How to Handle a Consultancy's Demand for Payment if You Don't Join Their Client?

Dear All,

I need your guidance. One of my colleagues has applied for a job through a consultancy and has been selected for a position in an MNC organization. However, his current employer has retained him. Now, the consultants have visited his office and called him on his company's landline number. They have asked him to sign a document stating that if he does not join the company, he will have to pay two months' gross pay. Please advise on what can be done to avoid any issues.

Thank you.

Dear Mayuri, you have not written about the type of agreement that your friend has signed with the consultancy. Was it on bond paper, and if yes, please confirm what was the value of the bond paper. Going further, we need the wording of the agreement as well.

With whom has the agreement been signed? Was it with an MNC or with the recruitment consultancy? Your friend should not have signed an agreement with the recruitment consultancy. They are just mediators who provide jobs to candidates. Nevertheless, this case falls under the purview of the Indian Contract Act, 1872. Therefore, your friend may seek advice from a lawyer who handles cases under this law.

Thanks,

Dinesh Divekar

Dear sir,

Thank you for your guidance. He has signed a service agreement with the consultancy. I have attached a copy of the service agreement.

Regards,
Mayuri

Dear Mayuri,

Overall, I have reviewed the verbatim of the agreement. The agreement is not one-sided per se. In the agreement, a clause has been included for either party, candidate, and recruitment consultancy. If the candidate fails to join, the contract demands a 2-month gross salary from him/her, and in case the consultancy's client revokes the job offer, they are ready to pay 2 months' salary. This implies that they are ready to take ownership for the failure of their client to provide the job to the selected candidate. Their balanced approach is appreciable.

Your friend could have been a little more thoughtful. Upon acceptance of the job offer, he should not have backtracked. His current organization has retained him (presumably) by increasing his current salary. But by accepting offers from both his current employer and the future employer, he has put himself in a bind.

Now, at this stage, what matters is whether the agreement was signed on valid bond paper, and if yes, then what was the bond amount. If the agreement was not signed on bond paper, then its validity is questionable. Therefore, your friend may approach a lawyer who handles cases under ICA, 1872, and obtain a legal opinion on whether to decline the new job offer and the consequences thereof.

Declining a job offer, whether by paying a 2-month gross salary or not, is an unprofessional approach. Your friend needs to improve his way of working. If he keeps blowing hot and cold, he will keep putting himself in a binding situation forever.

In the meanwhile, you too deserve some feedback on your first post. Since a few vital words are missing from the sentences of your post, I had to write my reply with some assumptions. In your second post also, you have not given replies to the questions asked in my first reply. Therefore, before clicking "post to this thread" button of this website (to send a reply), I recommend checking the completeness of your post along with the grammar. If you had done that, you would have observed the extent to which you had tampered with the grammar. While seeking opinions from the seniors, this carefree or informal approach is hardly expected!

Thanks,

Dinesh Divekar