Facing Legal Action for Alleged Contract Breach: How Should I Respond to My Employer's Recovery Suit?

I had a 1-year contract with a company and completed 10 months working with them last year in June. My CTC was 33,000 per month. However, in June last year, I only received 20,000 as a salary for the month of May. When I inquired about the deduction, they informed me that it was due to not following office rules. Additionally, my salaries for previous months were: April - 27,435, March - 27,635, February - 28,735, with a variable amount each month and an EPF contribution totaling 1,591. I repeatedly asked about the fluctuating salary but received no satisfactory response in writing or prior notification of deductions.

Frustrated by the lack of transparency, I submitted my resignation with a notice period of 10 days before leaving. However, the company neither accepted my resignation nor provided a justification for the salary deductions. Despite my inquiries, they insisted I fulfill the full year of the contract. When I pointed out the undisclosed deductions as a breach of contract, they simply warned me to leave if I wished, implying it would be a breach on my part.

After subsequent silence from the company, almost 8-9 months later, they have initiated legal action by filing a recovery suit against me, demanding thrice the amount of my salary. I am now considering legal action, as they claim I breached the contract, but it seems they breached it first by withholding salary without notice.

I have been disturbed by this situation, as my mental peace has been affected from the start due to consistently receiving less salary than stated in the offer letter. Despite raising the issue with HR, I was informed the deductions were for "office maintenance charges."

I seek advice from the community on how to proceed given the legal action taken against me.

Based on the information you've provided, it seems like there are multiple issues at play:

Salary Deductions

If you believe that your salary was deducted without proper justification and without clear communication, you might have a valid concern. Employers typically can't arbitrarily deduct salary without proper documentation and communication.

Breach of Contract

Your claim that the employer breached the contract by making unauthorized deductions and not providing the agreed-upon salary is something that could be evaluated by a legal professional.

Resignation

If you put in a resignation and served notice, but your employer didn't accept it and then filed a case against you, it's important to clarify whether your employment contract included specific terms regarding resignation notice and acceptance.

Summary of Recovery Suit

The case filed against you for breach of contract and seeking recovery might involve various factors. To assess this properly, you should consult with a lawyer who can review your employment contract, the circumstances, and the claims made in the suit.

Given the complexity of your situation, it's crucial to take the following steps:

Consult a Lawyer

Seek legal advice from an employment lawyer who can analyze your employment contract, the deductions made, your resignation, and the case filed against you.

Gather Documentation

Collect all relevant documents, including your employment contract, salary slips, communications with the employer, and any other evidence that might support your claims.

Respond Legally

Once you have consulted with a lawyer, follow their advice on how to respond to the summary of recovery suit. Do not ignore legal proceedings, as not responding appropriately can have negative consequences.

Mediation or Negotiation

Depending on the circumstances and your goals, it might be possible to resolve the matter through mediation or negotiation. Your lawyer can guide you on the best approach.

Keep Records

Maintain records of all communications and actions related to this situation. This can be crucial if the matter escalates further.

Remember, only a legal professional can provide you with tailored advice based on the specific details of your situation. It's important to act promptly to protect your interests and ensure you have the best possible legal guidance.

Resignation:

I had a notice period of 45 days, but while resigning from the job, I clearly mentioned the reason for my resignation over email. I stated that my salary had been deducted without any valid reasons, and no proper justification was provided for this action. In the resignation email, I also indicated that I would continue working for the next 10 days. Despite this communication, neither the HR team nor the management responded to the written correspondence regarding the salary deduction. Instead, they insisted that I must adhere to the notice period as per the contract without addressing the issue of the deducted salary or its processing timeline.

During the following 10 days, I regularly visited the office, yet no one provided me with an explanation regarding the salary deduction. Instead, they continued to threaten legal action for breaching the contract. However, it appears that the lack of communication and transparency regarding the salary deduction originated from their side. This deduction practice began in the first month of my employment, with smaller amounts such as 2000 or 3000 INR, but for the most recent month, the deducted amount exceeded 10,000 INR.

Your CTC was Rs. 30K, and probably the company included many items in it that you were not directly receiving as salary. There is nothing illegal or improper about the actual salary being less than the CTC, but such a wide variation in the monthly salary received is clearly unacceptable.

Reviewing the Offer of Appointment

We have to see the offer of appointment/order of appointment to advise you further regarding the violation of the service contract. You were appointed for 1 year, of which you completed 10 plus months of service. So the employer can claim only for the remaining period of service to complete the one year. The notice period of three months cannot lie outside the 1-year contract period. So, you are not liable to pay for anything beyond the remaining service, and the claim has to be limited to the actual total salary payable and not the CTC.

Defending Against a Civil Claim

Since a civil claim has been filed against you, you may defend it through an advocate. Meet the advocate with all your papers, and they will prepare your reply and help you to defend.

Suit for Recovery of Money
A suit for recovery of money is a civil relief and acts as an effective remedy to recover money from the delinquent. The suit can be filed under Order IV of the Code of Civil Procedure 1908 (CPC). It is a summary suit (Order 37, Code of Civil Procedure) that offers speedy disposal of the suit as here the defendant is not required to defend as a matter of right.

Limitation Period
The time period for filing a suit for money recovery is 3 years from the date when the cause of action arises. However, it can also be condoned and subjected to the discretion of the court.

Who can File a Money Suit?
Every person who has a right to sue can file a money suit. This category of people includes:
1. The Principal and Agent
2. Co-holders of a debt or actionable claim
3. Partners
4. Trustee and Trust beneficiary
5. A Religious Institution and its Member(s)
6. A Hindu Joint Family & Its Members
7. Banking Companies and Financial Institutions
8. Civil and Military Officers (for recovery of fine or penalty)
9. Other Statutory Authorities
10. Executor so on and so forth.

Where can we file a money suit?
In order to file any suit, the court must have "jurisdiction over your person" and "jurisdiction over the subject matter of the suit" for a valid judgment. If you are to file a money suit against another, there is a jurisdictional requirement that must be observed. The law requires the defendant to be sued in the place where the contract was made or where it was broken. The question that arises is where can a person sue for recovery of money under a money suit?

Territorial Jurisdiction
This is the first thing to look at before instituting a suit and while you decide where to file the case is to see if the court has territorial jurisdiction over the person. Under the Code, while deciding the territorial jurisdiction, these factors are looked into:
- Place of residence of the defendant
- Place where the defendant has his/her business and earns thereof.
- The place of cause of action wholly or partially.

Pecuniary Jurisdiction
Alongside the territorial jurisdiction, the pecuniary jurisdiction has to be taken into consideration. This is related to the subject matter of the suit. This criterion is mainly important to decide the place of suing in relation to the monetary value of the suit. The case will be filed as per the monetary value of the suit. One has to keep in mind that the territorial jurisdiction is determined before looking into the pecuniary jurisdiction.

What are the different means to recover your money?

Send A Legal Notice
When a defaulter receives a notice, he or she has 15 days to return the cash. In which a complaint is registered with the court, or one can file an FIR with the police.

Summary Suits
Which is the quickest way to recover your money which will be 'Order 37' of the Civil Procedure Code, with Summary Suits, as it is based on written statements and it will speed up court proceedings.

Thank you all for your advice. Find below some more details related to the case.

Details of the Case

1. It is a suit for recovery under Order XXXVII of the Code of Civil Procedure.
2. I know the CTC mentioned and the in-hand salary are always different, but in this case, no salary slip was provided to me. Therefore, I was never able to check the deductions for what reason. The salary I received was in the range of INR 27,500-28,500 every month. INR 1,531 was deducted as PF, which included my share as well as the pension contribution and the employer's share. The total comes to roughly INR 30,000. Still, every month INR 3,000 is missing, and on top of that, I would get INR 7,500 after every 3-4 months as an incentive. Even if you distribute that equally, still INR 500-1,000 is missing per month. However, the month I left my job, I only received INR 20,000. This made me conscious as earlier I never questioned it since the amount was less. But when 1/3 of the salary is not received, then I have to take that step.

Till date, they have never provided me with a salary slip. Upon asking for the salary slip via email, they inquired about the reason. I mentioned I needed it for a home loan, yet they still did not provide it to me. I had asked for it 2-3 months before leaving the job.

Other Issues Faced

3. There were several other issues such as late-night working, not allowing me to leave as per my duty hours, and various mental pressures like no paid leave. If you apply for paid leave, it's not approved, and salary is deducted for the same. In the 10 months I was there, no paid leave was granted. All of this is unacceptable. Despite being in a private organization, we shouldn't have to endure such treatment. However, when there is no reason provided for salary deductions and no salary slip is given, it forced me to leave the job.

Whether it is 100, 1,000, or 10,000, if they are not paying me in full as per the service agreement, which was for a CTC of 33,000 in total after all deductions, does that make them breach the contract? I have added all the deductions like EPF plus in-hand salary, yet it is still less than 33,000 by 3,000. Does this not constitute a breach of the contract on their end?

Understanding Salary Discrepancies

Your monthly salary will always be lower than your CTC figure.

Request for Contract Review

Regarding the issue, could you please provide a copy of your contract with the company so that an appropriate response can be suggested?

Good Day, As you mentioned, your CTC is ₹33,000 per month.

Understanding CTC and Net Salary

Cost to the Company - you won't get the full cost to the company in hand. The actual term you receive is your NET Salary. The whole amount is "CTC," then Variable pay will be deducted, like your food expenses, transportation, insurance, etc. So here is your "Gross Salary." Then your EPF will be deducted, resulting in your "NET Salary" – what you earn month on month.

You highlighted your "Feb 28,735," which approximately seems correct.

Steps to Take in Legal Disputes

However, in your case, a case was filed, so you have to proceed as follows:

1. You can highlight that "your queries were not answered. You have to take all mail printouts for proof."
2. Most cases favor the employee. So be strong and highlight all the negatives you faced.
3. If possible, file a lawsuit against them for your mental stress and health-related issues due to this.
4. Instead of answering their questions, document what you have faced. Be firm in your stance and emphasize that you are ready to work, but they are ignoring you and failing to address your queries.

Salary Discrepancies and Deductions

In February, the salary in hand was $28,735, with EPF contributions as follows: Employee Share - $1,018, Employer Share - $32, Pension Contribution - $541. The total salary was $30,326.

In March, the salary in hand was $27,635, with EPF contributions as follows: Employee Share - $1,018, Employer Share - $32, Pension Contribution - $541. The total salary was $29,226.

In April, the salary in hand was $27,435, with EPF contributions as follows: Employee Share - $1,018, Employer Share - $32, Pension Contribution - $541. The total salary was $29,026.

In May, the salary in hand was $20,000, with EPF contributions as follows: Employee Share - $1,018, Employer Share - $32, Pension Contribution - $541. The total salary was $21,591. The missing amount for every month ranges from $2,500 to $4,000, but for May, it was $11,500.

Uncommunicated Deductions

Variable pay deductions, such as food expenses, transportation, and insurance, were not mentioned in my offer letter or agreement. If such deductions are made, they should have been communicated in advance. While HR mentioned office expenses as a reason for salary deductions, I have no obligation to cover any office expenses based on my experience.

Breach of Agreement?

Based on these discrepancies, is this a breach of the agreement from their end?