Can My Friend Legally Challenge His Termination and Employment Bond? Seeking Urgent Advice

Dear Seniors,

Greetings for the day. I have one friend who was working with a manufacturing company in HR. Recently, he got terminated, with the company stating it was due to poor performance. He is under a Bond (a 3-year agreement) that includes clauses stating he must pay a percentage of his CTC if he resigns before completing the 3 years. The company provided him with 1 month's salary as notice pay (the notice period being 1 month). I have some questions:

1. Can he defend his termination in court?
2. Can he seek additional compensation from the company for breach of contract?
3. Within how many days is the company liable to provide his Full & Final Settlement amount?

Please reply.

Thanks in Advance.

The company needs to prove that the terminated employee's performance was poor. They need to have evidence or proof regarding the low performance. If they do not have the proof, the employee can challenge the termination.

Regards,
Rajeev Dixit

Based on your query, please find my answers below:

1. Your friend can file a case in court. However, if the company proves to the court about the performance of your friend, then he loses the case.

2. I also suggest that you advise your friend to reread the agreement/bond. There must be a clause in the agreement/bond which states that either party can terminate the contract by giving 1-2 months' notice, and the liquidated damages mentioned in the agreement also have to be paid. In case the company terminates the employee, the company has to inform the employee one month in advance and a certain amount has to be paid to the employee. If the company terminates the employee during the tenure of the bond, then the company has to pay all the dues applicable to the employee, including the liquidated damages (if mentioned in any clause of the agreement).

3. The full and final settlement will be paid to your friend as per the company's policy. Every company has its own policy for settling accounts. Some companies take one month, while some take one week or maybe two to three weeks.

I hope this helps. Let me know if you need any further clarification.

Regards

Legal Agreement and Termination Clauses

Firstly, any company prepares a legal agreement stating that a person breaching the contract has to pay a percentage of damages, which need not be vice versa. Since the company has clearly mentioned that in case of termination, it will pay one month of salary and did so, you can't claim any more amount from them. You can file a suit against the company if you really think that the termination is not justifiable.

Greetings for the day, I have a friend who was working with a manufacturing company in HR. Recently, he got terminated, with the company stating it was due to poor performance. He is under a 3-year bond agreement. The bond includes clauses stating that if he resigns before completing the 3 years after joining, he will be liable to pay a percentage of his CTC. The company provided him with one month's salary as notice pay (the notice period is one month). Here, I have some questions:

1. Can he defend his termination in court?
2. Can he claim more money from the company for breaching the contract?
3. How many days is the company liable to provide his Full & Final Settlement amount?

Please reply.

Thanks in Advance.

I believe that courts in our country are for everyone and are meant for justice only. If a person or employee feels that they are unduly exploited or victimized, they can approach the court to seek the justice due to them. There are no second opinions on that. However, they can seek help from legal experts before initiating any proceedings.

Best of luck.

Two Distinct Parts to Consider in This Case

1. The termination due to poor performance: Every organization has the right to remove underperforming employees. For this, a procedure needs to be followed, such as counseling, written warnings, and low marks in appraisals. I do not think any reputable company would bypass these steps. Hence, going to court may not be a wise course of action.

2. The Bond: I have had numerous opportunities to study these bonds. They are often one-sided and heavily favor the employer, making them voidable under Indian law. Even if a contract is not one-sided, it cannot guarantee employment for poor performers or those with questionable conduct. Therefore, going to court to use the bond to gain extra benefits does not seem wise.

Regards,
U K Munshi
Wg Cdr (Retd)
GM HR & Admin
Rajput Properties And Developers

You haven't clarified or confirmed regarding the process adopted or followed by the company in terminating your friend. Please confirm in detail regarding this aspect of the case. A lot could depend on this—if this can be taken up legally.

Validity of the Bond

Regarding the validity of the bond, U K Munshi is correct. This issue has been discussed at length many times on CiteHR before. However, please note that there are many ifs and buts regarding this aspect—for example, has your friend received any training when he joined?

Regards,
TS

Even if he has been trained, it would be a loss to the company and not to the employee. Hence, going to court will not benefit the individual.

Regards,
U. K. Munshi