Can We Ethically and Legally Recover Relocation Costs from Employees Who Joined Last Year?

Hi,

We provided relocation to employees who joined last year in November. Now, our management wants us to recover the same from them in case they leave the company before one year. However, we did not mention this recovery clause in the Appointment letter, Relocation reimbursement Approval note, or HR Policy handed over to the employees during joining. Also, a new circulation came stating that effective from February 09, any employee joining the Relocation will be recovered if he or she leaves the company before completion of one year starting from the DOJ.

So, my question is, can we legally or ethically recover the relocation amount from any employee who joined before February 09 or in November 2008? What are the legal and ethical implications the company can go through?

Thanks for a quick suggestion.

Ethically, it is unfair. I do not think there are any legal implications on the recovery because it is the policy of the company.

You have received an undertaking from the employees to this effect. Without a policy or undertaking, it is ultra vires to recover any money paid to the employees. This is my opinion.

I think that the relocation allowance paid to employees can be recovered from those who joined before the circular came in but have not yet completed one year of service. To check the legality of the action, the exact wordings of the circular need to be seen. Further, you can amend the circular and clearly mention the effective date of the rule as per the decision of your management. Hope this can help you.

Thanks & Regards,
Avika
09310270884
avika.kapoor@kapgrow.com