How to Handle an Employee Leaving Without Notice: Legal Steps and Options?

I am working in a Software Company, and we have an employee who left the company without serving the notice period as stated in his Appointment Letter. It is clearly mentioned that he must serve a 3-month notice period or provide salary in lieu of notice. Despite us informing him of the terms, he has expressed that he is not willing to serve the notice period nor provide any salary in lieu.

Options for Addressing the Situation

a. Please inform me, can we send him a Termination Letter?
OR
b. Can we proceed with an Absconding letter?

Please provide information on the legal procedures for such a situation.

Thank you.

Handling Employee Absconding Situations

You have mentioned "the employee has left." Has he absconded, or has he given his resignation letter and stopped coming? If he has not given a letter but is not coming, it is a clear case of absconding. Send letters and mention in the letter that he has to report on or before a specific date, failing which it will be deemed that he has left the organization without notice. Then insist on Notice Pay. By doing this, you can claim the same through courts as well.

If he has given his resignation but thereafter stopped coming, inform him that he has given his resignation but stopped coming. Quote the terms of the appointment letter regarding the notice period and ask him to deposit the required amount. Mention that legal proceedings will be initiated for the recovery of Notice Pay. If he does not pay, you can file a recovery suit.

By issuing a termination letter or an abandonment letter, you lose your right for the recovery of Notice Pay. This is the best method legally, in my view.

Regards,
Sivasankaran

He has given his resignation but thereafter stopped coming. We informed him about the terms of the appointment letter and even told him to pay the notice period, but he told us he doesn't want any certificate from the company, so he will not serve the notice period.

Recovery Suit Procedure

Can you explain to me the recovery suit procedure? Will there be any other letter? The management told me we don't want to recover his notice period through any court case.

Regards,

If you do not want to go to court, then leave it. Mark him absent and work out his dues. Send a letter to him indicating the following:

1. Amount due to you from the company (Include salary if any, leave encashment, etc.).
2. Amount due from him. Calculate the notice period amount.

Inform him that he has to make the payment to the company as indicated. If he pays, it is good. If he does not pay, just keep sending reminders every month for the next six months. If you are lucky, he may pay. If he does not pay, it will be forgotten over six months.

Regards,
Sivasankaran

Dear Mr. Ajaykumar,

There is a misconception among some people that bonds are not valid in India. This is not the right position.

Let me not use the word "bond." Let us use the word "contract." Contracts are governed by the Indian Contracts Act.

If there is a service contract with clauses that are not one-sided, then such contracts are valid.

For example, in the case of resignation, if the clause states that the employee needs to serve for five years and if he does not serve for five years, a certain amount has to be paid. If a similar clause is incorporated stating that if the employer asks the employee to leave, then this clause is legally binding on both sides. The mistake people make is assuming such a clause is always one-sided, leading courts to rule it out.

Another example is training costs. There is a misconception that only training costs can be recovered. If the costs are properly determined in advance, specifying the training cost and opportunity cost, which should be reasonable, then the amount is recoverable.

I can provide more examples. I also handled a court case in the 1990s, much against my wishes as the HR Head of a company. To my surprise, the Honorable Judge asked the employee in court, "Did you sign the contract knowingly?" The employee said "yes." The Judge then asked him, "Then why not pay the compensation? Why do you say the contract is one-sided?" Then, he turned to me and asked, "I will rule that the employee will pay the compensation. However, can you give him some concession?" Directly he asked, "Can you reduce the compensation to 25%?" I said "yes." The point I learned here is that judges also try to understand the intentions of the employees.

It is incorrect to say that bonds are not valid in law in India. One-sided contracts throughout the world are invalid, as in India.

Your next question may be why many managements insist on one-sided contracts. Many think that such clauses will act as a threat to prevent employees from resigning, which is not true. In places where I have worked, I have been able to change such one-sided clauses.

Service contracts, commonly referred to as bonds, are valid if they are reasonable and transparent. Companies should use them for specific skills and not for all skills.

Regards,
T. Sivasankaran

I agree with Mr. Sivsankaran regarding the bonds. However, sometimes the bond loses its significance if the employee breaches the bond, and the employer finds it cumbersome to spend time and money on the issue.

Regards,
S.K. Johri

Dear Friends,

I need the following clarification: Suppose an employee is required to give a 3-month notice period as per the offer letter and is to be confirmed within 6 months from joining by the company. However, the company has not provided the confirmation within the specified time, and the employee has joined another company after serving a 1-month notice period, nine months after joining.

Now, the employee is claiming leave encashment from the company, stating that he has completed the probation period of six months and is eligible for leave encashment. The confirmation letter was supposed to be provided by the company; it's their fault if they didn't do so.

The company has stated that the employee must serve a 3-month notice period and, therefore, will deduct 2 months' salary (since the employee has given one month's notice).

Now, the question arises: Who is right, the employee who is requesting leave encashment or the company that is deducting 2 months' salary?

Regards,
Sachin Mishra

Dear Mr. Mishra,

According to you, the offer letter is given with a clause for a three-month notice. Does it specify that this clause will be applicable only on confirmation?

1. If the letter does not specify that the notice period is applicable only after confirmation:
In such an event, the notice period clause is applicable even during the probation period. However, you also need to examine the clause very carefully.

2. If the letter specifies that the notice period is applicable only after confirmation:
In such an event, the notice period is applicable only after a letter of confirmation is issued. Since there is no letter of confirmation, management cannot demand a three-month notice period.

Whether an employee is confirmed or on probation, on resignation, encashment of earned leave must be given by the management. If any amount is due from the employee by way of notice period, the same can be adjusted.

Regards,
T. Sivasankaran

Dear Seniors, I have a query. If a company asks an employee to leave the job on a specific date, what would the company be responsible for? Does it mean that the company has to pay the employee three months' salary or provide a notice period of two months?

Thank you.

Dear Seniors,

I'm having some queries. If the company asks the employee to leave the job on a specific date, what would the company be responsible for? Would the company have to pay the employee 3 months' salary or provide a notice period of 2 months?

If the company asks an employee to submit their resignation, and the employee resigns, legally it is considered a simple resignation. In such a case, the employee must provide notice, and if they are relieved earlier, the company can legally request them to pay for the shortfall in the notice period.

Generally, when an employee is asked to resign, there is usually an understanding regarding the relieving date and the payments involved. In my experience handling such cases, we have offered salaries for three to six months, depending on the employee's seniority and length of service.

Recovering any money from an employee who is asked to leave before the notice period is completed is not fair. Normally, two options are considered:

1. Release the employee on the same day but provide three months' notice pay or one month's notice pay.
2. Keep the employee on the payroll for a maximum of three months with salary to allow them to find a suitable job. Release them on the day they choose once they secure a job within three months/one month, as the case may be. Do not adjust leave against this period.

I recommend these practices when an employee is asked to leave due to performance issues rather than integrity concerns. Option 2 is preferred as the employee can actively search for a job while still being considered employed.

Regards,
Sivasankaran

"Yes, sir, I definitely agree with you. But if the company agrees to pay leaves to that employee while in the notice period, then what? The case was that the company neither gave the notice to that employee on paper nor set a deadline for the employee. The management said that the employee can take a maximum of two months to get an offer from another company. If he gets the same, he can resign immediately. This means it's a mutual understanding of the management."

In the instant case, it will be appropriate for you to write to the person concerned that as an employee of the company, it was incumbent upon him either to serve notice or pay salary in lieu of notice in terms of his letter of appointment and advise him to comply with the provisions. Failing which, you will be obliged to withhold his dues equivalent to the salary for the notice period as well as any other dues. In the event that he chooses either not to reply or refuses to comply with your advice, you can withhold payments as referred to above.

Please be more careful in recruiting employees in the future and also add a bond to ensure that such events do not recur.

As a matter of fact, bonds have the force of law; still, most employers prefer not to enforce them in order to save avoidable costs and time. Both aspects do not work out to be very productive especially in the private sector. However, people fear the law and will avoid violating the bond.

Nothing more seems practicable in this case.

Regards,
S.K. Johri

Subject: Re: Notice Period OR Salary in Lieu

On the said topic, you have suggested the following two points:

1. Amount due to you from the company (Include salary if any, leave encashment, etc.)
2. Amount due from him: Calculate the notice period amount.

You further suggested that:

Inform him that he has to make the payment to the company as indicated. If he pays, it is good. If he does not pay, just keep sending reminders every month for the next six months. If you are lucky, he may pay. If he does not pay, it will be forgotten over six months.

In this scenario, will you please focus on the following queries:

1. If the recovery amount is inadequate compared to the amount of the notice period, can we recover it from the PF/Gratuity amount?

2. After six months, can we retain the balance amount of his full and final dues with us, or do we have to submit it to the Welfare Fund of the concerned state government? The left employee is not in agreement with the deduction we made from his full and final settlement.

With kind regards,

Sanjeev

[QUOTE=sanjeev vable;1881335]

Subject - Re: Notice Period OR Salary in lieu

On the said topic, you have suggested the following two points:

1. Amount due to you from the company (Include salary if any, leave encashment, etc.)
2. Amount due from him: Calculate the notice period amount.

Further, you have suggested that:

Inform him that he has to make the payment to the company as indicated. If he pays, it is good. If he does not pay, just keep sending reminders every month for the next six months. If you are lucky, he may pay. If he does not pay, it will be forgotten over six months.

In this scenario, will you please focus on the following queries:

1. If the recovery amount is inadequate compared to the amount of the notice period, then can we recover it from PF/Gratuity amount?
2. After six months, can we retain the balance amount of his full and final dues with us, or do we have to submit it to the Welfare Fund of the concerned state government, as the former employee does not agree to the deduction we made from his F-Final settlement?

With kind regards,

Sanjeev

1. You cannot recover from PF. (Recovery from PF is a cumbersome process and generally not possible.)
2. You can recover from Gratuity if he is entitled to the same.
3. Six months is just a date I mentioned. It is better to close all accounts before the end of the financial year. If any amount is due to him and if he falls under the definition of an employee under the Welfare Fund, then you need to deposit it after three years. I am not explaining all the details of the Act here. Just read the Act.
4. I am not explaining all possible scenarios, but have this as a guideline:

1. Salary due to the employee.
2. Encashment of leave if any.
3. Any other payment due to him like LTA, etc.
4. Any bonus payable to the employee.
5. Any incentive payable.
6. Gratuity payable.

Total payable to the employee.

1. Any advance amount to be recovered.
2. Any tour advance pending.
3. Income Tax.
4. Shortfall of notice pay.

Total recoverable from the employee.

Please note that the shortfall of notice should be adjusted at the end after adjusting statutory deductions and advances.

Please note that this is a guideline, and you can tailor-make this to suit your organization's requirements.

Thanks,

T. Sivasankaran