Facing a Service Bond Dilemma: How Can I Secure My Full and Final Settlement?

Dear All, I am facing a problem with my previous company. I submitted my resignation on 30/3/2022. Although the notice period was two months, the company relieved me on 5/4/2022 after completing the proper handover and no dues process. I worked for more than 12 years in that company.

Increment and Service Bond Issue

During the increment process in July 2021, the company issued an increment letter mentioning a revised salary and a separate line about a service bond: "As agreed, you will be signing a 3-year bond from July 2021 to June 2024." No other document was signed, only the increment letter with the service bond line mentioned.

Resignation Acceptance and Notice Period Adjustment

After my resignation, I received a resignation acceptance letter from the company, mentioning the acceptance of my resignation and the date of my relieving, i.e., 5/4/2022. It is stated in the resignation acceptance letter that any amount equivalent to the short notice period shall be adjusted against the balance PL and from the dues payable.

Full and Final Settlement Issue

I have a balance of 150+ PL. I communicated with the concerned HR for the full and final amount, but he asked me to submit Rs. 1 lakh as recovery against the service bond.

All experts are requested to guide me on how to get my full and final amount. Anticipating thanks.

Regards, Akshay Joshi

Mere mentioning in the salary increase letter that you have to sign a 3-year bond with the company, and in the event of you not executing such bonds, you will not be held liable for paying damages, legally. Signing and returning the copy of the salary increase letter is only a token of acknowledgment of the receipt of the letter/communication.

Hence, you may send a letter requesting your final settlement dues to the Chief Executive of the company with a copy to HR and wait for a reasonable period. If no reply is received by you, you may seek the help of a lawyer (an expert in Labor Laws) and send a legal notice to the company and then proceed legally.

Deciding on Action Based on Role

If you have been working in a supervisory or managerial capacity, then decide whether to confront the company independently or reach a compromise. If you did not have a supervisory role, directly approach the Labor Officer and request intervention. You will receive payment for Privilege Leave (PL) encashment as per the Standing Orders of the establishment or the relevant Act. The latter is typically restricted to 30 days, while the former varies based on the standing orders' clause. Even without Standing Orders, you are entitled to PL encashment if there was a prior settlement or communication indicating accumulation for a specific period, such as 150 days.

Ethical Considerations for Long-term Employees

A reputable company, when an employee with 12 years of service leaves, should not withhold their settlement on weak grounds. Imposing a bond on an existing employee who has completed 12 years of service is legally and ethically questionable. This issue should be raised with appropriate business forums. While it's acceptable to include retention clauses, they should only apply to new hires and not individuals with 10 or 15 years of service within the company.