Is My Company’s Notice Pay Clause Valid If They Broke Our Agreement? Seeking Legal Insights

Hi, I have come across a situation in which the company has signed an agreement with the employee asking for two months' notice pay. However, the other conditions at the time of signing the agreement, such as the salary enhancement after three months, which was the probation period, were not honored by the company. When the company did not increase the salary after three months and not even in the fourth month, I left the company without any notice period.

There was a clause that in case of any dispute, the matter would be referred to an arbitrator appointed by the chairman of the company.

Now that I have left the company, they are asking me to pay the following amount:
- three months' notice pay
- amount paid to HR consultants for my appointment equal to one month's salary
- the full month's salary of two employees in training me
- other miscellaneous expenses

I just want to know if the clause of the agreement between the company and me for two months' notice pay in the probation period is valid or not. Secondly, is the clause restricting an employee from taking further employment valid in law or not? On what grounds can I escape my liability if my case goes to an arbitrator? Please suggest any decided case laws, if any.

Dear casundeep,

The clause of agreement between the company and me for two months' notice pay in the probation period is valid or not - yes, it is valid.

The company can recover compensation amount as per the given appointment letter. Please check the exit clause of the appointment letter. What does it say about damages in case of a breach of contract? In most cases, a one-month notice period or salary in lieu is applicable. In your case, the notice period is three months, so I believe the company can demand three months' salary. However, demanding amounts related to consultant, training, and miscellaneous is not right. (I hope these things are not mentioned in the appointment letter).

The clause restricting an employee from taking further employment is not valid in law.

Bonded labor is abolished in India, so no one can force you to work. However, you may have to pay reasonable compensation for breach of contract.

On what grounds can I escape my liability if my case goes to an arbitrator?

Talk to HR and pay reasonable compensation (i.e., Notice pay). Most HR can do is hold your relieving letter, FnF, and give a negative PE check. I don't think you will receive an arbitrator or court letter, so don't worry. If, by chance, you receive any letter, talk to your lawyer.

For more HR information, visit: White Eagle: legal aspect for Notice pay