How Should I Handle a Legal Notice from an Employee After a Heated Confrontation?

I am running a small software organization with 4-5 staff. I recently caught an employee who had sold a design created for one of our clients to someone else. When asked to explain his actions, the discussion got heated, which ultimately led to him charging at me physically, for which a police complaint was registered and a settlement reached at the end of the day wherein he agreed to resign and settle matters.

However, a week later, he has sent a legal notice demanding 3 months' salary, lawyer's fee, and a bonus for 30 months of work. His notice period is 1 month. I have not issued any termination letter so far, and he has not been reporting to work since then. I am willing to negotiate and give him his rightful dues.

Options Available to Me

What are the options available to me? I do not wish to name myself or the concerned employee and keep things confidential as things may be sub-judice shortly.

Thanks in advance for your valuable tips and guidance.

What you have written is quite concerning. We should be moving from an uncivilized world to a civilized one. However, our progress appears to be contrary. Anyway, my comments are based on what you have written. I am taking your comments seriously.

Evidence of Illegal Sale

Do you have evidence of the illegal sale of software design? Has he pocketed the money by doing this illegal sale, or has he deposited this money into the company's accounts?

Police Complaint Details

Did you lodge a police complaint only for the physical assault or for the illegal sale of the company's assets (designs) as well? Do you have a copy of the police complaint? Have you withdrawn the complaint? In fact, you should not have withdrawn the complaint. This would have strengthened your case. Has he given a written apology to the police authorities?

Employment Terms and Resignation

What are the terms of his employment? On what grounds has he given resignation? Has he given a resignation letter at all? Did he mention in his letter that he is ready to forego the notice period?

If the employee has not given any letter of resignation but stopped reporting for work, then it is a case of abandonment of employment. You may send him a notice for abandonment of employment. If the employee refuses to report for work, then you may conduct an inquiry for the abandonment of employment and then terminate the employee.

Inquiry and Legal Action

Now the option available at hand is to conduct an inquiry for the illegal sale of software design. Send him a reply that he needs to appear before the inquiry. Based on the inquiry findings, you may lodge a police complaint. Further, it will be a legal course.

Other senior members may give their opinions. In the meanwhile, you may solicit legal opinion from a good lawyer as well.

Learning from the Incident

It appears that the incident has arisen out of a lack of emotional control and assertiveness. Leadership demands these personal qualities as well.

Regards,
Dinesh V Divekar

Dinesh's response summarizes the views of many members—that more information is needed before any well-informed suggestions can be given. Please confirm the various aspects of the case. For example, you mentioned "settlement reached at the end of the day wherein he agreed to resign and settle matters." What sort of settlement was it—financial, withdrawing of the police complaint, both, or anything else? Also, 'he agreed to resign'—but did he? What did he mean, or how did you understand it when he said 'settle matters'? What was the end result of this aspect? Please provide as much information as possible. The legal members would also be able to give their views.

Regards,
TS

Hi Friends, thanks for the replies.

Settlement Details

The settlement that was involved was as follows:

1. He would resign from the job and forgo the notice period, i.e., give 1 month's salary to the company in order to get the relieving letter.

2. Admit to his fault of stealing the design and giving it to someone else.

However, he has now sent a notice stating that as per his appointment letter, the company is liable to pay him 3 months' salary for termination or give 1 month's termination notice. The appointment letter clearly states that the employee has to give 1 month's notice or an equivalent amount in lieu of the notice period and on termination, apart from his working days due, the company owes nothing.

Legal Advice and Next Steps

I have met a senior lawyer from the Honorable Supreme Court, who is of the opinion that I should clear out his salary as per norms and press for an FIR for criminal conduct and breach of trust in passing the design to a third party. A second FIR is to be filed for physical assault. We did consider the option of him absconding from work, but this could potentially drag the matter and give him the option to file counter charges for not releasing his salary dues.

Regards

Police Involvement and Legal Actions

Was the police present when the compromise was made? You can and should hold back his salary. Since he is guilty of fraud, you are very much entitled to recover the cost of the fraud from him. You should file an FIR if not already filed, both for the fraud and the physical assault. The police should be willing to record the same since they were present and called.

Contractual Obligations and Termination Clauses

Your appointment letter has a 3-month notice from your side and 1 month from the employee's side. I have not heard of a contract so loaded in favor of the employee. Is there a clause for termination in case of fault? If not, then you need to speak to your lawyer and see if there is any such clause you can use now.

1. The compromise was made in front of the SI and a constable. The witness and signatory to the compromise was the father of the employee.

2. The appointment letter mentions that the employee must serve a notice period of 1 month or pay 1 month's salary in lieu. However, the termination clause in the appointment letter does not include any provision for a notice period from the company. Therefore, the demand from the employee is completely rejected. After clearing the salary, the employee has no grounds to take any penal action against the firm or its directors. We are proceeding to file an FIR for theft and physical assault, as well as our claim for damages.

Your post mentioned a 3-month notice, which confused the matter. I still believe you should not have paid him a salary. The compromise is adequate for defense in any court.

If the settlement agreement is properly worded, you might be in a better position to take him to court. This means he is confessing to:
1) Stealing your company's property
2) Trying to sell it clandestinely to others
3) Agreeing to resign without any compensation
4) Admitting his guilt of assaulting you, witnessed by his father and the police.

Does this agreement mention anything about compensation? It's very clear that he might have sought legal help to defend his case. Was the First Information Report (FIR) really registered? What is its current status? Did they proceed with it? Were any charges framed by the police against him based on the FIR? Since you already have the advice of an eminent advocate, it may not be fitting to confuse you with our opinions, which may lead you nowhere. Proceed with a legal opinion and ensure you have all relevant evidence, documents, eyewitnesses, etc., which can only strengthen your case.

If I may add to this:

Please let us know how exactly you are proceeding and, if possible, what the outcome is. At least for me, it will add to the knowledge base.

Termination Clause in Appointment Letter

Whether there is a clause in the appointment letter for termination on account of insubordination and/or working against the interests of the company, leaking or passing confidential information of our company to third parties, please send me the appointment letter (Terms of contract) of the concerned employee for taking stringent action and/or to draft a reply to be sent to the concerned employee's advocate.

Adv. Kishor Goswami - [Email Removed For Privacy Reasons] or mobile - [Phone Number Removed For Privacy Reasons].

Regards,