Facing Legal Hurdles: What Happens If I Resign Early to Pursue a Job in Canada?

I work for an employer and have been with them for the last three years. They asked us to sign an employment service agreement which states that we cannot resign within two years of employment. If we do resign, then we are required to pay them three months' salary. They have taken post-dated blank cheques from us.

It's almost going to be three years of service this August. I aspire to move or relocate to Canada and have been attending interviews with a few lined up.

I want to officially resign, but currently, it's uncertain as I don't have a job secured yet. I want to understand the legal implications and what actions I may have to face if I resign with a one-month notice period, in case I secure a job in Canada. I am planning to visit Canada in July 2023 and have already taken official leave for 20 days.

You have been working with this company for the last three years. Your contract of employment stipulates that you should not leave the company in 2 years. If you resign within 2 years, you will have to pay 3 months' salary. I am afraid, how do these conditions apply to you because you have already crossed the mandatory service of two years?

Legal implications of leaving before contract ends

A condition of service that you should not leave in 2 years is illegal, but there can be a notice period enforceable by law. Though no employer may go for a legal fight with an employee leaving, you cannot overrule the possibility of your background verification/exit formalities going negative once you decide to leave. Therefore, it is always good if you leave on good terms only. Anyway, since you have started your search for a Canadian assignment, go ahead with it.

Wherever possible, try to get relieved properly. As you claim you are about to complete 3 years, discuss with your employer. Most likely, they will agree to a proper relieving process as you are nearing 3 years. Also, before you leave, please collect the 3 undated cheques, which are very important. We don't know the background of the service agreement you entered into and what type of supporting document you provided along with the undated cheques. Whether the service agreement or the submission of undated cheques is legal or illegal is secondary, but the employer can harass you by depositing the cheques with the bank, knowing that they will be dishonored. Therefore, please exercise utmost caution.

Thank you for the comments. I really appreciate it. I am also eligible for incentives earned for the last financial year, which is a pretty decent amount. Usually, they disburse this during July or August. It is the same time I am leaving for Canada. If required, I can share a copy of the agreement in this thread, which can give you an idea.

Can you please advise if they can hold my incentive or adjust it against the salary in case I don't serve the notice period during resignation? Is it a breach of law, and if so, are there any serious consequences?

Hi, adding to the valid points shared by Mr. Madhu, unlike abroad, Indian employers, especially small and mid-size employers, pay less attention to labor laws until things get legally complicated. Whatever good services are rendered by the employee, irrespective of the number of years contributed, once an employee submits their resignation, employers tend to develop some sort of resentment against the employee (I am not generalizing all employers - exceptions are always there). In such a scenario, expecting benefits like incentives that were not part of the salary, even without completing the proper notice period, will be a case of uncertainty. It depends on the employer.

One thing I just want to ask you, when you know that your employer will disburse incentives in the next couple of months, why do you want to make a hasty move now? If you haven't submitted the resignation and you have time for relocation to Canada, why not wait for a couple of months so that you will receive the benefits and also complete your agreement period. Just my suggestion. Based on your comfort, you need to make the decision.