Is the "No Show" Clause in Job Offers Legally Enforceable? Seeking Real Experiences

Legal Validity of the "No Show" Clause

I got selected for a Manager role in a small IT company in Bangalore, but with a "No Show" clause, which I have to sign when I accept the offer letter due to my 3-month notice period. Is that clause or letter legally valid?

The clause is supposed to state that if I accept the offer letter, sign the clause, and then don't join the company, I have to pay 2 months of CTC. Conversely, if they revoke the offer, they are liable to pay 2 months of that CTC to me. If I sign it, then I guess it becomes legal. But what are the chances that such companies take legal action? Have you seen cases where such firms have taken legal action against candidates?

Dear Abhishek,

The first paragraph of your post reads, "I got selected for a Manager role in a small IT company in Bangalore but with a 'No Show' clause which I have to sign when I accept the offer letter, due to my 3-month notice period. Is that clause or letter legally valid?"

A single-sentence paragraph is confusing. Convert the complex sentence into 2-3 simple sentences. What is the date of joining? Will it be after you serve a notice period of 90 days or overlap with the notice period?

Legal Validity of 'No Show' Clause

The company that you propose to join is clear on not taking up the job. They have inserted a penalty for not joining the company, but at the same time, they have made the same penalty applicable to them in case they revoke the job offer. By doing this, they have converted the offer letter into a contract that is valid under the provisions of the Indian Contract Act, 1872.

Nevertheless, it is clear that the company is protecting its interest from non-serious candidates who accept the job offer but later ditch the company by not joining it. It is a deterrent for non-serious candidates. This is because if the selected candidate refuses to join, he/she does not have any liability. He/she is not a loser in any way. In contrast, the refusal upsets the operations of the company. They have to restart the recruitment process, and the post may remain vacant for several months. This could impact the business as well.

Considerations Before Accepting the Offer

Now, whether to accept the job offer with the penalty clause for not joining after acceptance of the offer letter is your call. In case you fail to join, they are surely going to send you the damage claim which is three months CTC. If you fail to pay them, they could file a lawsuit against you. In India, legal cases drag on for several years, maybe even decades. You will have to be present for each hearing. Are you prepared for the long course of litigation? Secondly, pending this kind of court case, which employer will give you a job?

Whether the company will take legal action or not is a difficult question to answer. The course of litigation is arduous for them as much as for you. Nevertheless, the company has a stronger financial muscle than you. They could flex it.

Feedback on Writing Skills

Lastly, humble feedback on the quality of your post. A job candidate applying for the position of Manager is expected to have better writing skills. There were a few spelling errors as well. I have used my ingenuity and corrected these. You could have spared a few more seconds for an accuracy check before uploading the post.

Thanks,

Dinesh Divekar

Honoring Employment Contracts

Contracts are made to be honored and not to be flouted. An employment contract is no exception. Once you accept the offer with your eyes and mind open, you have to simply join the job; there is no use in pondering over whether the company will actually take any legal action, as rightly observed by the learned member above. It implies your basic mindset should be to honor the terms of the contract, even if the other party is uncertain about initiating any legal action against the breach. Honesty is the best policy and is an indispensable trait of a job-seeker. Therefore, think deeply before accepting the offer.

Dear Abhisek, the clause in your offer letter to pay 2 months of CTC by either party fails to comply. The employer made it open for both parties to be liable to compensate each other for breach of contract. An offer stands binding once it is accepted by both parties. So, once it gets signed by you, it means you have accepted the terms and conditions, and the same can be used for legal purposes if violated. Companies can take action only limited to the extent of conditions mentioned in the offer letter, i.e., payment for 2 months of CTC only, nothing more than that.

It solely rests on you whether to accept or reject the offer. In my consideration, it is a good one.

Compensation for Withdrawing Offer: A Sign of Good Culture

This is the first time I have seen a company offering to pay compensation for withdrawing the offer. It shows a good culture.

If you are serious about joining the company, then the no-show clause should not worry you. If you are planning to do this just to increase your current salary by renegotiating with your company, or if you have other offers you may consider, then you are taking a risk. A company putting this clause must be ready with lawyers.

I am preparing an offer with a "No-show Penalty clause." Can anyone help me with the exact clause structure that helps to create one for our company? Thank you!