Can My Employer Take Legal Action for Leaving After a 25-Day Notice Instead of a Month?

I was employed with a private firm in the position of 'sales engineer'. I got another opportunity and decided to resign. I requested to be released in a week's time while submitting my resignation over email. I was even ready to lose a month's salary. They instructed me to hand over my current assignments to my colleague but sent me an email stating that my resignation is not accepted, as I failed to comply with the following contractual terms of my appointment letter: “If you are entrusted with any special assignment, you will not be allowed to leave the organization without implementing the same in the company to the satisfaction of the Company.”

However, I was not entrusted with any special assignments, and when I countered them, they mentioned they would interpret it in their own way. I served them a notice period of 25 days, and due to my next assignment's joining date, it might fall short by a few days. Hence, I requested them to adjust the same with my leaves due.

A day prior to my last employment day, I received an email from admin stating that if I don't collect outstanding payments from clients prior to release, they can move to court. The liability of collection is not restricted to me only, and I cannot be held responsible exclusively. I have discontinued my employment without a release letter and final settlement.

My Questions Are:

1. Can they issue a legal notice? If so, on what grounds and what could be their demand?
2. What could be the aftermath or damage to me?

Looking forward to your prompt responses.

Regards

Understanding Section 27 of the Indian Contract Act

Section 27 of the Indian Contract Act states that a contract agreement cannot restrict you from joining another company, even a competitor company, thereby breaking the so-called contract. Most of the clauses mentioned in the agreement will not be compliant with the Indian Contract Act. They may issue you a legal notice, but do not worry about that. Companies should have a backup plan as no employee can be restricted from leaving and joining another company.

The only potential damage could be that they may not provide you with a service certificate. However, as per the appointment order, you are required to pay for the 5 days' notice period salary, considering you have served 25 days out of 30. You have the right to demand the service certificate. All the best.

Thank you so much.

As informed, they have sent me an email a day before my release, stating that if I do not collect the outstanding payments from clients, they may take necessary legal actions against me. I have not yet responded to that email. Do I need to reply to it?

I would also like to understand what their claims or demands could be in the event of them suing me with a legal notice, and on what grounds.

If it is only your duty to collect dues from your clients, you will be held responsible for not collecting them. However, it is understood from your statement that your employer and you are jointly responsible. In this case, you should have completed your part of the work.

Regarding the Bond Agreement

None will restrict your future trade, business, or employment wherever you choose, and with whomever you choose to work. However, the damages the company incurred because of your breaking of the bond will be claimed. Such damages will include 5 days' notice pay and any other dues that may arise legally in the issue of your client.

I was working as a sales and service engineer. We were involved in trading activities, supporting front-end sales personnel with price support, quotations, technical assistance, customer visits, etc., which was my major role.

Collections were definitely a part of my job profile, but other sales and service personnel were equally responsible. Yes, our company permitted credit sales as a policy. There was no bond agreement; I only accepted the appointment letter by signing it.

I am willing to pay for a 5-day notice period. Please help me understand what you mean by "any other dues that may arise, which are legal, in the event of your departure."

I wish to join the new organization. It's already 30 days since I resigned. Am I eligible to join? Is there any legal non-compliance? Please help with your suggestions. I need your advice to get rid of my anxieties.

I have received a notice from the law firm hired by my ex-employee yesterday. They have claimed that they never asked me to hand over my responsibilities, nor has the same been done. Moreover, they have stated that since the outstanding collection was my responsibility, I should join their service, or they will pursue criminal/civil cases against me. How should I proceed? I will definitely seek a lawyer's advice. But just to alleviate my anxiety, I want to know: What could be the damage they can do to me?

I have replied to the notice that I received from the law firm hired by my ex-employee. The ex-employee has claimed that I was given special portfolios of clients to handle, and the outstanding amounts are due against the invoices raised in line with business transactions with those clients. Thus, collecting the outstanding was my responsibility; hence, I should join their service, or they will file a case to recover the outstanding due (amounting to 3 crores) from me. In my absence and the unavailability of my expertise, these dues may become bad debts.

Please be informed that the order booking was approximately 16.5 crores, and there were many people involved on and off from different regional branches and the Head Office of the ex-employee.

Also, note that they have asked us to withdraw my lawyer's reply to their legal notice. Why are they asking to do so, and what is the impact?

How should I proceed?

Please note, I was handling general sales and services, and the firms to whom credit sales have been extended are all customers of the firm. They are not special portfolios but definitely important customers. The clients will never refuse to pay their dues since all are government PSUs, MNCs, and will definitely make payments as per the payment terms in purchase orders.

Please help.

There is a very important statement here in your post, which is sidelined in the discussion: "... They instructed to hand over my current assignments to my colleague."

Have you done that? Do you have any record of it? (ISO standards require such responsibility handover minutes as quality records. If your firm is ISO certified, then you must maintain such records).

If you have the record, does it include the list of outstanding collections and their credit limit periods? Was this record also shared/informed to your supervisor in writing to support your proper handover completion?

If you have not maintained such records and delays have been observed in outstanding collections, then the loss due to this delay (not the actual due amount) can result in "any other dues" due to your non-fulfillment of duties. Also, if any sales order loss, due to not timely follow-up in this period (if it can be proved due to improper handover), can result in similar dues.

You are now ready for payout for the 5 days missing notice period, but did you try to push a cheque/email to HR with instructions for these deductions on your last working day (before you left the job)? It is very important that you have full disclosure with the company before leaving and do not wait for threats from HR before showing the reasonability.

On a Little Different Note:

Have you now joined a competitor of your previous employer? Is there a threat to divert their old customers to your new job? If yes, then the handover and relieving activity records are very vital. A company can go to any length to not lose the customers with the leaving sales personnel, and you may end up damaging your reputation in the new employment and industry if such is proven.

Before making any hasty decision, please make it certain that you have cleaned your hands from all connections and responsibilities from the previous employment.

Best Regards,
Amod Bobade.

Sales Engineer's Responsibility for Collections

Since when is a sales "engineer" held responsible for a collection of 16.5 Crores plus Rs. amount? I wonder then, what the managers are doing?

Their legal notice must be saying "respond within the given timeline or...". Now, how can they ask to withdraw the response? What do they expect the person to do exactly then?

Rejection of Resignation

Also, if they deny the handover instructions, then that means this is a question of "rejection of resignation". It would be interesting to know from the experts on this forum what the law says if the resignation is rejected (Is it a kind of bonded labor?).

Steps for Employees Facing Rejected Resignation

If the employer rejects the resignation, but the employee wants to leave, what steps should an employee take to avoid getting into such scenarios (Records, Payouts, etc)?

Thanks in advance, experts, for your responses.

Best Regards,
Amod.

I faced a similar situation two years back. The legal opinion says that no employer can arbitrarily fix conditions of employment. So, in my opinion, the organization cannot sue you for not serving the full notice period.

Festive Greetings All.

The query raised and the responses received from seniors and stalwarts are very introspective. Just wanted to share my opinion as most of my friends are from the pharmaceutical sales and marketing field. Considering the recovery liability entrusted here on the query raiser, it would have been appropriate on his part if he had made it absolutely clear in the form of a written memo stating the handover details, including the pending liabilities, to the employer beforehand. This way, the employer would have been made aware of everything beforehand.

Now, if the employer is suing the query raiser, it is only because the best clientele along with dues are at stake. When the query raiser needed it, he got the job, and the responsibility endured, whether written or verbal or granted, solely lies on the query raiser.

Please note I am not supporting anyone here. As seniors have mentioned earlier and in earlier quotes, the query raiser is liable for only five days' worth of notification. But as HR professionals, aren't we responsible to make everyone aware and responsible for everything, even during exit?

Thanks,

Ani

My colleague, after understanding the handover documents and details, has written an email to my VP, the reporting authority, acknowledging receipt of everything, including the outstanding collections list with updated status and details of the concerned contact persons of the client. This record was also shared/informed to my reporting authority, colleagues, finance team, and execution team in writing over email and soft copies with proper listing before my exit.

In my resignation, I have requested the company to agree to the notice pay, i.e., one month's salary, and before leaving, I again requested them to adjust the shortfall in notice from my due leaves. No, I am not joining a competitor; rather, I shifted to an entirely different industry segment.

They are denying the handover instructions since I have no written record for the same. I was actually contributing significantly to their organization. They do not have an exact replacement for me, though they may have parallel lines and backup plans. They rejected my resignation, citing the clause in the appointment letter: "If You Are Entrusted With Any Special Assignment, You Will Not Be Allowed To Leave The Organization Without Implementing The Same In The Company To The Satisfaction Of The Company."

They are framing my general sales and service as a special assignment, declaring the client base as special portfolios and claiming the entire outstanding recovery as my sole responsibility to add merit to their demand.

But I want to know the following:

1. What could be the legal consequences for not attending the 5 notice days?

2. Why are they asking me to withdraw my reply?

3. Can the court ask me to compensate in VCR rupees?

Regards

Legal Consequences of Not Attending Notice Days

1. What could be the legal consequences for not attending 5 notice days?
The worst consequence for not attending the 5 days' notice could be a deduction of salary for those five days.

Request to Withdraw Reply

2. Why are they asking me to withdraw my reply?
The company wants you to withdraw your reply so that the lack of a reply can be used against you and show you in a poor light.

Court Compensation Concerns

3. Can the court ask me to compensate VCR rupees?
The court will not ask you to repay 5 crores. You were a team member, and the whole team is involved in sales and is accepted by management. The question of solely making you responsible will not work out. That way, no sales engineer can ever leave the job from your company. There will always be outstanding credit collections, and then they can reject the exit.

All you should have done is give a written brief with all the details of sales, contact people of the client, and reference to sales orders, etc., from the client. This is a pressure technique and will not finally go to court if there is nothing hidden in your query.