Confused About NDA Clauses and Notice Periods? Seeking Advice Before Accepting Offer

Hi, I received an offer letter from an organization along with an NDA. The offer letter mentions a 6-month probation and a 1-month notice period during the probation period. Additionally, after that, a standard 90-day notice period is applicable.

NDA Clauses

However, in the NDA, there are two clauses as follows:

The recipient agrees to serve a 1-year employment term and may leave only in the case of ill health, for which a 90-day notice is required.

The recipient agrees to refund 50% of the compensation after leaving the organization for the duration of the employee's tenure with the company.

The recipient agrees to these terms without any questioning.

I spoke to HR, and she mentioned that these clauses are standard and apply if an employee leaves without serving the notice period. I requested her to update the NDA with this condition, but she is not willing to make changes. She provided me with an email response stating that these clauses are applicable if the notice period is not served.

I am hesitant to trust this email reply as it is non-binding and non-enforceable. I seek assistance in understanding if my interpretation is accurate and whether I can rely on the email reply while still pushing for an update to the NDA. If not, I may need to reconsider accepting the offer.

Dear Aj-S,

There appears to be a certain confusion in your mind. Because of this confusion, members also get confused when reading your post.

Offer Letter vs. Appointment Letter

When the company is satisfied that the candidate is suitable to fill a vacancy, it issues the "Offer Letter." In the offer letter, the company generally mentions the date of joining, designation, salary offered, etc. Once the candidate joins on the specified date, he/she becomes an employee, and the company issues the "Appointment Letter." This letter is detailed and primarily contains the terms and conditions of employment, including the conditions of separation.

Now, please confirm whether you have been issued an "Offer Letter" or an "Appointment Letter"? While issuing the former, hardly any company mentions the conditions of separation.

Understanding the Non-disclosure Agreement (NDA)

Your second confusion is on the "Non-disclosure Agreement" (NDA). However, the NDA primarily involves the disclosure of information during and sometimes after employment. It does not mention the length of the notice period or how the case of non-fulfillment of the notice will be handled.

I request you to first understand the definitions of the terms of employment and then write a post. A post raised with assumptions may invite wrong suggestions.

Your Query

"The recipient agrees to serve a 1-year employment and may leave except in the case of ill health, for which 90 days need servicing.

The recipient agrees to refund 50% of the compensation after leaving the organization for the tenure employee with the company. The recipient agrees to it, and no question should come from the employee."

Reply to Your Query

The first condition is nothing but "Forced Employment," which is inconsistent with the labor laws in vogue in India.

The second condition is completely illegal. The employee receives remuneration for the work rendered by him/her. Recovery of past remuneration paid to the employee upon leaving the employment is ridiculous. Just ask HR under which labor law they have inserted this kind of condition in the appointment letter.

Final Comments

The role of HR related to labor laws is an advisory one. While the management may come up with fancy conditions of employment, HR is expected to step in and try maintaining consistency with labor laws. It appears that this has not happened in the case of the poster's company.

Thanks,

Dinesh Divekar

Thank you, Dinesh. Apologies for not detailing the case. I had received an "offer letter," and after accepting the offer, I received an "appointment letter" with the date of joining, "applicant form," "NDA," and a request to attach relevant documents. You are correct; the NDA in my current organization was requested to be signed when I joined the organization.

Below are the contents of the clause which are questionable, and I feel these are unreliable to the extent of forcing labor and have a mala fide intent in deceiving employees. This is my personal opinion based on the text of the clause and the intent of the non-disclosure agreement.

"That the receiving party agrees to work with the disclosing party for at least 1 year and shall not leave the service of the disclosing party during this period, except in the case of continued ill-health, in which case she/he can leave the company by giving three months' notice period or payment in lieu thereof."

"That the receiving party agrees, in case she leaves the company during the term of the agreement, she undertakes to refund 50% of the gross emoluments paid to her during the period she remained in the service of the company, in addition to any other damages and/or losses suffered by the disclosing party. The amount of refund shall be determined by the disclosing party and shall not be open to any question by the receiving party."

Can you please help me with these clauses to understand more? There is no parent clause above these clauses stating "in case the employee leaves the organization without serving notice." I also need to understand why HR is not updating the NDA with the correct condition, but she is able to give me this in writing in email replies. Should I accept this appointment or still pursue HR to modify the NDA with the condition?

Best

If someone can please help me in deciding what I have to do, it will be of great help. I received a written reply from HR, which states that "clause 5 and 6 are only applicable in case of leaving without serving notice period." However, she is not agreeing to update the NDA.

Thank you in advance.

Regards

Please understand that the NDA you are discussing has nothing to do with the notice period or the forcible refund of 50% remuneration. The 90 days of service, as well as the stipulation to refund 50% of emoluments, are burdensome to the employees, but that seems to be the company policy, and HR cannot do anything about it apart from repeating that these are standard clauses in their appointment order.

Thus, the reply that "clause 5 and 6 are only applicable in case of leaving without serving the notice period" is correct. HR cannot add these clauses in the NDA as they are outside its scope. You have the choice to reject the offer.

This is a reply to your third post. Whether to accept the appointment letter or not is your decision. We cannot suggest anything. However, once accepted, the conditions mentioned in the letter will become applicable to you. Yes, the conditions are unreasonable and one-sided too; nevertheless, ensuring that these conditions are deleted is an onerous task. You may have to take a course of litigation as well. Are you prepared for that?

Thanks,
Dinesh Divekar

I understand that after agreeing, the NDA is binding. I want to take this employment but don't want an agreement of bond employment, which was not disclosed before or after the interview process.

Can the HR email reply be taken in the spirit of trust and be a standing ground for her justification that clauses 5 & 6 are applicable in cases when an employee leaves without serving notice? Can her email be proof that the organization will not ask me for a 50% refund of gross emoluments? What are emoluments here?

HR told me, "Why would I put this 50% clause when many employees would not join just by seeing this clause?" I agree that clause 6 is unreasonably binding in word and text, and the NDA should have a condition for when employees leave abruptly. Can I force this organization to update their NDA?

Emails from HR professionals cannot supersede the contents of the appointment letter. Therefore, there is hardly any legal value to the email.

The company did not disclose the terms and conditions of employment right at the interview itself. This shows that the company lacks a culture of transparency. By her own admission, the HR professional mentioned that if these conditions were disclosed during the recruitment process, then nobody would join. This indicates that the company has difficulties in retaining their employees and is resorting to acts of entrapment. Such companies are not to be trusted.

Thanks,

Dinesh Divekar

Thank you, Divekar. One important point here is that the authority signing the NDA (COO) is the same person who has replied to the email and provided clarification regarding clauses 5 and 6. However, even with this clarification, will it still not be considered valid, along with any additional information related to the NDA?

Offer Letter Terms and Decision Making

Your offer letter states that the probation period will be 6 months with a 1-month notice period, and the notice period will be 90 days post-probation period. Another term is that you are obligated to serve for a period of 1 year, or otherwise pay 50% compensation for health reasons by serving a 3-month notice. An offer, once accepted, becomes binding for the employee to fulfill. While this may not be a standard offer letter for this establishment, it could be a standard format. Your assessment is correct; a response from HR would hold no weight against a signed offer and appointment letter.

Now, you have to decide what to do. Consider the offer if you are unemployed, or else, skip it altogether. Engaging in situations where doubts persist is not advisable.