Mandatory Service Period or compensation back - Is this allowed as per the laws in India?

Hi! I had an employee reach out to me. As per her terms of employment with a multinational entity, she had to serve a mandatory period of 24 months, which includes 12 months of probationary time. In case she fails to serve this mandatory period of 24 months, she will be liable to pay a certain sum towards compensation fees. Due to unforeseen circumstances, she had to resign within 11 months, and now the MNC is demanding some compensation back from her.

Is this allowed as per the laws in India? If so, how can she weave through this issue?

Hi,

What were the documents signed by the employee and what was the nature of work performed? Whether any specialized software/skill development training was given? Whether any security checks were deposited? In the absence of security checks, there might not be any major implications except that they will serve termination.

Normally, in any agreement, there will be some "way out" clause like extended notice. Please check the terms and conditions thoroughly.

The employee is an IT professional. There was an offer and appointment letter signed by the employee which had this clause mentioned in it. No security checks were deposited as such. The employee had also diligently served the notice period in full.

Hi,

My assessment is that there will not be many implications, except that they will serve termination, blocklist the employee for future requirements, or provide negative feedback in case of background verification.

However, advise the employee to try for a proper relieving without making any payment, for example, by serving an additional notice period if permitted.