I recently joined an IT company as a Senior HR. Here, we train freshers for one year and then place them on the client side for work (VLSI) on our rolls. During training, we provide them with a stipend of 25k and require a commitment from them to work for a minimum of three years with us after completing the training.
Now, if anyone breaches the bond in between and requests a relieving or experience letter without repaying the training fee, which we incurred as an expense on a prorated basis, can we legally withhold the experience/relieving letter? In such cases, we are not withholding anybody's full and final settlement. But regarding an experience letter, can they legally file a suit against us? Please guide.
From Canada, Toronto
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Now, if anyone breaches the bond in between and requests a relieving or experience letter without repaying the training fee, which we incurred as an expense on a prorated basis, can we legally withhold the experience/relieving letter? In such cases, we are not withholding anybody's full and final settlement. But regarding an experience letter, can they legally file a suit against us? Please guide.
From Canada, Toronto
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Although the employees have signed bonds, they commit breaches of the bond and do not pay the bond amount or pro rata damages. In these circumstances, can the relieving letter or experience letter be withheld?
There are statutory provisions under some Shops and Establishment Acts, such as the Delhi Shops and Establishment Act, which require the employer to give an experience letter at the time of leaving. Similarly, under Model Standing Orders, where applicable, there is a requirement to issue such certificates, failing which the authorities can compel the employer to issue the certificate. Now, leaving aside the legality of bond provisions, will it be proper to not issue such certificates to employees who have committed a breach of bond?
Firstly, the meaning of relieving should be understood. By issuing the relieving order, the contract of service is determined. However, to safeguard the employer's interest, the relieving may be made conditionally. Legal action may be pursued separately to recover the legally tenable damages from the bond agreement. The following are extracts of a few cases in which relieving was done conditionally:
Madras High Court
The Registrar Of Co-Operative ... vs G. Manoharan on 21 October, 2009
“Here, the first respondent was suspended on the eve of the day on which he was to attain the age of superannuation. No relieving order was passed.”
Supreme Court of India
Bhagirathi Jena vs Board Of Directors, O.S.F.G. And ... on 31 March, 1999
“The appellant was relieved on 1st July, 1975 by the Corporation 'without prejudice to the claims of the Corporation.'”
Delhi High Court
Lucas Indian Services Ltd. vs Sanjay Kumar Agarwal on 25 August, 2010
“The appellant company in a letter dated 4.12.1999 informed the respondent that his services would be relieved subject to certain conditions specified therein, among which one was the repayment of a loan advanced by the appellant company to the respondent.”
If you do not issue such certificates with conditions to employees who have resigned but breached the bond, they are to be treated as continuing in the service of the company. Such employees must be removed from the payroll of the company to keep the registers of employees updated and to ward off any future claim of continuity of service, as held in the above Madras HC decision.
It is appropriate that a relieving letter with conditions may be issued to such employees on the following lines. It serves a dual purpose: it safeguards the employer's interest and gives such employees an unusable relieving letter:
“His services would be relieved subject to conditions specified herein, which, inter alia, include that he has failed to repay the liquidated damages payable by him in respect of the bond dated ____ executed by him in favor of the company, and his relieving shall be without prejudice to the claims of the company to recover the liabilities due from him.”
It may be pointed out that if the employee has cleared his dues, then in the case of non-issuance of such certificates, the employee can seek an interim mandatory injunction from the court to obtain such certificates without any conditions.
It is subject to the views of other learned persons.
Thanks
Sushil
From India, New Delhi
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225There are statutory provisions under some Shops and Establishment Acts, such as the Delhi Shops and Establishment Act, which require the employer to give an experience letter at the time of leaving. Similarly, under Model Standing Orders, where applicable, there is a requirement to issue such certificates, failing which the authorities can compel the employer to issue the certificate. Now, leaving aside the legality of bond provisions, will it be proper to not issue such certificates to employees who have committed a breach of bond?
Firstly, the meaning of relieving should be understood. By issuing the relieving order, the contract of service is determined. However, to safeguard the employer's interest, the relieving may be made conditionally. Legal action may be pursued separately to recover the legally tenable damages from the bond agreement. The following are extracts of a few cases in which relieving was done conditionally:
Madras High Court
The Registrar Of Co-Operative ... vs G. Manoharan on 21 October, 2009
“Here, the first respondent was suspended on the eve of the day on which he was to attain the age of superannuation. No relieving order was passed.”
Supreme Court of India
Bhagirathi Jena vs Board Of Directors, O.S.F.G. And ... on 31 March, 1999
“The appellant was relieved on 1st July, 1975 by the Corporation 'without prejudice to the claims of the Corporation.'”
Delhi High Court
Lucas Indian Services Ltd. vs Sanjay Kumar Agarwal on 25 August, 2010
“The appellant company in a letter dated 4.12.1999 informed the respondent that his services would be relieved subject to certain conditions specified therein, among which one was the repayment of a loan advanced by the appellant company to the respondent.”
If you do not issue such certificates with conditions to employees who have resigned but breached the bond, they are to be treated as continuing in the service of the company. Such employees must be removed from the payroll of the company to keep the registers of employees updated and to ward off any future claim of continuity of service, as held in the above Madras HC decision.
It is appropriate that a relieving letter with conditions may be issued to such employees on the following lines. It serves a dual purpose: it safeguards the employer's interest and gives such employees an unusable relieving letter:
“His services would be relieved subject to conditions specified herein, which, inter alia, include that he has failed to repay the liquidated damages payable by him in respect of the bond dated ____ executed by him in favor of the company, and his relieving shall be without prejudice to the claims of the company to recover the liabilities due from him.”
It may be pointed out that if the employee has cleared his dues, then in the case of non-issuance of such certificates, the employee can seek an interim mandatory injunction from the court to obtain such certificates without any conditions.
It is subject to the views of other learned persons.
Thanks
Sushil
From India, New Delhi
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Death while in service letter for pf death claim.docx