Is It Fair to Demand Salary Repayment for Resigning Before Service Agreement Ends? Seeking Urgent Advice

Hello Seniors, I am posting a case of my friend who urgently seeks guidance on this.

Background of the Case

My friend works in the IT industry and joined this company about 1.5 years ago. While joining, she was not briefed about the terms and conditions. A formal appointment letter with a service agreement was handed over only after a month's tenure, and by that time, the service had picked up.

Current Situation

Now, my friend has resigned with a proper handover and notice period served. However, HR claims that according to the service agreement, an employee who resigns before the bond expiry has to repay the whole amount that the company has paid him/her as salary. They are demanding my friend to return the salary for the 1.5 years of employment.

There was a discussion between HR and my friend stating that if the whole amount earned is paid back to the company, it would only mean there was no worthwhile contribution, and HR said - YES.

Suggested Actions

I suggested asking for the training cost, negotiating to pay that, and peacefully closing the matter. But that was already communicated to HR despite the fact that there was no training provided by the company.

HR's Proposal

HR suggested to my friend that if no money is to be paid, they can have a mutual settlement by giving a cheque amounting to the due pay, not writing the date on it, and giving in writing that no employment would be accepted in 12 months from now.

Legal Concerns

My friend does not want to initiate any legal procedure. At the same time, she wants to know if there would be counter-results if she discontinues going to the office (as the notice period is served as negotiated, pay received, they never accepted the resignation, but the date was clearly mentioned in the resignation letter).

Fairness of the Clause

Also, is it fair for a company to include such a clause in the service agreement? We all know that such agreements are not legally viable and are signed only to discourage employees from resigning, but asking an employee to repay every penny that was paid during the service tenure is something that one needs to think of before putting it into the agreement. Please advise and comment on this.

Kindly advise on the situation as early as possible as it is a little urgent.

Thanks in advance for the help and time.

While giving consent for the acceptance of an offer of appointment, one has not only the right but also the imperative need to go through all the terms and conditions of employment, particularly those as sensitive as a bond.

It is relevant to mention that the system of taking a bond in the first instance must be formal and expressed, not implied. If your friend did not sign any bond at the time of joining, she is not liable to accept any such conditions now.

Furthermore, it is important to note that the practice of taking employment bonds from employees has been deemed illegal by the Apex Court of India in several judgments. Employers are prohibited from obtaining bonds from employees as the employment contract must be based on the principles of equity, justice, and fair play. Both the employer and employee have equal rights to enter into and terminate the contract according to the agreement.

Employees cannot be subjected to bonded labor.

I suggest that if the current employer does not release your friend upon resignation and completion of the notice period, she should not deposit even a single penny and should leave the office to join another organization. If she is owed any dues from the current employer, she may send a notice giving one month's time. If she does not receive relief, she should file a complaint with the relevant authority under the Payment of Wages Act, 1936. The authority will hear both parties and issue necessary legal orders.

Regards,
Dev

A few clarifications/queries:

1. You mentioned that your friend worked in this company for 1.5 years. Did she have any appraisal during this period?
2. What is the bond period as per the agreement?
3. You mentioned "...resigned with proper handover and notice period served." Was this from your friend's perspective, the boss's, or HR's? The points that you mention relating to relieving/paying-back should have been discussed at the time of resigning, not at the fag-end.

Also, I suggest waiting for the legal experts in this forum to respond.

Regards,
TS

To give further clarifications:

Appraisal and Performance

Her performance was found to be contributing. There wasn't any official process with any letters or appraisal given. However, she was always appreciated for her work, contributions, and zeal to learn and unlearn as desired. But as far as I understand, you mean to ask if any appraisal letter was given. The answer is NO.

Bond Period and Notice

As per the agreement, it is 2 years. There is a 3-month notice period, but she had mentioned that she would serve 1 month and pay 2 months' salary. She is getting married, and so she has taken this decision.

Resignation and Notice Period

The clause from her end was mentioned in her resignation. She never received a formal acceptance letter. After a few days of resigning, she went to clarify the clauses, but nothing conclusive happened. She asked me from when the notice period starts, and I think all would agree on this, that the notice period starts from the day an employee puts his/her paper down irrespective of whether he/she receives a formal acceptance. Also, the company has hired someone in her place, and she briefed him about all her duties and pending projects.

Experience and Relieving Letter

She is not too fussy about an experience and relieving letter for now. But she needs it because if she may wish to join in the future, her precious 1 and a half years of experience would be futile as she'd have to hunt as a fresher or as absconded. She received her last month's salary from HR, and she had gone to discuss further.

HR's Demands

HR said it is okay if you don't pay me 2 months' salary as you're getting married. But give me in writing that you'd not join any firm for at least 12 months from now and give me a signed cheque worth the pay you've got from here, so that if we found you're employed somewhere, we can deposit that cheque. As far as my knowledge goes, one can't put someone under such pressure.

Another thing was HR said you should have thought before you signed this agreement. But my question is how fair is it to have put a clause that demands the whole earning back if the employee leaves? That is not right. It would just mean they exploited her and used her expertise for free of cost for this time and reaped benefits.

Legal Advice

Yes, I am waiting if some legal advisor can also suggest. She consulted one of the lawyers, and she told it would not affect if she leaves. But my concern is can they list her as absconded or file a case against her regarding bond breakage and harass her or her family?

Regards,

Before we go further in 'how to advise' your friend, please confirm/clarify the following aspects of the situation:

1. You confirmed that she didn't receive any Appraisal Letter. Has she received any Salary Raise—in any form?
2. What are her ACTUAL career plans AFTER marriage?
3. Where is she likely to settle after marriage?

The options she can choose will depend on these answers. However, giving the check (whether undated or post-dated) to the company is an ABSOLUTE NO. We will figure out how to handle it later.

Regards,
TS

Hello sir, adding to your further points -

She has got a salary hike.

Currently she's not changing but she wishes to come back after a few months' time.

Her in-laws are in Mumbai itself. So there is no change of city. However, giving the cheque [whether undated or post-dated] to the company is an ABSOLUTE NO [we will figure out how to handle it later].

Rgds,
TS[/QUOTE]

Since she got a salary raise, she can use it if and when any discussion comes up again with HR, repeating what was said earlier ("meaning there was no worthwhile contribution and HR said - YES") to rebut any such trashy argument by HR. Hope you get the point. Actually, she could have done it earlier itself—maybe it didn't strike her in the tension.

Career Plans

Does she intend on returning to the same company? I am sure it depends on her views of her career here for 1.5 years (from the 'job enrichment' angle).

HR Advice on Undated Check

As for the HR advice of giving the undated check, ask your friend to give a counter-suggestion that she will provide an affidavit stating what the HR means/wants, since legally that is acceptable (let her involve a lawyer to draft this). If HR doesn’t accept this suggestion and insists only on the check, you can be sure that the company wants to avoid going legal. Your friend can use this to her advantage.

Regarding the check, she should take the stand that she doesn’t want to give... period. What if the company deposits it based on some false info coming to them that she joined another job? She would rather enjoy her marital life than run after courts just because someone in this company goofed (the best-case scenario). The worst-case scenario would be the company depositing it willfully—though this is best left unsaid to the HR (could mess up the situation further)—whether this can happen, only your friend can say, since she knows the nature/mentality of the top people and HR here better (even though I do have an 'uncomfortable feeling' from this angle).

If she is okay to rejoin here later, she can use this to her advantage.

There's another subtle point here—how come the company wants the undated check for one year when she already completed 1.5 years and has only 6 months left to complete the agreement?

Also, did your friend have any tussle with any of the bosses?

Regards,
TS

The company HR seems to be overstepping in this case, with unknown motives or interests. The maximum they can ask her to deposit is the cash equivalent of the shortfall of the notice period. Please suggest to your friend to write a polite yet factual letter to the CEO, addressing them by name, and send it by Speed Post. Track its delivery and maintain the tracking sheet for her future use, if required. If HR does not accept the payment in lieu of the shortfall of the notice period, a crossed cheque in the company's name may be enclosed.

In all probability, the CEO may not be aware of such issues related to the functioning of their HR. No individual heading an organization will attempt to be unfair to employees. In most cases, HR professionals, who have limited understanding and experience, forget their role and tend to quote rules about which they lack clarity themselves. They should at least read the views of experts and senior professionals to add to their wisdom.

Coming to her career plans, does she intend to return to the same company? I am sure it depends on her views of her career here for 1.5 years [from the 'job enrichment' angle]. No, she doesn’t intend to join back the same firm, having had a bad experience now.

As regards the HR advice of giving the undated cheque, ask your friend to give a counter-suggestion that she will provide an affidavit stating what the HR means/wants since legally that is acceptable [let her involve a lawyer to draft this]. If HR doesn’t accept this suggestion and insists ONLY on the cheque, you can be SURE that the company WANTS TO AVOID going legal. Your friend can use this to her advantage.

I suggested this to her. Probably she should meet her HR on Mon/Tue and shall share the consequences.

Regarding the cheque, she should take the stand that she doesn’t want to give... period. There’s another subtle point here—how come the company wants the undated cheque for ONE YEAR when she already completed 1.5 years and has only 6 months left to complete the Agreement?

Exactly something that even I fail to understand. I had told her that a company can recover the training cost that they incurred on an employee if he breaks the bond. But if the employee has served a considerable period, we deduct the training charge accordingly. Ideally, that’s how it works. But the HR wants the full salary that was earned during the employment tenure. Strange.

Also, did your friend have any tussle with any of the bosses? She never had any tussles or arguments with anyone.

Suggest first preparing your friend mentally for the worst-case scenario—which is not being able to get any documents for this experience and not being able to show this experience in her resume in the future. This is not to suggest that "this is what will happen," but to ensure that she approaches this issue from a position of mental strength. That's human psychology—when one is prepared for the worst-case scenario, anything else would be a bonus or positive result.

When I referred to "how come the company wants the undated cheque for one year, when she already completed 1.5 years and has only six months left to complete the agreement?" I was referring to the timeframe and not the quantum of the salary the company wants to be returned. Suggest asking your friend to focus on the timeframe part rather than the quantum, since this (focusing on the quantum) is bound to boomerang on her [since this was a part of the agreement she signed—howsoever flawed].

I think BK Bhatia has a very valid point—ask your friend to take this up with the CEO [or the Head of the Division, if the CEO sits elsewhere]. If HR shows signs of preventing this contact, maybe she can put this in writing or mail to the CEO with a cc to HR—your friend has nothing to lose now—and everything to gain, if this goes well.

Also, let her take the stand that she resigned not to join another company but due to marriage—most often companies have unwritten rules regarding this part in the initial stage itself. They should have included this aspect for unmarried women employees in the beginning itself—while getting the agreement or bond signed—only goes to say a lot about the HR policies in practice in this company.

Wish her all the best.

Regards,
TS

Let me answer all your questions legally, but before that, I must ask you to tell your friend not to come under any kind of pressure and not to pay a single penny to management. Also, there is no need to give any cheque to them.

Position 1: Legality of the Bond

Any bond executed without providing proper training is completely illegal. As you have already mentioned that no training was given, it is illegal and cannot be enforced by the company. You have also confirmed that she has received all her dues, so there is no issue in that regard.

Position 2: Restrictive Employment Clauses

Any clause that restricts an employee from seeking employment after resignation is also illegal and unenforceable. Your friend can rest assured that nothing will happen in that aspect as well. The only concern you might have is if they provide your friend with negative feedback. This can be addressed with a relieving letter obtained through intervention by labor authorities if the company refuses to provide one easily.

Based on your description, this company appears to be a typical small firm. Such companies often overlook the legal implications of their actions towards employees. However, company policies are not above the law, so you can relax knowing you have not done anything wrong.

Feel free to reach out if you need further clarification.

Regards,

True that, sir. For the worst-case scenario, I advised her that she can always show her appointment letter and a copy of her resignation letter to the future company if she wishes to re-join anywhere.

Focus on Timeframe, Not Quantum

Sure, sir, I would advise her on this.

Taking It Up with Higher Management

I think BK Bhatia has a very valid point—ask your friend to take this up with the CEO (or the Head of the Division if the CEO sits elsewhere). If the HR shows signs of preventing this contact, maybe she can send this in writing to the CEO with a cc to HR—your friend has nothing to lose now—and everything to gain if this goes well. Also, let her take the stand that she resigned not to join any other company but due to marriage—most often, companies have unwritten rules regarding this part in the initial stage itself. They should have included this aspect for unmarried women employees at the beginning itself—while getting the Agreement/Bond signed—only goes to say a lot about the HR policies in practice in this company.

Last night while talking to her, I shared BK Bhatia's viewpoints. She shared that perhaps her Director and CEO are unaware of this situation. They had recently advised HR for a new joinee (when HR suggested they should make a bond of some years and of so much value) that a bond and commitment should be in the hearts and not on paper. She said since her rapport with both the CEO and Director is good, she would try to arrange for an appointment with either of the two and share her concerns, and they can negotiate accordingly.

Thank you very much, sir, for all the timely help. I shall share the outcome for the benefit of others as well.

Dear Ankita, let me answer all your questions legally, but before that, I must ask you to tell your friend not to succumb to any pressure and not to pay a single penny to Management. Also, there is no need to issue any cheques to them.

Thank you for the timely advice. Additionally, could you please advise on the steps that can be taken if the company refuses to provide a relieving and/or experience letter in such a situation? Furthermore, in the worst-case scenario where she receives a legal notice from the company, how should it be handled?

Thanks a lot in advance.

Regards

If they refuse to give her the relieving letter, please ask your friend to write an application to the Local Labour Commissioner stating that they are refusing to provide her with the relieving letter. Also, mention the coercive tactics of the management, such as demanding the entire tenure's salary or making her sign a bond without providing any training. Before taking this step, you may want to consult with a lawyer and send a legal notice indicating your intention to proceed with the aforementioned actions. In many instances, the situation can be resolved upon receipt of the legal notice. If the issue remains unresolved, proceed to lodge a complaint with the Labour Commissioner.

Thank you.

Reviewing Agreement Clauses

It is important to go through the exact wording of the clauses in the agreement in question. It may be possible that the clauses are not strong or legally enforceable, which is why the employer wants to take a cheque from her to ensure that she does not join a competitor.

Regards

I have been following this thread with interest. Such unconventional situations require novel solutions, as suggested by members. What I find appalling, though, is how some rogue HR professionals are always bent on exploiting the employees and giving a bad name to this noble profession, which stands for the development of humans.

Warm regards.

To enrich the value shared by our senior lawyer, an employee can be made to enter into a bond at the juncture of giving any training that is more specific and expensive, with the clear consent of the involved employee for a specific duration. Even in that case, an employee who benefited from the training but quits during the tenure, the sum payable by the employee can only be on a pro-rata basis and never the full amount. This is because the employer has already reaped some output from the training provided to the employee.

Also, when it comes to taking up a job for 12 months with another employer, it is usually referred to as a "non-compete agreement," the validity of which only my legal friends and seniors can clarify. However, to my knowledge, the enforcement of such agreements in the Indian context is tough.

I would suggest your friend draft a clear communication letter detailing the situation and consult a labor law practitioner for advice. It is important to inform the top management and request their intervention, providing clear evidence by sending it through registered post. If this approach does not yield results, as a second measure, you can invite them for arbitration.

If the situation remains unresolved, with all the relevant facts, you can approach the labor department. An officer of the capacity of ACL and above will likely be in charge and may be able to provide a solution. As a final measure, I recommend approaching the court.

Please let me know if you need further assistance.

Best regards

Withdrawal of Resignation: Time Frame

An employee has resigned with an effective date of two months later. Within what time frame can she withdraw her resignation before the effective date?

Regards,
Sanjeev.

The resignation can be withdrawn at any time before the formal acceptance of the resignation. However, it can also be withdrawn even after the acceptance of resignation, but only if the management allows you to do so, as it will be at the discretion of the employer in such a case.

It is obvious that all the concerned people acting on behalf of the employer are using intimidatory tactics which are bordering on harassment. Your friend may politely refuse to hand over any cheque or payment (other than the shortfall of notice or training program attended for which evidence of cost is available) and ensure all her correspondence is in writing. This will insulate her from any unforeseen circumstances in the future.

Secondly, there is no harm in seeking legal opinion and acting accordingly. Lastly, you may wish to advise her to read carefully all future agreements/documents she may sign.

Thank you.

Regards,
Shashidhar

Dear Ankita,

Suggestions for Handling HR Pressure

Only four suggestions:

1. Tell your friend not to get under pressure from HR.
2. Do not pay a single penny to HR under any circumstances.
3. Seek legal help (the case is yours).
4. Search for a new job and enjoy.

Regards,
Sanjay

Like Shashidhar K mentioned, suggest to your friend to learn from this experience, given that agreements are now a way of life in any field, whether one likes it or not. Also, any update from your friend?

Learning from Experience

She surely learned that lesson. Basically, it so happens that since after graduation, when it's been a long time since you've been placed, one tends to sign service agreements or bonds without seriously thinking of their impact otherwise.

Current Situation

About her case - She is trying to reach her director but is unable to. She thought of going through the proper hierarchy first and proper methods so that there are no more grudges for her. The HR is not willing to negotiate. But there is no communication from their end as well. This is actually fine as it just means that they won't harass her if she's not paying up the amount. But just for the sake of an experience letter. Surely, she doesn't need it immediately, but if after some time she wishes to come back, how to prove the employment tenure?

Right to an Experience Letter

Also, an experience letter is a right of the employee whether or not he/she would look for a job any further. Would we not give an experience letter to a person getting retired even after knowing that he/she's not going to work anymore?

Legal Considerations

Again, the dilemma is if we follow the legal route (like the labor commissioner or such) for holding back the experience letter, the reason given by HR that she's broken the bond and not paying back might be considered. She is waiting to have a peaceful negotiation with the director as early as possible, but it seems very unlikely to me.

Regards,
TS

I suggest that you should let her put a cut-off date, maybe until the end of the day today, to reach the Director. If she can't, then suggest to her to send an email in a way that would also document things in writing to her advantage, with the opening line as "I tried to reach you to explain my side of the situation, etc."

Regarding 'no news' from their end, I suggest not ignoring the situation. Many times, 'No news is good news' can be a misplaced response mechanism. At this point in time, from the HR's perspective, it's your friend who needs the experience letter and is under more pressure. Unless a situation is created to transfer some pressure to the HR, there's no way they will respond to close the chapter. I hope you understand what I mean.

Also, I suggest waiting for Kamalkant's response/suggestions too.

Regards,
TS

I would suggest you write the whole matter to the CEO of the company and wait for his/her reply. If you still get a negative response from the CEO, then write the whole matter with all supporting documents and conversations to the Labor Commissioner and mark cc to HR and the CEO of the company. I am sure your friend will get justice. I suggest her to engage in regular written communication. This kind of bond is 110% illegal.

Regards,
Om

As previously mentioned, don't worry about the bond; it is unenforceable as no actual training has been provided against it. However, if your friend is unable to reach the CEO, please advise her to send a letter via registered post addressed to the CEO, highlighting all the concerns.

TS's concerns are valid; sometimes, over time, you may lose standing in the matter. Assert your rights while you still have the opportunity. Be confident and demand what is rightfully yours. Even if the CEO does not respond after receiving the letter, you may consider sending a legal notice. I sincerely hope that following this, they will provide her with the necessary experience and a relieving letter.

Fear nothing if you are on the right side.

Thank you.

Employer Actions for Bond Condition Violations

One question that remains unanswered is: What action can the employer take against the employee for not fulfilling the bond conditions? The available legal remedy for the employer is to file a civil suit against the employee. However, this is a very time-consuming and costly process, and it can be very difficult to prove a violation of such a so-called bond.

Regards,
Nk Panchal

From your statement, it appears that your friend is leaving the organization. Please consider the following points:

1. The compensation should be equivalent to the shortfall in the bond period. It cannot be a refund of the salary paid. Normally, the service bond is taken only for freshers (for whom the training is provided).

2. If the conditions in the bond are one-sided, then the bond itself can be challenged in the court of law.

3. Also, at the time of joining, the employee should have been briefed on the bond terms.

4. Your friend can serve a registered letter and leave the organization. She can also mention in the letter that she is willing to pay for the shortfall in the service period.

5. For the collection of the dues, legal remedies are available.

Regards,
Ravi
[Phone Number Removed For Privacy Reasons]

Please, it's my humble request: do not pay a single penny to that IT company. I, too, once suffered a lot and became a victim. Just tell your friend to move on. Nowadays, many small IT companies are following these harassing practices. Employees are working more than 10 hours a day, and if you forget to submit a timesheet, there is a salary deduction. Such hellish practices a company is following. Kindly move on without serving a notice period and without paying them anything.

In this matter, as you are saying that your friend had signed the bond, that means he/she definitely has the received copy. If he/she doesn't mind, can you share that bond on the forum so that after going through the document, we can provide more accurate guidance.

Thanks/Regards,
Ratikanta Rath

No one can force you to pay or hold the settlement after resignation, except if the employee is at fault or has dues to the company.

Regards,
Hiren

After reading this thread, I feel it is a weird thing; it's like harassing people. If possible, please share the bond on the forum without mentioning names or other details for the terms and conditions mentioned in the bond. That will be better for assisting.

Regards,

I am Rajvir Singh Beniwal, HRD Manager. I would like to tell you that if your friend has signed a binding contract, there is no issue. I want to emphasize the importance of paying the full salary for the duration worked. No questions should arise if she did not provide false information at the time of joining. Even though she may claim that every employee was happy to secure the job and did not thoroughly review the written terms, the HR department obtained her signature upon providing the appointment letter. Regarding the contract, she was not given sufficient time to review it. If there is any harassment, you can seek assistance from the labor office or union.

Regards, Rajvir Singh Beniwal

The agreement is null and void. Your friend is not liable to pay any dues. Send a resignation letter by Registered A.D. Request them to settle the dues in the resignation letter. Your friend can sue them at any point under the Payment of Wages Act and for unnecessary harassment. The company is using this tactic to reduce employee turnover. However, the agreement/bond has no value; they just want to create moral tension. Your friend is free to leave the company at any time.

Thank you all for your timely help. Just wanted to inform everyone that she has finally been called for a meeting with the Director. Hopefully, the problem will be resolved under his guidance.

For reference to all -

She was given an appointment to meet the Director. However, before she could meet the Director, HR had a meeting with him. HR came and told her that it would only be a waste of time.

The Director told her that he does not generally entertain people of her level, but only because they share a good rapport, he was willing to meet her. (I do not understand how the schedules matter to a Director if he can't handle employee grievances and complaints.) He just said he can't do much in this situation as it's an HR matter. If he intervenes, there is a possibility that new trainees might just wish to leave the company without proper F&F. Saying so, he left for some meeting.

HR suggested to my friend that they can co-own a post box in a post office, and she can have one key, while the other would be with the company. The check can be placed in that box for 1 year. She denied.

She asked for the invoices raised against her training; HR said she's not talking right now because training doesn't mean formal training but also on-the-job training and opportunity cost. (I fully agree with this, but how the payment of fully earned salary to date is justified is still a question.)

HR suggested that we shall give you a relieving letter and your PF after 1 year. My friend agreed but asked to have the same in writing or reply over the mail. HR refused to give anything in writing.

HR also threatened her that he would publish her photo in local newspapers and mark her as absconded. (A few colleagues of hers informed that he was indeed planning to do this.) She protested, saying how can she be marked as absconded when she gave a resignation letter and is still doing follow-up for a relieving letter? HR said, "Yeah, but I think this is the only right word." (Lacks justification.)

When my friend said she would have to discuss with her family before depositing the check for such a big amount, HR said she should have brought one of her relatives to discuss. We do not have time to go on delaying this process. At the same time, he refuses to give anything in writing.

As was requested by a few seniors, here is the content of the notarized service agreement on 100 Rs stamp paper -

Agreement forming part of our Employment offer:

This Agreement is entered into on the date of August 11, 2011, between ____, a company registered in India, having its registered office at _____ (hereinafter called the 'Company') and ______, an Indian inhabitant residing at ____ (hereinafter referred to as 'Employee') of the other part.

WHEREAS

A. The company has selected the employee for the position of 'Management Trainee - MIS' which would initially involve extensive training for one year for imparting the required level of skills, for effectively carrying out the official responsibilities assigned to the Employee.

B. The Employee, on joining the Company, undertook to stay in the employment of the Company for a minimum period of two years.

B.1 In case of any separation on any accord/reason, the employee will have to serve three months' notice to the company.

C. The employee undertakes to undergo the training methodologies, as may be required, and understand job responsibilities so that the same are carried out in an effective manner.

D. The Employee, as part of consideration for the training efforts and costs involved, agreed to sign a bond for not leaving the services of the company for a minimum period of two years from the date of her joining the services of the company.

Now this Agreement Witnesses As Below:

1. In case the employee, for any reason, leaves the services of the company before the said period of two years, then she shall forthwith pay the entire sum earned to date as being the indemnification of the cost of training to the company. The employee undertakes not to dispute the amount and shall pay the amount before requesting the formal relieving order from the company.

2. That the said employee shall be just and faithful to the company in all matters and shall not at any time except under legal process divulge to any person whatsoever and shall use her best endeavors to prevent her publication or disclosure of any trade secret or any business process or any confidential matter or information concerning management decisions of the Company or of its dealings, transactions, or affairs which may come to her knowledge.

3. However, the company has the right to terminate the employment of the employee in case she breaches any of the above provisions and is found dishonest to the company at any moment of her employment without any notice.

4. In witness whereof the parties have executed this Agreement on the day and date mentioned above at Mumbai.

Signed by the duly authorized representative for

And on behalf of the company in presence of

Signed by my friend

Signed by the employee in presence of

1)

2)

Dear Ankita,

After going through your recent mail, please confirm the following:

1. Has your friend, who joined as a Management Trainee - MIS for 1 year, been confirmed in her position? Has she received any confirmation letter?

2. When your friend submitted her resignation via email or hard copy, did she receive a copy of the acknowledgment?

Findings from the Agreement Format:

Upon reviewing the agreement, it is evident that it is a one-sided agreement favoring the employer. Some key points include:

- The Employee, upon joining the Company, committed to a minimum employment period of two years.
- In case of any separation for any reason, the employee must provide three months' notice to the company.
- The company reserves the right to terminate the employee's employment without notice if she breaches any provisions or is found to be dishonest.

Furthermore, the Employee agreed to a bond preventing her from leaving the company's services for two years without any mention of recovery of any amount.

This contract is clearly biased, as it allows the employer to terminate the employee without notice or reason, while restricting the employee from leaving without notice.

I suggest that your friend seek advice from a legal professional and consider taking legal action in civil court to address this issue.

Experts, I would appreciate your insights on this matter.

Regards,
Ratikanta Rath

After going through your recent update, please tell me if your friend had some previous work experience or not. Although one year of on-the-job training for just an MIS Executive seems too much to me. I am of the view that even in the case of a fresher in the job, one doesn't need one year of training. It is clearly a move to take advantage of the law. I suggest that the same can be defended, and I urge your friend not to succumb to the pressure built by the management.

Opportunity Cost and Management Decisions

Regarding the opportunity cost, my question to the management would be: why are you hiring freshers then? You should go and hire experienced people instead. Is there really such a thing as opportunity cost?

Please take a stand and fight against the malpractices introduced solely to take advantage of the law.

Thank you.

Thank you for your help. With regards to your question:

Confirmation of Employment

1. As your friend joined as a Management Trainee - MIS for 1 year, was she confirmed? Was any confirmation letter given to her?
Yes, she was given a confirmation letter on 1st April 2012.

Resignation Submission

2. When your friend submitted her resignation via mail or hard copy, did she receive a copy of that?
She submitted the resignation in hard copy in December. They have not acknowledged the copy or sent her an acceptance letter as well.

Thank you for all the advice. She does not have any prior work experience. She joined the company in August 2011 as a fresher. Yes, the point is well taken. Perhaps it did not strike at that time. On-the-job learning is usually difficult to track, and we are helpless about it, making it difficult to present our arguments to an experienced person. She was informed that they would arrange a meeting on 12th March.

She is being firm only because she realized that this is not the right practice and is questionable under the law. However, she cannot afford the expenses of legal proceedings as I already mentioned she is to get married soon.

Seeking Suggestions

I wanted to know your suggestion on this:
If the meeting on the 12th does not work, should she register AD the minutes of the case so far to the company? This will reinforce the fact that she is continuously following up for the relieving process. If there is no reply from their end, should she first contact the labor office or directly send a legal notice through a lawyer?

Looking forward to your valuable guidance.

Regards,

Based on what Ankita Shah mentioned about 'HR threatening her that he would publish her photo in local newspapers and mark her absconded' and also corroborated by a few colleagues, please confirm or clarify if there is some way to preempt this action by the company? Something like a 'restraint mechanism' by courts in many cases.

I think it would be wiser to preempt any such possibility by the company rather than 'reacting' to the situation, which would turn out to be long-drawn and expensive in the long run.

Questions for Ankita Shah

What is the 12 March meeting for? When your friend's Director can take a stand 'he can't do much in this scene as it's an HR matter', I can see there's more than just a simple assurance of yet another meeting.

Regarding the 1-year training period, I think many companies have this duration for Freshers—more a norm than an exception. But... a BIG BUT... what baffles me is the total lack of transparency in this company in such issues. Either the HR DOESN'T know the rules of the game, or it's DELIBERATE from their end... though I feel it's more the latter than the former, based on the sequence of events you have been mentioning.

Also, please confirm if your friend informed her fiancée about the situation so far? Maybe it's better to involve him too... or at least keep him updated/informed.

Regards,
TS

[QUOTE=tajsateesh;2031984]

@ Ankita Shah--

What is the 12 March Meeting For?

When your friend's Director can take a stand saying 'he can't do much in this scene as it's an HR matter,' I can see there's more than just a simple assurance of yet another meeting.

Regarding the 1-Year Training Period

I think many companies have this duration for Freshers - more a norm than an exception. But... a BIG BUT... what baffles me is the total lack of transparency in this company on such issues. Either the HR DOESN'T know the rules of the game, or it's DELIBERATE from their end... though I feel it's more the latter than the former, based on the sequence of events you have been mentioning.

I think they expect her to give up by handing over a cheque because they gave her a meeting date only after she said she can't deposit such a huge amount and needs to consult. I too doubt the matter would close on these simple terms as now I feel the issue is not a compliance issue; it has emerged more on the ego of the HR to prove himself right.

Hence, just to be ready for the next leap, I asked if it should be the labor office or the lawyer's notice.

Her fiancé does know about the whole issue and is supportive. But the issue is again we lack the knowledge and experience to tackle such a situation. The amount is too high to forego, especially in the situation that a person is getting married. And if the HR would have wanted money, he might have perhaps tried to settle it out by quoting it down or negotiating. He is not doing it. He plainly informed her that he is not at all motivated to help her and is not here to help her. He just needs her to hand over the check for a peaceful settlement....

Fail to understand what it means...

Tell your friend to contact a lawyer and file a case in civil court so that the payment part will be held up until any judgment is made before the situation worsens. Your friend has already made several mistakes, even though her resignation was not accepted by the management on that day. She should send her resignation through postal mail with acknowledgment due. Since she has not taken any further action, the HR person can easily claim that they have not received any resignation from her. As she is a confirmed employee in the staff/executive category, she should pursue a civil case since she cannot file any dispute under the Industrial Disputes Act in the Regional Labor Court/District Labor Court.

Experts, I need your views.

Thanks/Regards,
Ratikanta Rath

Ask your friend not to worry about the experience and relieving letter. Nowadays, many HR professionals in companies are accepting this fact. Ask your friend to explain what happened in the past regarding her employment. I hope this may alleviate her concerns to some extent. Also, advise her not to pay any money, as suggested by other members.

Encourage her to handle the issue with a calm head. Wishing her all the best.

Regards.

Clarification on Bonded Labor and Service Agreements

Thank you very much. However, I just wish to ask one doubt: The document is about bonded labor. We have ample documents to support that bonded labor is illegal. Now, though it is implicitly understood that the same is true for service people, it is not explicitly mentioned.

What I mean to say is, if we look at it, for argument's sake, HR can say you are not a laborer as defined by the labor laws, and hence this is not bonded labor. This is a service agreement. Logically, he's wrong, but technically, and due to loopholes, he can prove himself right. What to do? Just a thought, because I have mostly seen in films and daily soaps how one sentence can be used to one's advantage and gain/lose by the same sentence.

Kindly correct me if I'm wrong.

Thanks a lot for all the efforts.

Dear TS,

If they try to publish her photo in a newspaper and term her as absconding, that shall backfire upon them as there is enough to prove that she resigned and is a victim of the management's malpractices. Besides that, I have never seen any employer taking that kind of step. On-the-job training, that too for 1 year, and asking to serve for 2 years otherwise to surrender the whole amount earned seems too unreasonable to me and, I guess, to other members as well.

As far as the cost of litigation is concerned, all you need to do is put all the matter on paper and go to the labour commissioner with firm determination to fight back. You do not need a lawyer as lawyers are not allowed to participate in conciliation proceedings. So don't worry and be firm.

Regards,
TS

Could you check if she has a copy of the agreement? If so, check the date of signature on every single page of it. Also, could you check with her if the agreement was on stamp paper? If so, check the date on it along with the name in the agreement. This could help her to communicate clearly. But anyways, if she has gone to this extent, it is better that she does not return to the company again. It is always better to see the greener side. 

She does not have the original copy of the agreement.

Agreement Details

It is only a 2-page agreement. On the 1st page, there is the company's stamp, and on the 2nd page, there are 3 signatures - hers, HR's, and her supervisor's.

Stamp Paper and Dates

The agreement is on a Rs. 100 stamp paper. As mentioned in the previous post, it was not notarized. It bears no notary and only the company's stamp. Now, there are the following stamps on page 1:
- SM stamp office, Mumbai - dated 10th Aug
- Her office stamp with address - dated 16th Aug 2011

The agreement is said to have been entered on 11th Aug 2011.

Conclusion

This could help her to address the issue upfront, but if she has gone to this extent, it is better that she does not return to the company again. It is always better to look at the greener side. 

I hope some light can be shed so that I can better understand this point. Thank you in advance. 

This clearly means that the company cannot take any legal action, and it is evident that the company did not take every single step cautiously, which means the employee can talk to them upfront and tell them that they are wrong.

Also, didn't she sign with any date? If so, what's the date mentioned? Also, what's the date mentioned by the other person (employer)?

Thanks,
Priya

Neither my friend nor the employers have signed with a date. The only dates mentioned are:
- 10th August 2011 near the stamp of some stamp office
- 16th August 2011 near the company's stamp
- 11th August 2011 - her joining date.

Apart from these three dates, no other dates have been mentioned, neither in the agreement nor under the signature while signing.

Regards,
Priya

I am in a similar situation. I also want to leave my current company, but I am bound by a contract that remains valid until February 14th. Can I leave the company after clearing all dues and completing the handover? Will my current employer interfere with clearing my PF, full and final settlement, etc.?

Dear Sandee,

Have they provided you with any useful training? If not, yes, the bond might be illegal. I would request you to elaborate on your case.

Regards,

Case Elaboration and Concerns

I joined the organization in February 2011 as an Executive-level employee with 3.5 years of experience. The company signed a bond of 3 years, which includes the following clause (as far as I remember): If an employee leaves the company in the first year after joining, he/she needs to pay 3 years' CTC to the company. If an employee leaves in the second year, then he/she needs to pay 2 years' CTC, and if an employee leaves in the third year, he/she needs to pay 1 year's CTC. The company did not provide any training for me except for the induction.

Now, if I want to leave the job, am I liable to pay as per the contract? If I leave the job on unsuitable grounds, am I still liable to pay? What actions will my company take against me for breaching the contract?

Regards

Dear Sandeep, Yes, the bond in your case holds no merit for the company. It is clearly illegal and appears to have been implemented just to harass the employees. Do not worry and do not heed what the management says. You can leave the services at any time by serving the agreed notice period. They cannot take any action against you. So proceed without fear.

Hi Sandeep, thank you for elaborating. From your post - "which I remember" - I wish to ask if you have a copy of the bond you signed or only the company has it? (I am asking this because whenever an agreement is made, there have to be 2 original documents - one with you, one with the company bearing your signature, a signature of the company's representative, and witness(es)). If you do not have a copy of the agreement, how is this a legal agreement proceeding?

Secondly, are there any clauses on how they would compensate you in case they terminate you within the said period? (If there is no such clause, clearly the agreement is one-sided and questionable and can be nullified in court).

Thirdly, they demand you to pay the whole CTC if you leave the service. Again, it means the exploitation of your skills. This is similar to the case of my friend.

Fourthly, they have not given you any training. A bond is enforceable only to the extent of the training costs incurred. If they claim on-the-job training, the question is, was this on-the-job training worth the CTC claimed? Was your contribution to the company of no significant value? These are just ways to demotivate employees from resigning by creating a fear that you would be liable for X amount. This is actually wrong as they are just tying an employee who has no interest to stay and hence would not perform.

Since the agreement is illegal, you can resign without paying a penny. But be assured that they would try to harass you and ask for money from you based on the contract you've signed, as they are doing in my friend's case. You'd have to be firm and strategize your steps, and you cannot afford to lose your patience. We would always be there to advise you on your steps as this is really not a legal bond.

All the very best. :)

Understanding Employee Rights Under Labour Law

Based on the scenario, what I understand is that your friend is being harassed by the employer. Referring to the Shops and Establishment Act, any employee who wishes to quit the current company can send their resignation letter via registered post to the HR Manager, MD, or CEO of the company. By law, it is automatically understood that the employee has a clear intention of leaving the job, and no employer can deny their resignation.

I recommend that she should meet with the concerned area Labour Officer, explain all the details, and retain all documents related to the current employer. She can always lodge a formal complaint with the Labour Officer, copying the Central Labour Office as well.

According to Labour Law, no employer can bind any employee to work with them forcefully. Under the principles of Natural Justice, such cases will be taken very seriously in the court of law.

Therefore, I suggest meeting the concerned Labour Officer or Commissioner of the Labour Department, explaining the situation, and formally lodging a complaint. This action will help your friend to escape this unfair situation.

Regards

Let me clarify this. There is nothing legally binding like a "Bond" or a "Service Agreement" in India. No company can force you to pay on behalf of a service agreement. Even if the company takes the matter to a judicial court, it will definitely lose the case. As citizens of India, we are free to work anywhere and can leave a job anytime by giving a proper reason. "Bonded labor" is strictly prohibited in India. So, your friend does not need to pay anything despite a bond.

Yes, it may happen that a company denies providing documentary proof of employment like the "Experience Letter, Relieving Letter," etc. Please take appropriate action as per convenience.

Thank you.

You are very correct in stating that the company can take legal action against the candidate in court. However, it ultimately depends on how the candidate handles the case in court and the reasons they can provide. The legal aspect of the issue involves a court proceeding, and it is determined by how both parties manage it. In my opinion, it is indeed challenging for the employer to prove their side. As you are an advocate, you are well aware of how these situations unfold.

(Please don't consider this offensive; this is simply my perspective.)

I am attaching the full service agreement of my friend. He has resigned on Feb 12th. As per agreement clause 1(C), an employee has to pay 4 months' gross salary with 12% interest. Can he challenge that agreement in court, or suggest any solutions you have?

Thank you.

Regards

Sure Sandeep, I saw this agreement, and it is not enforceable under any law in India. It is rather a joke. Don't worry; tell your friend that he is totally safe, and the employer will not be able to recover even a single penny from him. Feel free to revert in case of any doubt.

I have a problem; I joined the company only one month ago. They have signed me to a service agreement for one year. I have no issues with the company, but there is a night shift which I cannot handle. Their transport department is also the worst; they don't provide a guard with the cab as per their promise. My family is very tense with my night shift job. I can't leave the job since I have signed the service agreement, and my health is suffering because of this. Please help, what can I do about this? I am also asking for a morning shift, but they are denying that we don't have a morning shift for the particular profile. Please help with what to do.

Thanks and regards

I have some problems; I joined the company only one month ago. They have signed me to a service agreement for one year. I have no issues with the company, but I cannot handle the night shift. Their transport department is also the worst; they don't provide a guard with the cab as per their promise. My family is very tense with my night shift job. I can't leave the job since I have signed the service agreement, and my health is suffering because of this. Please help me with what I can do in this situation. I have asked for a morning shift, but they are denying it, stating that there is no morning shift available for my particular profile. Please advise on what steps I can take.

Thanks and regards,