Show" clause which I have to sign when I accept the offer letter, due to my 3 months Notice period. Is that clause or letter legally valid".

A single-sentence paragraph is confusing. Convert the complex sentence into 2-3 simple sentences. What is the date of joining? Will it be after you serve a notice period of 90 days or overlap with the notice period?

The company that you propose to join is clear on not taking up the job. They have inserted a penalty for not joining the company but at the same time, they have made the same penalty applicable to them in case they revoke the job offer. By doing this they have converted the offer letter into a contract that is valid under the provisions of the Indian Contract Act, 1872.

Nevertheless, it is well clear that the company is protecting their interest from non-serious candidates who accept the job offer but later ditch the company by not joining it. It is a deterrence for non-serious candidates. This is because if the selected candidate refuses to join, he/she does not have any liability. He/she is not a loser in any way. In contrast, the refusal upsets the operations of the company. They have to restart the recruitment process and the post may remain vacant for several months. This could impact business also.

Now whether to accept the job offer with the penalty clause for not joining after acceptance of the offer letter is your call. In case if you fail to join, they are surely going to send you the damage claim which is three months CTC. If you fail to pay them, they could file a lawsuit against you. In India, the legal cases drag on for several years, maybe even decades. You will have to be present for each hearing. Are you prepared for the long course of litigation? Secondly, pending this kind of court case, which employer will give you a job?

Whether the company will take legal action or not is a question difficult to answer. The course of litigation is arduous to them as much to you. Nevertheless, the company has a stronger financial muscle than you. They could flex it.

Lastly, humble feedback on your quality of the post. A job candidate who is applying for the position of Manager is expected to have better writing skills. There were a few spelling errors also. I have used my ingenuity and corrected these. You could have spared a few more seconds for an accuracy check before uploading the post.

Thanks,

Dinesh Divekar

From India, Bangalore
Much appreciate the feedback. And apologies for not checking the write-up once.

Contracts are made to be honoured and not to be flouted. An employment contract is no exception. Once accepted the offer with your eyes and mind open, you have to simply join the job; no use in pondering over whether the company will actually take any legal action as rightly observed by the learned member above. It implies your basic mind set not to honour the terms of the contract, if the other party is not sure to initiate any legal action against the breach. Honesty is the best policy and it is an indispensable trait of a job-seeker.
Therefore, think deep before accepting the offer.

From India, Salem
Dear Abhisek,
The clause in your offer letter to pay 2 months of CTC by the either party fails to comply. The employer made it open for both the parties can be liable to compensate other for breach of contract.
An offer stands binding once it accepted by the both the parties. So once it gets signed by you means you accepted the terms & condition and the same can be used for legal purpose if violated. The companies can take action only limited to the extent of conditions mentioned in offer letter i.e. payment for 2 month CTC only, nothing more than of it.
It solely rests on you, whether to accept or reject the offer. In my consideration it is a good one.

From India, Mumbai
This is the first time i have seen a company offering to pay compensation for withdrawing the offer.
It shows a good culture.
If you are serious about joining the company, then the no show clause should not worry you. If you are planning to do this just to take your current salary higher by renegotiating with your company, or have other offers you may take up, then you are taking a risk. A company putting this clause must be ready with lawyers

From India, Mumbai
Hi, I am preparing an offer with " No show Penalty clause" Can anyone help me with the exact clause structure which helps to create one for our company. Thank you!!
From India, Bengaluru
Actually, any document or appointment letter is to be read as a whole and not in piecemeal. Expert opinion could only be given after perusing the document.

-S. K. Mittal
Industrial & Labour Lawyer
9319956443

From India, Faridabad

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