Received a Dues Recovery Letter from My Old Job – What Are the Legal Risks If I Don't Pay?

Hi,

I have received a letter from my previous company asking me to settle my dues of 64000/-. I want to know am I legally bound to do so. If I do not pay it, what are the legal consequences?

The background is that I worked in this company for 4 months. My probation period ended after 3 months. However, since the work was not suitable to my profile and experience, I managed to find a new job and have been working in this new company for the last 7 months. The notice period in my previous company was 2 months. Nonetheless, as I was completely frustrated with the work given to me, I resigned, giving them a notice period of 15 days. After submitting my resignation letter, I was not called for any exit discussion by my managers. It appeared that they did not take my resignation seriously. Consequently, I left after completing my pending work and joined the new company. I had shown my resignation letter, signed by my manager, to my new employer, and they were okay with it for onboarding me.

Now, the company has sent me a letter asking me to settle my dues. I do not understand how a company can ask for such a substantial amount from an employee who worked there for only 4 months.

Can anyone tell me if there would be any legal consequences against me if I do not pay the recovery amount?

For the time being, do not respond to the letter sent by your previous company. If you do not reply, normally, they may send another letter asking you to pay the amount. To that letter, you may put a counter asking for clarifications as to why the amount should be recovered from you. Once the resignation is accepted unconditionally and you are relieved from service, the company cannot ask for the amount even if the terms of the appointment order say so. It should not be the case that when a company's financial position weakens, they immediately send letters to all previous employees, even though they had left some seven or more months ago, and call them to pay huge sums towards notice pay. Therefore, you need not take this letter as a serious issue.

Regards, Madhu.T.K

Dear [Recipient],

Please note that the contract between you and the employer stipulates that after the completion of the three-month probation period, you are required to provide one month's notice. However, you have not fulfilled this requirement, thereby breaching the contract. If the company chooses to do so, they may initiate a recovery case against you.

Regards,

JS Malik

But is it not a breach of contract that the company starts asking me to work on Saturdays and Sundays, that too 12 hours? Is it not a breach of contract that the company recruited me saying I would be working on skills that I have experience in, but later assigned me some BPO kind of work?

I have already submitted a resignation letter which is signed by my manager, but I have not received any response from them regarding my release date. Does it make any sense to stay there if I have no work in hand and have completed my current assignments? All I want to do is get out of this current mess and start with a new company.

Additionally, I have discussed all these issues with my new employer. After our discussion, they mentioned that it would be fine if I simply show them the resignation letter and join without a relieving letter.

Hi Indra,

First of all, you need to check whether you signed a contract on stamp paper, i.e., a bond, or if it was stated in your appointment letter. If it's not a bond, then there's no need to worry. Please check if you have received a notice from the company, either via post or through a courier. If it is through the post, it indicates that they are taking steps to involve you in this matter.

Regarding your resignation, it is valid whether the company accepts it or not. Additionally, you provided them with a 15-day notice, giving them the option to recover any outstanding amounts during your employment. As Madhu suggested, it is advisable to remain silent for some time and observe the situation.

Please let me know if you need any further assistance.

Hi Indra,

You are on strong ground. As has been suggested, wait for their second note/reminder. Then seek an explanation from them for the amount they have asked from you. Since you have given notice, resigned, and the same has been accepted by the company, they can't do much.

Dear Indra,

Take it from me. If the recovery is made only for the notice period, the company cannot take any legal action against you whatsoever. Keep the letter with you if you wish, and if you hate the company, burn it to ashes, and then put the ash in a nice envelope and send it back to your old company. :-x After 7 months, it's really stupid of the company to send a legal notice, and this will not hold good in a labor court at all or in civil matters.

Regards,
Ukmitra

Dear Indra,

Without going through the appointment letter, we are unable to answer your query. Please also send a photocopy of the appointment letter and your resignation letter so that we can guide you accordingly.

SHISH RAM UNIYAL
09811681660

Dear Friend,

The details you have given are not adequate to provide you with the right response. In brief, can you let us know the following:

1. What are the terms and conditions of your offer letter regarding Probation?
2. What financial implications does the Offer Letter imply in case the employee leaves without serving the notice period?
3. Did you submit your resignation letter to the HR Department? - Because a signature from your reporting manager is not valid until he is the designated person to sign Resignation Acceptance Letters. (Usually, Line Managers are not allowed to accept resignation letters).
4. If yes to question 3, have you received a relieving letter and service certificate? (They are legally liable to provide you the same in case you had a clear separation).
5. Have you signed a legally valid agreement with your employer which has financial implications? (A service agreement or Bond certificates, for instance).

Regards, Girish.S.
The HR Knowledge Space - For complete HR Gyan!

Hi,

Face the situation squarely. Delaying tactics may not work. Did you receive any intimation from your previous company about non-acceptance of your resignation letter? If yes, you may be in trouble, considering that terms of employment should have been communicated to you in a legally binding manner, which is always the case with good organizations. If not, it can be safely assumed as accepted, and your liability becomes a question mark.

Take care,

Tunar

Yes, the severance terms would have been decided when you joined the company. You should ask for the detailed breakup of the amount due to be paid by you. As for not paying, I believe, depending on how the company treats the matter, they can even move the court to realize the dues. So, cover that flank also.

Dear Indira,

Take it as a good learning experience and keep sending correspondence from your end to them seeking clarification and compensation for the mental agony. Believe me, you will learn a lot, and nothing negative will happen to you.

Dear Indra,

You may want to read the 'Terms & Conditions' of your appointment letter. Also, let us know if you have signed any type of 'Employment Agreement'. If they send you another letter, please respond asking them why there was no feedback from them when you sent your resignation.

I do not think they would like to take this all the way to court. Even if they do, you already have evidence to support your position (No Exit Interview, No Verbal/Formal Communication at the time of resignation, No Discussion, Late response).

Regards,
SF

Dear Indra,

I am responding on the assumption that you have not received any relieving letter as yet. In my view, you would be liable to pay the notice period if your appointment letter states so and if you have accepted the same.

It seems that you have 'abandoned' the job and left without a relieving letter, which was not insisted upon by your current employers. You would not have been liable for the notice pay if you had left during the probation period.

I have a question for you - suppose the employer had asked you to resign after your confirmation? Would you not have termed it as 'unfair'? In such a situation, you would have been demanding the notice pay of 2 months!

Your comment that you worked for 12 hours a day or on weekends does not improve the situation... In all probability, you are working in a similar way even today!

In my personal view, it is always better to separate cordially. In your case, you should have talked to your ex-boss and worked out an amicable solution.

In retrospect, you could have also negotiated with your current employers at the time of joining to bear a part (if not the whole) of the notice pay.

Regards,

Innovation

I ought to be corrected, guys. These guys failed to give the appropriate notice, and the company has the legal right to deduct money equivalent to the notice period, or the employee has to pay for failing to waive an appropriate notice. Check whether the amount they are demanding corresponds with the monthly salary of the agreed notice period.

Also, we do not have inside information regarding the contents of the contract and its related contents. It's better to furnish us with all the contents of the contract. Without that, we are bound to mislead you.

Hi friends,

Just a different thought. Please think, before getting a job, all new joiners are usually ready to accept the terms and conditions laid down by the company (as per legal terms and conditions only). Legally, one month is permitted, and three months are allowed based on the appointment terms and conditions.

Sometimes, new employees work for 3 to 4 months, and then, when they find a new employer to switch to, they quit without following proper termination procedures (just leaving). This is ethically incorrect. The departing employee may not be concerned about the company's time spent on training, recruitment processes, replacement timings, and training, etc. (If they have to pay a notice period for new recruitment for a replacement??)

In addition, the Department Head accepts the resignation letter only for the purpose of recommending HR to follow company policy. Nowadays, employees are thinking smart by taking a copy and showing it to the new employer, and some unethical HR managers are accepting such letters, thereby encouraging these employees to secure the job.

As professionals, we should follow things ethically and legally.

Some colleagues advise ignoring such letters outright, which is truly disheartening as it shows a lack of respect for the rules and regulations of the company. We should respect and adhere to the company's norms and conditions.

If anyone is not following, we should not encourage them to deviate.

Note: Nowadays, reference check procedures are taken very seriously, and employees not following proper termination procedures may not secure good jobs in professional organizations. (Unethical practices lead to unethical companies)

If anybody is fortunate, may God save them.

If somebody is engaging in unethical practices, how can they be a good employee of the current organization?

If someone is accepting unethical practices, how can they select the right candidate for the organization?

I understand the feelings of Jagan, and I do appreciate the initiative of Jagan towards a new ethics which will help all HR professionals. But there is yet another side to the same coin. There are a lot of highly professionally managed firms that simply terminate employees without even following the basic laws in practice. The best example of this practice is the giant IT companies.

Yes, we have laws to protect employees, and only "employees" are so protected. As such, if you want to terminate the services of an employee, you need to give him notice or pay notice pay. Whereas, there is no law which makes it obligatory on the part of an employee to give notice of his leaving! Knowing this fact, why should we, the HRs, send a legal notice to an employee who has left our establishment? Certainly, if we ask for the cost of training incurred, naturally, there is some logic in it. But asking for an amount calculated in such an impression that by employing the person who left the company had gained nothing but had incurred only costs and that costs should be borne only by that employee is ridiculous. Also, the management took seven long months to decide on it!

There are a lot of employers who promise many things but do nothing as promised. That is why employees leave. My perception is that I will not allow any employee to continue if he feels unhappy with the organization. I will relieve him at the earliest. This will be my stand if I feel unhappy with an employee also.

Regards,

Madhu.T.K

Dear Indra,

Please don't post anything that identifies you. As it pertains to your previous employer's relationship, you should justify why you don't want to pay the notice period.

Jamal

Dear Mr. Madhu,

Thank you for your input.

Just a different thought.

One of our HR guys is advising the company to follow the procedure. Why should these individuals advise the management wrongly? In my experience, if you follow professionally, legally, and ethically, no employer will say NO to any requests. If an employer is asking us to follow unethical practices, we should educate them on the right procedures.

If our HR team is accepting these kinds of unprofessional practices, such as accepting letters without proper relieving procedures, it leads to an unprofessional workforce. Indirectly, we are all responsible for fostering this kind of workforce culture.

I agree on the importance of targets and timelines in business. By putting effort into hiring the right candidate, we are building the organization. If you look at our Senior HR colleagues, they followed the rules and regulations properly, had a concern for a humane approach, and helped build the organization, society, and economy. If you observe most retired employees, they have good ethics and live happily compared to our current generation. Nowadays, some of our HR team, without proper knowledge, are damaging organizations, leading to the rise of short-term companies. Employers rely on good employees.

We should not seek immediate benefits but instead have a vision and aim for long-term benefits.

As HR professionals, we should discuss good practices rather than advising and encouraging employees to ignore letters, etc., or suggest that the employer can do nothing. Indirectly, we are encouraging employees to follow unethical practices. Let the affected person go and discuss with higher officials, express the facts and views, and face the problem directly rather than hiding.

A problem is always an opportunity. Face it and build strength. Legally, nobody can collect money from an employee, but at least based on consideration, HR can help the employee by obtaining approval from management for an exemption.

HR professionals know ways to assist employees and should use them for the right cause.

Dear Vjagan,

I have gone through both our posts. It's so good to read, but for a staff member who has been harassed by the employer, these are just plain Corporate Diplomatic talks only. Sorry, but no offense intended.

The subject case at hand is of an employer who is not an ethical employer, who has sent a legal notice to mentally torture a candidate after a gap of 7 months. After being in slumber, they have realized that the "Notice Days," that's what I feel being recovered from concerned, needs to be recovered.

Our concern here is with the staff who is frightened and disillusioned, and that is what most of the experts have done – guided him with various solutions. I am sure the concern has already made a conscious decision, which is his own.

We are all here to guide, what we think is the best for the concern, that may or may not be in the best practice. Suggest you give your advice to the concern who is looking for an answer.

Hope I am making sense.

Regards,
ukmitra

Hi Ukmitra,

Thank you for your input. My suggestion is as follows: let the concern take a fight rather than flight approach.

1. Let the concern send a letter or meet the company's senior official to express the views and feelings about what happened.
2. Ask to consider exempting the payment if it was already agreed upon in the appointment letter.

Generally, no employer will attempt to collect money from employees except for a few reasons like breaching an abroad training commitment or purposefully damaging machinery. As a good HR practice, we should provide the employee with a chance to realize the mistake, and the amount can be waived off.

I do agree that legally, an employer cannot collect money from an employee without a strong reason. However, an employee can avoid creating a negative opinion about their character by approaching the problem differently. Remember, a problem often has multiple solutions.

Thank you.

Hi Indira,

This is not right. In the appointment letter, it clearly mentions the 3-month notice period clause, and you had also signed it. In my opinion, you should clear your dues. Sometimes in the future, this will create a problem for you.

Aklak - HR

Hi Indra,

This is a common scenario in most places when the HR sends you a recovery letter after a couple of months since you quit the organization. But looking at your case, the amount mentioned is way too high even if your salary per month was a lakh. They can claim recovery only on the basic pay and not on the entire amount according to the laws. However, if in your appointment letter it has been mentioned that you will be liable to pay the entire salary due for the notice period or the company will pay the salary in lieu of notice if they relieve you earlier than the actual date of resignation, then it becomes legal as you would have agreed to it by signing the letter. On the other hand, since your resignation letter has been signed by your reporting manager or supervisor, it shows that they have accepted your resignation.

You needn't worry much about this issue as they will not be able to do anything. However, I advise you to go through your appointment letter where it talks about Termination of Employment. If they talk about paying only basic pay as notice period settlement, you can always take up this issue with the Labour Dept and file a case against your previous employer.

Cheers,
Karthik.I

Hi, I have just joined this blog. Indra, can you please tell me if you have paid the amount and if there was any legal action taken against you? I too have received a recovery letter from my company asking for a significant amount. I need your advice, please respond.

Thank you.

I am also facing the same issue. I joined the company at the end of January, and due to an emergency, I went on leave from the first week of March. That leave got extended, so I sent a resignation email to my team lead and project manager before my leave period expired. However, they didn't reply to the email. When I contacted my team lead, he said, "We have considered you absconded because your leave was not approved." There was no response to the email except for the notification that the leave was not approved.

Now, they are asking for a recovery amount, stating that I did not serve the notice period. The reason they are giving is "Stopped working without intimation."

Could you please suggest what to do in this situation?

Termination Process and Probation Period Clarifications

A topic started in 2009 going live in 2016! It is good, and I hope that all who have participated in the discussion are still very active on CiteHR. If you read my earlier posts in this thread, you will find that there is a procedure to be followed to terminate an employee. At the same time, you can terminate a probationer without many procedures but by following what is stated in the termination clause of the employment contract. I understand that Ndram's case is similar to one during probation. If your appointment letter states that during the probation period, your services shall be terminated without notice and without assigning any reason, then the employer demanding a notice period would be acting illegally. This is because, during the probation period, there is no notice period as per the aforementioned presumption. Now, if there is no probation, or even during probation, a notice period is to be served, then you will have to follow that. Additionally, in the case of an employee falling under the definition of a workman or an employee to whom nobody reports, the notice period stipulation will not be binding even if the appointment order contains a specific clause. This is because you cannot have a service condition that is not legally binding and goes against the Industrial Disputes Act.

From a practical HR perspective, I must also highlight that joining an organization ahead of other candidates who genuinely seek a job and then taking leave on personal grounds, extending it further, and ultimately resigning when a better opportunity arises cannot be considered a logical approach. If the HR or the Reporting Officer has not approved the leave request, you should be seen as absconding from work, which could lead the employer to terminate your service. Whether the employer can demand notice pay is a separate matter. In essence, they cannot do so if there is a probation clause like the one discussed above. However, they can document your service as absconding, which may negatively impact your career.

Therefore, I advise that you should strive for an amicable settlement with the employer by meeting in person. If you pursue legal action, the outcome may favor you, especially if you were a workman category employee. On the other hand, if you were in a supervisory role, winning the battle might be challenging. The terms of employment are crucial, so it is vital to clarify whether you were under probation and if there were separate termination clauses related to probation.

Regards, Madhu.T.K