Facing Unexpected Hiring Fees After Resignation: How Should I Handle This Situation?

I am working in an Indian manufacturing company as a senior sales manager. I joined only four months ago. I have just resigned and provided a month's notice as per the signed contract and requested a relieving letter. My HR has responded, stating that I can be relieved within a month but only after paying 2 lacs as hiring expenses, which were incurred by the company in hiring me. This clause regarding hiring expenses was never mentioned before and is not a part of my contract. When I inquired, the HR mentioned that the company is not performing well and has incurred a loss of 2 lacs due to my resignation, as it had already paid the consultant 2 lac rupees. (All communication is via email from my HR).

Please help. I am still serving my notice period. What should I do?

Legal Considerations for Notice Period Buy-Out and Hiring Expenses

The amount sounds exorbitant! The notice period buy-out is applicable only for the number of days that aren't served. Recovering the cost of hiring from the employee isn't legal. The amount spent on the hiring consultant is between the employer and the consultant and cannot be recovered from you. Even recovering the cost of training that is often included in the Onsite Travel Agreement is not completely legal. Please consult a lawyer.

You need to prepare a well-drafted letter on paying only for what is left to be served and nothing beyond that. In case the employer doesn't comply, you can take it to the Labour Commissioner.

Wish you all the best!

Illegal Hiring Expense Claims

The company knows that what they are asking is illegal. The cost of hiring is part of business expenses. They cannot pass this on to the employee. Follow what is written in your contract regarding the notice period. As mentioned above, consult a lawyer and send a polite but firm letter reiterating that you have adhered to the offer letter terms and will not bear any further expenditure of any nature being claimed by the company. Probably, the company is hoping you will negotiate and then reduce the amount, as any amount claimed from you is a bonus for the company. Hold firm and refuse to make any such payment beyond what is stipulated in the offer letter which you have agreed upon.

This is in addition to what learned members have said in their posts. At this stage, tell the HR department that if they do not release the relieving letter, you will be forced to make a formal complaint to the labor office. Whatever money they spent on recruitment was their own decision. You have nothing to do with it.

Think of the opposite. Suppose your performance had been too bad or you had caused some big problem for them. Would management not have terminated you? Reserving the right of termination on one hand but initiating the recovery process in case the employee resigns is nothing but double standards. You may not give much importance to them.

What will happen if you do not get the relieving letter? A relieving letter showing employment for only four months is useless. Disclosure of the fact that you had resigned just after four months could cause more harm than good. Nevertheless, getting a "No Due Certificate" is important. Your ex-company may try to fix you in some other issue.

Thanks,

Dinesh Divekar

This is not legal on the part of HR to ask you to pay hiring expenses. You should refuse to pay this amount politely citing your appointment terms and conditions. Yes, you must pay the shortfall of notice period.

Raakesh Dixit
Labour Law Consultant
919810509965
917533809000

I would go one step ahead of what (Cite Contribution) mentioned: "The amount sounds exorbitant!"

It's not an amount issue at all. It's that this company just has misplaced notions of what hiring is all about.

Replacement Guarantee Clause

Generally, every company that hires through agencies or consultancies has a standard clause in their agreements called the Replacement Guarantee Clause. If the candidate leaves before a specified period of time—for whatever reason(s)—then the agency has to either refund the fees paid or provide a free replacement. Usually, it's 3 months. In your case, this either doesn't seem to be there or has crossed the 3-month timeline where the agency could be refusing to give a replacement.

Hence, the company wants you to become the scapegoat.

It's between the company and the agency... none of your business to get into what's essentially a relationship issue between them.

Generally, at least in the very few instances that we experienced, the agency gives a replacement for a lower one-time fee rate for cases that are technically and legally beyond the Replacement Clause effective timeline, but ethically not really so [after all, it's not a large time span/gap between 3 months and 4/5/6 months].

What to Do

Since you have the complete situation in writing, I suggest informing them through writing that you are being advised to go legal and put everything that is still only verbal into writing, basically generating a written record of the complete situation. Going by general human psychology, the company would hesitate to move forward unless they have something against you or you have not put all the facts here in this posting.

Another Angle

Don't you think you too are at fault for resigning so soon after joining? Unless there are very strong reasons to do so? Especially at your seniority?

I suggest giving this a thought. While technically none can stop you from joining elsewhere whenever you wish to, in the long run, you would be doing your career more damage than good when you jump without strong reasons or justifications in such a fashion.

Regards,
TS

Understanding Legal Options for Employment Disputes in India

I need to understand which email IDs in the Indian legal system I should contact to expedite my case. My company is based in Andheri East, Mumbai. Will any political influence help in this case? I do not want to go to a labor court as it involves time-consuming visits, which I don't want to spend on this HR issue. Our company has a large legal team whose core job is to handle labor-related issues.

Handling Notice Period and Financial Demands

What should I do if I am not relieved on the last day of my notice period? They may demand that I pay 2 lakhs and sign documents stating that 2 lakhs are due for recovery to provide the relieving.

Regards,

Avoid Political Influence in Employment Disputes

Do not get involved in this racket.

As far as your last query is concerned, it is quite possible that the company will insist on showing Rs. 2 lakhs as outstanding in your documents. The only way to handle this is to refuse and move out without relieving documents. On the other hand, put this demand in writing, highlight its illegality, and make your intention of not paying clear. Send this to top management. In any case, your exit will be a troubled one. There are no quick legal solutions to this.

Thank you for your message.

Is there a way wherein I can file an online Labor court case? I have visited the website [Home: National Portal of India](http://www.archive.india.gov.in) and would like to know if it is only for Delhi or also applicable to Mumbai. Please help.

Dear,

What your HR is doing is not legal. You can approach your Labour Commissioner's office over there. They are not supposed to deduct hiring expenses from you, but they can deduct training expenses. If there is no policy (Employee Salary Retention Policy) mentioned in your appointment letter, you can proceed.