Hi, I took up a job in a firm in Bangalore 6 months ago and had been on the bench ever since. At the time of joining, I had signed an indemnity bond which was duly notarized. The terms, in brief, said that the contract period was for a year and that if I leave the organization within that year, I would be liable for an amount of 2 lakhs. Being on the bench for 5 months, I decided to look out for a change due to the fear of losing the job. I got an offer from another firm and decided to move on. Now the employer is threatening to sue me for breach of contract and sent me a notice from a lawyer. The notice also states that I'm liable to pay an amount of 2 lakhs. Please let me know what my next course of action should be.
Acknowledge(0)
Amend(0)
Acknowledge(0)Amend(0)
This matter was discussed many times in this forum itself. Please find the related issue using the search option on the site.
An indemnity bond (as is in the instant case) signifies a contract between the employee and the employer wherein the former agrees to indemnify any loss caused to the latter due to his conduct or by any other person. Only when this condition is met does the contract become an indemnity contract/bond.
What is the amount of loss sustained by the employer due to the conduct of the employee leaving the organization? Is it Rs 2 lakh? Is a certain amount fixed at the time of entering the contract? Can the employer prove that he has suffered a loss to the tune of Rs 2 lakh due to the employee leaving before completing the stipulated period? It is up to the employer to find answers to these questions. If the employer has no proof to show that he suffered a loss of Rs 2 lakh, he cannot require the employee to indemnify it.
It is implied that if the employer has incurred an expenditure of Rs 2 lakh on parting training, which is an asset or value addition for the concerned employee, the employer can insist that the employee remains with him until the amount spent on training is fully recovered in the form of service/labor from the employee. In such cases, the employer is justified in claiming that he has suffered a loss by spending on training an employee.
Moreover, compelling an employee to work for him is not acceptable, and any suit seeking direction in this regard will not be maintainable as it will be deemed as "bonded labor."
In the above circumstances, there is no legality for such notices, and the employer will not file a suit against any such employee; the proceedings will end with a notice only. You can either ignore the notice or reply refusing to pay the amount, stating that there is no ground for demanding such an amount.
Regards,
Madhu.T.K
From India, Kannur
Acknowledge(0)Amend(0)
4556An indemnity bond (as is in the instant case) signifies a contract between the employee and the employer wherein the former agrees to indemnify any loss caused to the latter due to his conduct or by any other person. Only when this condition is met does the contract become an indemnity contract/bond.
What is the amount of loss sustained by the employer due to the conduct of the employee leaving the organization? Is it Rs 2 lakh? Is a certain amount fixed at the time of entering the contract? Can the employer prove that he has suffered a loss to the tune of Rs 2 lakh due to the employee leaving before completing the stipulated period? It is up to the employer to find answers to these questions. If the employer has no proof to show that he suffered a loss of Rs 2 lakh, he cannot require the employee to indemnify it.
It is implied that if the employer has incurred an expenditure of Rs 2 lakh on parting training, which is an asset or value addition for the concerned employee, the employer can insist that the employee remains with him until the amount spent on training is fully recovered in the form of service/labor from the employee. In such cases, the employer is justified in claiming that he has suffered a loss by spending on training an employee.
Moreover, compelling an employee to work for him is not acceptable, and any suit seeking direction in this regard will not be maintainable as it will be deemed as "bonded labor."
In the above circumstances, there is no legality for such notices, and the employer will not file a suit against any such employee; the proceedings will end with a notice only. You can either ignore the notice or reply refusing to pay the amount, stating that there is no ground for demanding such an amount.
Regards,
Madhu.T.K
From India, Kannur
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Contract employee & Principal employer 2017.pdf
HR Concern for Employer n Employee.doc