Hi Friends, Nowadays, many companies adopt one-sided separation clauses such as resignation, termination, retrenchment, etc that look archaic and like draconian. The clause like if the company wants to terminate or discontinue the service of the employee can do so by giving short notice of 15 days for any reason and when the employee desires to leave the company, must serve 3 months notice period otherwise FNf dues, relieving letter will not be cleared. Is this clause valid and lawful in the employment contract conditions? Can it withstand legal scrutiny?
From India, Mumbai

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The employment is a contract and therefore the agreement between the 2 parties can be anything they both mutually agree on. The restriction in specific acts (eg Labour Laws, Standing Order...) then that overrides the contract law.

The only other thing is the contract act has a doctrine of discarding an agreement for undue influence or coercion. There is no real provision for someone agreeing to a disadvantageous term in a contract.

Therefore it is unlikely that the courts will stand up and stop the process.
Enforceability is another thing as the entire process is highly time consuming and expensive, so most companies will not go to court. However, they are free to put a negative BVG

From India, Mumbai
Thank You Mr. Saswat for your insights shared.

However, isn't this undue and disadvantages agreement condition when Orgs play double standards as per their interest and convenience in regard to your view,
"The only other thing is the contract act has a doctrine of discarding an agreement for undue influence or coercion. There is no real provision for someone agreeing to a disadvantageous term in a contract."?

Let me add one more clause to my first query. The companies also shrewdly put clause that during the serving phase of 3 months notice period, if the company relieves the resigned employee before the completion of 3 months NP, then salary will be given for the days the resigned employee actually worked for the days.... i.e no full lieu of salary for 3 months NP.

Isn't this serious violation of both contract doctrine and even ethical values?

It's vividly clear that even in this era when society is well conscious about social justice and fair treatment to all and a culture of CSR, this kind of greedy and over smart approach are being practised by the Organisations. Of course, there are many good organisations also who adopt good HR practices and put efforts to adhere to labour guidelines and even excel them.

The logic " What is mine will be mine and what is yours will be shared" adopted and practised by the Org must be discouraged.

Some may counter question and contest that why employees do, after all, join in such companies at first place? Need to understand the fact that it's compelling and not untrue that in this highly challenging market environment when society is facing greater unemployment challenges, employees have no choice but to join for survival and sustenance.

Here, Govt needs to introduce laws to regulate and control dictating practises by companies for better Industrial Relations to exist truly!!


From India, Mumbai

Whether the government will or will not intervene, is unfortunately, not something we can dictate...
The law will look at the law and not the ethical side of it. If a candidate signs terms which are in favour of the company, there is nothing the law will do about it, as long as the labour laws are not violated. therefore, things like working hours, minimum wages, etc are defined. There is also many terms provided in the Standing Orders. The labour commissioner will not allow modifications of Standing Orders that are detrimental to the workers.

However as the things stand, the company is free to put its terms. If you don't like it, you should have tried for a different job. It is possible that the company pays more than market and that is why people are willing to join, even on adverse terms. Or the candidate doesn't care and plans to walk off without notice. There is little the company can actually in such a case either.

From India, Mumbai
When the resigned employee doesn't serve the agreed NP, and walk off, the company very easily hold FNF even doesn't clear other things such as relieving letter, giving negative BGV, etc.

Labour laws are there but are they actually followed? Be it working hours, be it earned leave, be it statutory bonus, be it PF.....employees/workers are at the receiving end of suffering! There is the clear cut guideline that even if 240 days are not worked in a calendar year, an employee/worker is entitled to get EL based on pro rata at separation - resignation, termination or death- in 2 days of last working days as per payment of wage Act 1936. But it's refused stating eligibility criteria of 240 days working. Companies make own policies for bonus of 4%, 6%, etc proportional to number of days worked in the calendar year when 8.33% is the minimum %. Labour laws are there, but companies are formulating their own policies arbitrarily to deprive the employees' rights as per their suitabilities.

In our country, enforceability is the main problem.

From India, Mumbai
Notice Requirements for Employees

The ID Act does not provide any notice period for a resigning employee. However, the Standing Orders and/or some
of the state-specific Shops and Establishments Acts require employees to provide prior notice of a specific minimum
period to the employer before cessation of their employment following voluntary resignation. For example, under the
Punjab Shops and Commercial Establishments Act, 1958, an employee who has been in the service of the employer
continuously for a period of three months, must provide 30 days' notice or pay in lieu of that notice when they resign.
A notice period longer than the statutory notice period can be agreed in the employment contract. Where the state
law provides a particular notice period for the employee, it may not be necessary for an employee who is resigning
to give any longer notice period that may be provided for in their contract of employment.
Generally, the notice period should be similar for both parties and if the notice period is greater than the law
provides, this must be reasonable. A labour court is unlikely to accept a situation where the employer's notice period
is one month, but the employee is required to serve a longer notice period. Labour courts are likely to consider the
employee to be in a weaker bargaining position and would seek to protect the employee's interests. In such a case,
the court may require a resigning employee to serve a similar notice period to that provided to the employer (see
Central Inland Water Transport Corporation Limited and Ors. vs. Brojo Nath Ganguly and Ors (06.04.1986 -
SC)), which discusses how an employer might have higher bargaining power, rendering the employment an unequal
arrangement and violating Article 14 of the Indian Constitution).

From India, Mumbai

I think case of Central Inland Water Transport Corporation Limited and Ors. vs. Brojo Nath Ganguly and Ors is a wrong one to take. The company is a PSU and therefore the fundamental rights and the writ petition for relief would be admissible. The right of article14 does not hold against a private company or private individual. If that was the case, the contract law would not have provided specifically that the fairness of consideration is not material to a contract.

That said, lawyers will present different arguments to the courts and the courts will always give judgements that are based on the case (or even based on their own biases). The question is whether an employee can really claim that shelter confident that the court will support him, or even for that matter, have the money to fight it in the court.

From India, Mumbai
The earlier views are only derived from a Mumbai based renowned Labour lawyer.

I understand that any contract should be fair to both parties and the principle of equality should be implied in it. Contract should not be biased. Private sector employees also have the fundamental rights. The contract conditions demanding more notice period for resigning employees and allowing less notice period for employers for job termination is EXPLOITATIVE and dictatorial in nature. And not honest approach.

Refer to Punjab state laws in this regard, it's clearly mentioned 1 month notice for each party or payment in lieu of. Most Org have the same separation condition for NP ( 1 month, 2 months, 3 months ) at different position levels.

I have personally seen individual cases where the employers didn't clear their FNF dues even after the concern employees ( even at junior levels) served 1.5/2 months notice period in place of 3 months where the notice period for the employer is only 15 days. It's illegal and unlawful.

I strongly believe that no labour court will allow this kind of partiality and unfairness.

Companies are formulating this kind of policies without prior approval from the local competent authorities. Unfortunately, some HR professionals also guide them that too.

Industrial Relations can best be established if this kind of basic issues are adequately addressed and fairly practised.

From India, Mumbai

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