Is It Fair for My Company to Demand Six Months' Stipend After Resignation?

Hi Friends, I am working with a South Indian hotel company as a Management Trainee. I have already completed 23 months of training (out of 24 months). I resigned on May 18, 2015, and they accepted my resignation on June 6, 2015. They don't want me to serve the notice period either. According to company policy, I have to pay my remaining 1-month stipend, i.e., Rs. 16,000/-, but the company is asking me to pay 6 months' stipend, i.e., Rs. 96,000/-, on the basis that 1 month is remaining and after 2 more months, there will be an evaluation of the training program. If there is any 6-month extension to that, then I have to pay 6 months' stipend. Is it legal? I am resigning 1 month before my training finishes and 3 months before the evaluation. Do I have to pay six months' salary too? It's like paying nearly 1 lakh rupees to get relieving letters. Kindly guide me through this.

Thanks,
Will.

Hi Will,

You need to carefully read the appointment letter or the joining letter and see if there is any such clause mentioned in the letter. If there is something mentioned like what you have written, it is advisable to extend your stipend period and serve the notice period.

Hi Will, After the training finishes in June 2015, and if the evaluation is in August 2015, where is the account for these two months? Were you expected to work there for these two months without a contract?

If you are resigning, then how is the 'possible extension of training' applicable? Why would they want to extend your contract "to train you more" if you have failed in the first evaluation and want to leave?

They can mention that the training is not completed satisfactorily, but they cannot force you to remain in training. Also, they cannot refuse to provide a relieving letter (just like a school leaving certificate).

Secondly, this is a "stipend" (a stipend is a monetary allowance for a role that is normally unpaid and cannot be measured in terms of a task) and not a "salary" (salary represents payment for work performed by availing your services for a defined task). You should not be legally asked to pay back the stipend for one month either.

I personally think that this is just another scheme from unethical management to harass trainees just because they have control over it. Somebody should really drag them to court and make them pay for such rules.

Though, I am not sure if the labor laws would apply to your case, as you were considered a student and not an employee.

Also, as Nathrao correctly said, our legal practices are generally lengthy and expensive. This is a very good topic to get views from our legal expert seniors.

I am curious to read further suggestions as well.

Best Regards, Amod Bobade.

Thank you so much, everyone, for the help. I would also like to add this point that until now, I have not been given any offer letter, nor have I signed any. The only papers I have signed were those for ESIC and PF. I only have a letter of intent. I am joining a new tech company next week, and I don't know what to tell them because I still have to wait for a relieving letter, and that will cost me too much. I'm really worried; it seems like the end of my career so soon.

Dear Amod, This training officially ends on July 18th; however, I resigned on May 18th. After the training ends, the company usually takes 2 months to evaluate the training period for further promotion. During these 2 months, they expect us to work as management trainees. I am confused about one thing - if I am resigning now, why would they evaluate me further? The evaluation time is still 3 months away, and it's uncertain whether I will be promoted or required to extend my training for another 6 months. They mention it's company policy, but I have never seen this policy documented during my 22-month training period, nor have I signed an offer letter to date. Is this so-called "policy" applicable to me?

Should I inform the new company about this situation, and will they still consider me after knowing these details? This is my first job change. To be specific, the new company is an international tech company. Kindly assist me.

Regards, Will

As mentioned by Amod & Nathrao, Training is teaching or developing in oneself or others any skills and knowledge that relate to specific useful competencies. Stipend is paid not for the work performed but as a living wage. The company cannot claim the stipend as Notice Period buyback; it is illegal and can be challenged in the court of law. You can persuade them firmly to relieve you amicably.

If the "Management Trainee" program continues until evaluation, then officially the training period does not end in one month but in 3 months (4 months if you have resigned in May!). By resigning, you wish to leave the training before completing it. The evaluation is still necessary as the employer has trained you for 22 months, even though it might indicate that you have not completed the training as expected.

From your response above, it seems you do not want to continue any further connection to this organization or the training received from them. Please do not devalue the training you have received to date from them.

This is also an issue of ignorance on your end, as much as from the employer's HR. We should not take the organizations for granted. You should have asked timely questions and got the policies clear about your employment, rather than running away from them now. Your experience/training certificate is at stake here.

You say you have not received any offer letter. So how do you accept the stipend? Just based on verbal discussion? Is there no letter/office memo indicating 'you will get a stipend of xxx amount for xxx period'? Are you even getting payslips for the stipend?

If you do not have an appointment/offer letter, then you might not really expect to get an "experience/relieving letter." In that case, there is no point in paying the stipend amount to the hotel. What you should pursue is the best possible F&F settlement and a clearance/handover note before leaving.

Yes, you should inform the new company about this "basis of employment" with your current employer so you would not get into any trouble if they insist on any further documentation about your previous experience.

Are they already aware that you are leaving the training halfway before evaluation?

Since you were just in a 'management trainee' position before, I do not think the new employer would really expect it to be a real "experience." They should understand if you are not able to produce certain documentation but have declared it upfront.

Finally, do not be worried that your career is at an end so easily. The worst case would be that you would lose these 22 months of experience on paper and would have to start job hunting as a fresher again. That's not so bad, as 2 years of learning is not too much in the whole upcoming career of about 40 years. Anyway, the experience you gained (even without a certificate) will stay with you forever. Nobody can deny that.

Hope for the best but prepare for the worst!

Best of luck!

Best Regards,
Amod