Is It Legal for My Employer to Demand 10 Lakh Rupees After Resignation Notice? How Should I Respond?

Hi Team, My employer sent me a legal notice asking for 10 lakh rupees against my resignation, stating that they sponsored my H1B visa and invested a lot of money based on me. However, I am currently serving my notice period as per their requirements when I submitted my resignation. Despite this, they have still sent me a notice demanding the payment of 10 lakhs.

I have not signed any contract or bond, and I have been working as a senior software engineer for the past 2 years. Is it legal for them to demand this payment even though I am serving my notice period?

What should be my next step in replying to this notice?

Thanks,
Varathan

To provide a proper reply, we still need additional information. Please reply to the following questions:

a) What are the conditions of your employment? Has anything been mentioned in the appointment letter about the H1B visa that your company had issued?

b) The company has sent you a "legal" notice. Is this notice from an external lawyer? Is it from the legal officer of your company, signed by HR, or by some other senior authority of the company?

c) Your designation is Senior Software Engineer. How many people reported to you?

d) When did your company acquire the H1B visa for you? After this acquisition, did you travel to the US for company work? If yes, how many times?

Upon receipt of the replies to the above questions, senior members will provide their opinions. In the meanwhile, you may want to find out the labor office in your area. You may not see the labor officer, but find out the procedure to make a complaint against the employer.

Thanks,

Dinesh Divekar

If you have not signed any contract or bond, you should refer to the terms and conditions mentioned in your appointment letter. There might be a clause in the appointment letter that covers the company's loss in this case. If the appointment letter is also clear, then check if your company asks for any annual sign-off on something like values, beliefs, or policy amendments, which automatically gives them the benefit of obtaining an agreement from you on their terms and conditions. (We often ignore reading official emails and say 'I accept' blindly to many things rolled out in our company.) If that is also clear, then seek legal help to counter, as your company has sent you a legal notice, and you need to reply with a legal response soon, as there is a certain time frame in which you have to respond to any legal notice.

Considerations Before Legal Action

Hope you have tried speaking to your seniors, reporting manager, boss, or company HR in this matter to resolve it peacefully. If you start a legal process, your relieving may be delayed.

Thanks,
Aditi

Thanks for the quick reply, and here are the answers:

Conditions of Employment

a) What about the conditions of your employment? Has anything been mentioned in the appointment letter about the H1B visa that your company had issued?
No.

Legal Notice Details

b) The company has sent you a "legal" notice. Is this notice from the external lawyer? Is it by the legal officer of your company or signed by HR or some other senior authority of the company?
Yes, I got a legal notice from an external lawyer signed by the director.

Designation and Reporting

c) Your designation is Senior Software Engineer. How many persons reported to you?
No one.

H1B Visa Acquisition

d) When did your company acquire the H1B visa for you? After this acquisition, did you travel to the US for company work? If yes, then how many times?
I got the H1B visa in October 2015, and I have not traveled to the US.

Thanks,
Varathan

Dear Varathan, You have not signed any documents related to the H1B visa, nor are there any provisions in your appointment letter. Additionally, even though you are a Senior Software Engineer, no junior reports to you. Therefore, the provisions of the Industrial Dispute Act, 1947 apply to you. Under these provisions, you can approach the Labor Officer of your area and present your case. Please bring along evidence of your employment with the company, starting from the appointment letter. Remember to carry both the original and a photocopy of each document.

Once you submit a formal application, the Labor Officer (LO) will summon both parties and deliver a verdict. I anticipate it will be in your favor. I doubt that your company will oppose the LO's recommendations, as software companies usually hesitate to do so. Regardless of the verdict, consider requesting a Relieving Letter or a No Due Certificate upon leaving. This will facilitate your transition to a new company.

At this point, the information provided should be adequate. Please return to this forum and update us on the outcome of the meeting with the LO.

Thanks,

Dinesh Divekar

Mr. Varthan, if you have not signed any contract or agreement with the organization, you may not need to pay any compensation, subject to the proper service of the notice period as per the company norms.

Resignation Acceptance and Legal Notice Concern

Please find the reply regarding your resignation. We are accepting your resignation, and you will be relieved on 18th February, subject to the satisfactory transfer of all the company knowledge and information that you have accumulated as part of your job with XXXXX. I will sign your relieving letter upon reviewing the knowledge transfer process on the above-mentioned date.

I will try to approach LO. Even though they accepted my resignation, I don't know why they sent me this legal notice to pay 10 lakhs.

Thanks,
Varathan A

For your smooth exit, I recommend you approach the Labour Officer (LO) well in advance. Though your company has confirmed that you will be relieved on 18-02-2016, the authorities concerned might change their minds at the last moment and put your issue of the relieving letter on hold. The dispute over the payment of Rs 10 lakh need not be linked to the issue of the relieving letter. What if the authorities leave you in the lurch at the last moment?

Issuing a Legal Notice: An Overkill

The logic of issuing a legal notice to a serving employee who reports for duties regularly is not understood. A simple letter on the company's letterhead would have sufficed. The issue of a legal notice is an overkill. This action on the company's part shows that the authorities in your company are not necessarily well-versed in routine administrative procedures. One possibility is that they know the case will not stand legal scrutiny, but they wanted to scare you into withdrawing your resignation.

Anyway, approach the LO tomorrow itself and find out what he says.

All the best!

Regards, Dinesh Divekar

I appreciate the logical questions covering your contract of employment raised and the useful suggestions put forth by Dinesh and Aditi in the wake of the inappropriate legal notice. I am in complete agreement with their views that you are a workman under the Industrial Disputes Act, 1947, in spite of the high-sounding nomenclature of your designation and the monetary compensation attached to it. I also confirm their opinion that at this stage of the notice period, as well as even later after your relief, they have no locus standi to serve a legal notice demanding a sum of Rs. 10 lakh towards H1B Visa expenses when you have not signed any bond nor actually traveled abroad on the visa. It may be a tactical move of the employer to retain you under threat.

However, I have my own reservations about the suggestion to approach the District Labour Office at this stage due to the legal position that an individual employee/workman is precluded from directly raising a dispute under the ID Act regarding any of his employment grievances other than non-employment or recovery of monetary dues. Espousal of the cause by a Trade Union is a must.

So what is important at this crucial moment, as suggested by Dinesh, is to get the relieving order on the expiry of the notice period already begun without rubbing the management the wrong way. First, seek an appointment with the CEO or the person empowered to relieve you and try to convince them politely. Explain to them your hardship and inability to meet their monetary demand and show that you are even prepared to reimburse the expenses, if any, incurred by the management towards the Visa obtained. If it is not fruitful, issue a reply to the legal notice through an advocate about its untenability and your taking recourse under the ID Act through a Trade Union apart from taking civil remedy.

Regards

Thank you for the detailed reply. In your response, you mentioned that Varathan can send the reply to the lawyer's notice through his own lawyer. However, before taking this step, he can approach the Labour Officer (LO). Initiating an Industrial Dispute is a significant step. Sometimes, a communication from the LO alone can suffice, especially in the case of software companies. Preliminary discussions often precede the escalation to a full-fledged industrial dispute. Therefore, I recommend reaching out to the LO.

For Varathan: As per Mr. Umakanthan M's advice, you may contact the CEO or another senior authority figure to present your case. It is unlikely that any substantial progress will be made during this meeting, given the absence of the lawyer's notice validated by the CEO.

While the meeting holds administrative significance, refrain from disclosing your potential approach to the LO. Maintain a polite demeanor but assertively state that the claim of Rs 10 Lakh is not legally valid. Prior to the meeting, craft a formal business letter and deliver it to the CEO's secretary in a sealed envelope. Obtain the secretary's signature on a copy of the letter.

Thank you,

Dinesh Divekar

Hi Umakanthan and Dinesh,

Thank you very much for your detailed suggestions. I will approach my company and LO and update you the same.

Thanks again,
Varathan

Cannot guide unless the whole circumstances of your H1B visa sponsorship by your employer. But overall, it is better to sort this out through mutual understanding than litigation route. Legal course on an employee by any employer has adverse impact on any employee, irrespective of the content of the case, hence recommended to avoid.