Employee Absconding: How Should We Handle Legal and Contractual Challenges?

Employee Agreement and Legal Implications

One employee who joined in June 2012 in Chennai as an Associate Mentor, with headquarters in Hyderabad, worked for four months. Upon joining, he signed a ₹100 non-judicial stamp paper agreement for two years. He also provided an undated cheque equivalent to two months' salary if he were to leave within the agreement period.

He left the company in October without serving any notice period or informing the head of his department. When the HR department sent a notice to rejoin and messaged him through his mobile, he stated that due to family and health conditions, he is unable to continue working, considering it as a resignation.

Despite sending another warning letter to rejoin or return the company property, the cheque deposited was dishonored due to insufficient funds, leading to a legal notice being sent.

The agreement clause states that if the employee leaves before the contract's expiry or if the company terminates the services for any reason, the employee is liable to pay two calendar months' salary as liquidated damages. Additionally, the employee is required to submit an undated cheque for two calendar months' present salary at the agreement signing.

Regarding the legal course of action, the next steps should be considered based on the terms outlined in the agreement.

Firstly, let me highlight a point: Bonds are illegal in India, but due to a certain amount of investment in the employee (training, if provided), liability can be established. Conduct a thorough investigation on the employee before proceeding with any charges. Appoint an inquiry officer at your end to oversee the investigation process.

During this process, ensure that a registered post is sent inquiring about the reasons for the employee's absence from duty. Request the employee to return any company belongings or office property to their last known address, informing them that failure to report for duty (specify the period) will result in legal action, and they must submit a resignation letter with the appropriate notice period as per their offer/appointment. If the post is not acknowledged or if there is a refusal, it can be considered a significant point, and a legal notice may be sent as a reminder.

This process should only be pursued when there is a potential loss to the company or when the employee's position is critical to the company.

Kindly review and modify as needed for clarity and legal accuracy.

Regards

Thank you, Senior. He sent a mobile resignation to his Head of the Department. When our HR Department sent a notice through email to rejoin or communicate with him personally for not rejoining the duties from his end, there was no reply.

Our legal department deposited the cheque, and after it was returned for insufficient funds, the legal department sent a legal notice. However, it was returned with the remark that the notice was sent without instructions.

Question on Bond Service Validity

My question is, taking a bond service is not valid. But when he suffered for one year without a job, our organization gave him a chance to work without any responsibility. He left without proper communication, and this may set a precedent for others. Therefore, our HR Department wants to take this matter seriously.

Previously, other employees who were on bond also left. They either submitted a request for resignation or informed us that they had found another job and left on good terms. We did not require them to cover any training expenses, nor did we impose any conditions for leaving. One or two employees even left without serving the notice period.

Challenges of Midway Departure

This practice of leaving midway, especially after being assigned a project post-training, poses challenges for the company. It takes time to train a replacement and have them ready for the job. If a project is not completed on time, it affects the company's credibility in the market. The company is dependent on such projects for its operations. What about the other employees who are dedicated and loyal to the company? One person's actions can have repercussions in this competitive environment.

Please advise.

Like Sharmila Das mentioned, bonds are not legal in India unless the company has invested in the employee's training, which is verifiable. Also, as she pointed out, please check whether your efforts would be worthwhile. Sometimes companies end up spending heavily for minimal results. I hope you understand the point being made.

Regarding the Remarks/Comments You Provided:

1. "He sent a mobile resignation to his Head of the Department" - Such forms of communication are still not acceptable in India for resignations. Legally, he remains on the company's rolls unless you have agreed to accept his resignation via mobile.

2. "The legal department sent a legal notice" - As far as I know, bounced cheque cases fall under the Criminal Procedure Code (CrPC), so you can file a police complaint immediately. However, before proceeding, ensure the employee cannot claim he was coerced into issuing the cheque. If he does, it might create additional problems.

3. "When he suffered one year without a job, our organization gave him a chance to work" - I suggest not making hiring decisions based solely on emotions. While compassion is commendable, remember that you hired him because his services were beneficial to the company, likely at a lower cost. It was a decision made in self-interest and aligned with his situation. If that was truly the case, why was a bond necessary? Please consider this perspective.

Options Available to You:

Conduct a cost-benefit analysis before pursuing legal action and consider tightening your HR processes. Implementing a surety during the bond process could be one approach. Additionally, if attrition rates are unusually high, it may indicate shortcomings in company policies, practices, or the work environment, leading to many departures during the bond period.

All the best.

Regards,
TS

I think you have not understood what Ms. Sharmila has stated. This type of bond is illegal in India. If you had provided any kind of training to him, you would be entitled to get the bond money, which is not the case, I suppose, with you. On top of it, you kept an undated and signed cheque from him, which again comes under forced labor and other illegal labor practices.

If I were you, I would not have taken any action against him to enforce the bond or for the recovery of the cheque amount as the same would have been illegal on my part. The only possible action you can take against him legally would be to recover the notice pay in lieu of the short notice served if mentioned in his appointment letter. The bond is only legal in India when you provide any training against it; otherwise, it comes under unfair labor practices and is punishable under law.

We had given him training for 15 days, and he is from another state, Chennai, so we provided him with hotel stay and covered all daily expenses for those 15 days. If we calculate this 20-day training, it exceeds his notice period pay.

In such a case, I need to see your bond to check if you have mentioned in the bond that it was signed as a result of the training provided to him. If you have done so, please go ahead and enforce the bond; you will surely succeed. I also condemn such an act from any employee.

I have already disclosed two paragraphs which include information about the damages. Is this not enough?

Liquidated Damages Clause

"By way of agreed liquidated damages, the Employee agrees to pay the same without any proof of actual damages suffered by the Company."

No other paragraphs are included regarding the amount for training. Additionally, the actual duration of the training is 15 days, not 20 days.

Forget it. If an employee does not want to work with you, why are you worried? Secondly, what will you recover from him? For two months' salary, how much time will your legal team or lawyer take to send the recovery notice?

Cost Analysis and Improvements

I suggest conducting a cost analysis and closing the case. Also, focus on how you can work on improvements:

1. Was the hiring process flawed? If yes, why?
2. Why did the employee leave? How can you retain employees?
3. Why did he not bother to communicate with HR about his departure?

You need to examine your company culture and HR practices.

Regards,