Hi, I am a fresher and I signed a contract for 2 years. However, I am now finding it challenging to work because I want a permanent government job. But I can't say that for my resignation; they will say I need to think before signing the contract and ask me for 6 months' salary for the period I worked. As suggested by my family, I told them I am going for higher studies, but they want me to show the admission letter and all. The notice period is 2 months. So, please suggest how to leave the company without paying the money.
From India, Hyderabad
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From India, Hyderabad
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If you are sure that you will get a government job and that you will never come back to private work, then just ignore the demands by the employer. Submit your resignation, work for a maximum of one month, and then just hand over the duties and leave the company. These employers make contracts to work for two years, etc., just because they know that people fear background verification. Naturally, if you leave before the contract period, they will not give any positive feedback when a background verification comes about you by any future employers. But this background verification will be just toilet papers if you have decided to join government service or PSUs. Moreover, compelling an employee to work with an employer is bad in law, and creating a bond for that is equal to bonded labor, which is illegal.
From India, Kannur
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4483From India, Kannur
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Dear Sir/Madam,
An employee may secure a higher or more beneficial position elsewhere. It is their right. A contract may not bind them. It is advisable to first secure a government job before resigning, as finding a government job can be very challenging. Sometimes, one may find a government job, but it may not be suitable for them.
From India, Indore
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An employee may secure a higher or more beneficial position elsewhere. It is their right. A contract may not bind them. It is advisable to first secure a government job before resigning, as finding a government job can be very challenging. Sometimes, one may find a government job, but it may not be suitable for them.
From India, Indore
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Dear Madhu T K sir,
I need your guidance on the following cases:
1. For Fresher:
Is the applicability of a bond for a fresher necessary? Since the company provides training for fresher employees, would the bond be applicable?
2. For Experienced Candidates:
Is a bond applicable in the scenario where an employee leaves within, for instance, one year and is required to pay X amount? This is especially relevant when no special training has been provided to the employee or when the employee has undergone some special training incurring costs. Would the bond be applicable in such cases?
Thank you in advance.
From India, Mumbai
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I need your guidance on the following cases:
1. For Fresher:
Is the applicability of a bond for a fresher necessary? Since the company provides training for fresher employees, would the bond be applicable?
2. For Experienced Candidates:
Is a bond applicable in the scenario where an employee leaves within, for instance, one year and is required to pay X amount? This is especially relevant when no special training has been provided to the employee or when the employee has undergone some special training incurring costs. Would the bond be applicable in such cases?
Thank you in advance.
From India, Mumbai
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Serving the notice period as per the terms of your employment contract is indeed the most straightforward and ethical course of action. It's essential to honor your legal obligations and fulfill the terms of the agreement you've entered into with your employer.
ALWAYS REMEMBER before signing any document, especially one related to employment or a contract, it should never be done hastily. It's crucial to thoroughly review and understand the implications of what you're agreeing to.
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ALWAYS REMEMBER before signing any document, especially one related to employment or a contract, it should never be done hastily. It's crucial to thoroughly review and understand the implications of what you're agreeing to.
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(Fact Checked)-The user reply is correct. It emphasizes the importance of honoring legal obligations and understanding agreements before signing, which are ethical practices. (1 Acknowledge point)
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Bond is illegal, and nobody should be compelled to work with any employer/organization. This applies to freshers as well as experienced individuals. In the case of a fresher appointed as a trainee, all labor laws are applicable, except for apprentices appointed under the Apprentice Act 1961 or interns participating in an academic program as part of their curriculum. Nowadays, the term "intern" is commonly used instead of "training." If an intern is hired after completing the course, not at the request of the institution's Principal, they will not fall under the exempted category of intern but will be considered a trainee, similar to an employee in all aspects.
An apprentice is typically engaged for a specific period, and the Contract of Apprenticeship outlines the termination process. However, any compensation is usually limited to an amount equal to three months' stipend.
If an employer provides training to an employee, whether a fresher or experienced, the employer may recover the actual cost of training if the employee does not continue for a specified period. To enforce this, there must be a quantifiable record of costs spent exclusively on the employee. Without providing training or incurring costs for the trainee, enforcing any bond is not feasible. While employers may issue notices, few have taken further legal action or succeeded in such cases.
From India, Kannur
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An apprentice is typically engaged for a specific period, and the Contract of Apprenticeship outlines the termination process. However, any compensation is usually limited to an amount equal to three months' stipend.
If an employer provides training to an employee, whether a fresher or experienced, the employer may recover the actual cost of training if the employee does not continue for a specified period. To enforce this, there must be a quantifiable record of costs spent exclusively on the employee. Without providing training or incurring costs for the trainee, enforcing any bond is not feasible. While employers may issue notices, few have taken further legal action or succeeded in such cases.
From India, Kannur
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(Fact Checked)-The user reply contains accurate information regarding the legality of bonds, training agreements, and the rights of employees, both freshers and experienced individuals. (1 Acknowledge point)
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Hi Dipti Srivastava,
True, we have to respect the contract and the terms of the contract, but if the terms of the contract are not consistent with the laws of the land, we should challenge it. We know that the notice period is a common condition of service nowadays. Under Indian law, an employer is liable to pay one month's notice if they want to terminate an employee. In the case of factories, mines, etc., where there are 100 or more workers employed, it shall extend to three months. However, under no law is it mentioned that an employee should also give that notice to the employer if they want to leave.
But what is the scenario? In most companies, especially IT companies which are not factories and do not employ 100 or more employees falling under the scope of Chapter VB of the Industrial Disputes Act, the stipulated notice period is three months! It is true that IT companies are industries covered by the ID Act, but employees cannot be asked to serve a 90-day notice. Employees, upon joining, are often unaware of the organization's culture, the prevailing career scope, etc. When they realize that it's not the right fit for them, they should be able to leave.
While it's true that the employee agreed to the terms and conditions of employment before joining, they may have been promised many things by the recruitment team, many of which may not have materialized. Therefore, it ultimately becomes the employee's decision to determine what the law requires and if they are truly liable to pay a notice period or serve such a long notice period.
From India, Kannur
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True, we have to respect the contract and the terms of the contract, but if the terms of the contract are not consistent with the laws of the land, we should challenge it. We know that the notice period is a common condition of service nowadays. Under Indian law, an employer is liable to pay one month's notice if they want to terminate an employee. In the case of factories, mines, etc., where there are 100 or more workers employed, it shall extend to three months. However, under no law is it mentioned that an employee should also give that notice to the employer if they want to leave.
But what is the scenario? In most companies, especially IT companies which are not factories and do not employ 100 or more employees falling under the scope of Chapter VB of the Industrial Disputes Act, the stipulated notice period is three months! It is true that IT companies are industries covered by the ID Act, but employees cannot be asked to serve a 90-day notice. Employees, upon joining, are often unaware of the organization's culture, the prevailing career scope, etc. When they realize that it's not the right fit for them, they should be able to leave.
While it's true that the employee agreed to the terms and conditions of employment before joining, they may have been promised many things by the recruitment team, many of which may not have materialized. Therefore, it ultimately becomes the employee's decision to determine what the law requires and if they are truly liable to pay a notice period or serve such a long notice period.
From India, Kannur
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Under Indian law, employee bond agreements are legally enforceable if they are reasonable and do not violate the principles of freedom of employment. The Indian Contract Act, 1872, governs the legality of these agreements, and courts have upheld the validity of employee bond agreements in certain circumstances.
The Supreme Court of India ruled in favor of the employer, upholding the validity of the employee bond agreement. The court held that the bond period and the compensation amount were reasonable, and the employee was obligated to honor the agreement.
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The Supreme Court of India ruled in favor of the employer, upholding the validity of the employee bond agreement. The court held that the bond period and the compensation amount were reasonable, and the employee was obligated to honor the agreement.
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Ultimately, it's a matter of fairness and balance. While contracts are important, they should not unfairly burden employees or contradict legal requirements. It's essential for both employers and employees to understand their rights and responsibilities under the law and work towards a mutually beneficial resolution.
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I don't find any justification for a bond to work for the employer. True, there are instances where an employer can recover the costs of training given to an employee, and as such, a bond to recover training costs in real terms only is enforceable. I request our valued member, Dipti, to post a citation of the Supreme Court that held that a bond is maintainable for our academic interest.
Again, I will not say that the employee should run away from employment without knowing the situation in which the employer would be put once he just leaves the organization without notice. But I will say that a notice period of 90 days is highly unfair, and if the employer insists that the employee who falls under the scope of the ID Act should serve it, then I would say that an employee is not bound to give even a single day's notice to leave. Many employers take it for granted that they can impose three months' notice on all employees. That should not be allowed.
From India, Kannur
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Again, I will not say that the employee should run away from employment without knowing the situation in which the employer would be put once he just leaves the organization without notice. But I will say that a notice period of 90 days is highly unfair, and if the employer insists that the employee who falls under the scope of the ID Act should serve it, then I would say that an employee is not bound to give even a single day's notice to leave. Many employers take it for granted that they can impose three months' notice on all employees. That should not be allowed.
From India, Kannur
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It is unfortunate that seniors are advocating the person just get out without paying any respect to the bond signed by him. This is how his character and traits will also be formed. I am not advocating he should make payment and get rid of the current organisation. First, he should explain the situation and convince the employer for waiving of the bond amount or at least should calculate the liquidated damages on a proportionate basis and pay the amount for the unserved bond period. This has been upheld by various courts also. If the employer has given some specific training which involves some cost and needs to be recovered, the same should be recovered. In the Wipro case, the Bangalore court has agreed to recover training cost proportionately from the relieving employee's terminal benefits for the unserved bond period.
This is my personal view, and I have commented to blame anyone.
From India, Ernakulam
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This is my personal view, and I have commented to blame anyone.
From India, Ernakulam
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(Fact Checked)-The user's reply contains accurate information regarding the legal implications of breaking a bond agreement with an employer and the potential consequences. The reference to the Wipro case in Bangalore is relevant in terms of recovering training costs from employees who do not complete their bond period. Overall, the advice provided aligns with legal principles. (1 Acknowledge point)
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@Ravichandiran-B, The seniors have not supported the act of abandoning the job by ignoring the agreement signed but are defending the bond signed or compelled to be signed. I have only said that the bond is illegal, and I have also mentioned that if the employee was given training, the cost of training could be recovered in actuals. All the courts have echoed the same sentiment, and no court has ever ruled that an employer can insist on a bond and compel an employee to work for a certain period. If this were permitted, we would risk entering into a bonded labor system. Even in the current scenario, many employees, especially in new generation industries like IT, are pressured to work due to negative remarks employers make in background checks. This practice has significantly harmed the careers of many young individuals. We do not support employees who leave without notice, but there should be genuineness in the length of the notice period, right?
From India, Kannur
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From India, Kannur
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A contract is a binding agreement between an employee and employer under the Indian Contract Act, 1872, from the day of entering into the contract between both parties. No employee can contravene the contract unless the employer agrees to reasons deemed fit and requested by the employee. The reasons mentioned in your post do not seem to be eternal facts that could justify the employer. The employer has invested financial resources in the employee, and if the return on investment (ROI) has not yielded results within the contract bond period, the amount incurred towards employee development has to be returned to the employer.
My sincere suggestion is to request the employer in a kind manner to waive off your bond period. In his upcoming recruitments, the employer will add more stringent rules to his employment terms considering the experience based on your employment, which will affect upcoming job seekers.
From India, Telangana
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My sincere suggestion is to request the employer in a kind manner to waive off your bond period. In his upcoming recruitments, the employer will add more stringent rules to his employment terms considering the experience based on your employment, which will affect upcoming job seekers.
From India, Telangana
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@Madhu T K - sharing for your reference, but yes, bonded labor is definitely illegal but not employment bond. Honorable Supreme Court in Niranjan Shankar Golikari vs The Century Spinning And Mfg. Co held that "there is nothing to prevent a court from granting a limited injunction to the extent that is necessary to protect employers' interests where the negative stipulation is not void." The Court also mentioned that "an agreement to serve a person exclusively for a definite term can be termed as a lawful agreement." Therefore, the restrictive covenants provided in a contract shall be valid for the duration of employment and will not be a violation of Section 27 of the Indian Contract Act, 1872, and there are many more judgments in favor of the employer. The employment bond gives a right to the employer to claim the reasonable liquidated damages in the court of law in case of breach of contract by the employee. Employment Bond is an important document that protects employers' interests with a caveat that the conditions mentioned in the Bond should be reasonable.
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(Fact Checked)-The user's reply contains accurate information regarding employment bonds and the validity of restrictive covenants in contracts as per the Supreme Court judgment in Niranjan Shankar Golikari vs The Century Spinning And Mfg. Co. The reply also correctly mentions the employer's right to claim reasonable liquidated damages for breach of contract. Therefore, the response is correct. (1 Acknowledge point)
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Dear Sir/Madam,
An employee is required to work for a minimum period, as mentioned in the contract or appointment letter. This condition is typically specified when training is a prerequisite for the job. Before being assigned to a regular job position, the company provides training either on-site or at an external location. If an employee resigns before completing the minimum period outlined in the contract or appointment letter, the company reserves the right to recover the training costs incurred.
Thank you.
From India, Indore
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An employee is required to work for a minimum period, as mentioned in the contract or appointment letter. This condition is typically specified when training is a prerequisite for the job. Before being assigned to a regular job position, the company provides training either on-site or at an external location. If an employee resigns before completing the minimum period outlined in the contract or appointment letter, the company reserves the right to recover the training costs incurred.
Thank you.
From India, Indore
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Niranjan Shankar Golikari was given exclusive training in the spinning department of the tyre cord division by the technical collaborators, namely, Algemene Kunstzijde Unie of Holland and Vereinigte Glanzstoff-Fabriken, West Germany. There was an express agreement by Century Spinning And Mfg. Co with the technical support providers regarding the payment of consideration for that. The agreement with the employee contained a clause that the employee, having received the training, should remain with them for a minimum period of five years so that the training cost could be recovered. True, there is nothing contrary to what I have stated in my previous posts. The Apex Court also drew a distinction between a restriction in a contract of employment, which is operative during the period of employment, and one that is to operate after the termination of employment.
In later cases like Superintendence Company of India (P) Ltd. vs. Sh. Krishan Murga (AIR 1980 SC 1717), the Court observed that "the doctrine of restraint of trade does not apply during the continuance of the contract for employment and it applies only when the contract comes to an end".
In Ambiance India Pvt Ltd vs Naveen Jain (2005 (81) DRJ 538), an agreement between the parties prohibiting an employee for two years from taking employment with present, past, or prospective customers of the plaintiff was held to be void and contrary to section 27 of the Indian Contract Act. It was held that such a stipulation would prima facie be against the public policy of India and an arm-twisting tactic adopted by the employer against a young man looking for a job.
In Sandhya Organic Chemicals v. United Phosphorous (AIR1997GUJ177), it was held that an employee cannot be prevented from utilizing the knowledge and experience that he has gained while being in employment.
In Niranjan's case, the core of the contract was that he had received training, and that too exclusive training as part of the contract of employment, which also had a clause that the Supervisor (Neeraj) would make use of his knowledge gained exclusively for the employer for a certain period. That is why, while referring to the case of Niranjan, the Courts have said that the Neeraj case is different from other situations.
From India, Kannur
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In later cases like Superintendence Company of India (P) Ltd. vs. Sh. Krishan Murga (AIR 1980 SC 1717), the Court observed that "the doctrine of restraint of trade does not apply during the continuance of the contract for employment and it applies only when the contract comes to an end".
In Ambiance India Pvt Ltd vs Naveen Jain (2005 (81) DRJ 538), an agreement between the parties prohibiting an employee for two years from taking employment with present, past, or prospective customers of the plaintiff was held to be void and contrary to section 27 of the Indian Contract Act. It was held that such a stipulation would prima facie be against the public policy of India and an arm-twisting tactic adopted by the employer against a young man looking for a job.
In Sandhya Organic Chemicals v. United Phosphorous (AIR1997GUJ177), it was held that an employee cannot be prevented from utilizing the knowledge and experience that he has gained while being in employment.
In Niranjan's case, the core of the contract was that he had received training, and that too exclusive training as part of the contract of employment, which also had a clause that the Supervisor (Neeraj) would make use of his knowledge gained exclusively for the employer for a certain period. That is why, while referring to the case of Niranjan, the Courts have said that the Neeraj case is different from other situations.
From India, Kannur
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In the landmark case of S. Golikari vs. Century Spinning & Manufacturing Company, the Supreme Court upheld the validity of a clause in an employment contract that stipulated the appellant employee would serve the respondent company for five years, undergo training, and reimburse training expenses and pay damages if they resigned before the expiry of the five-year period. The court held that this restriction did not constitute a restraint of trade, as it was limited to the agreed-upon contract period.
Similarly, in M/s Gujarat Bottling Company Limited vs. Coca Cola Company, the Supreme Court succinctly summarized the law pertaining to 'negative covenants' in employment contracts, drawing on earlier apex court judgments. The Court held that, in balancing the employer's interests with the employee's right to livelihood, a negative covenant that is operative during the employment contract period, when the employee is exclusively bound to serve the employer, is generally not considered a restraint of trade. Therefore, it will not fall under the purview of Section 27 of the Act.
Damages: Section 73 of the Act provides the general right to compensation for loss or damage caused by breach of contract. Section 73 of the Act reads as follows:
73. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
To avoid legal hassles, it is essential to honor your employment bond and understand the implications of breaching contractual obligations.
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Similarly, in M/s Gujarat Bottling Company Limited vs. Coca Cola Company, the Supreme Court succinctly summarized the law pertaining to 'negative covenants' in employment contracts, drawing on earlier apex court judgments. The Court held that, in balancing the employer's interests with the employee's right to livelihood, a negative covenant that is operative during the employment contract period, when the employee is exclusively bound to serve the employer, is generally not considered a restraint of trade. Therefore, it will not fall under the purview of Section 27 of the Act.
Damages: Section 73 of the Act provides the general right to compensation for loss or damage caused by breach of contract. Section 73 of the Act reads as follows:
73. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
To avoid legal hassles, it is essential to honor your employment bond and understand the implications of breaching contractual obligations.
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(Fact Checked)-The information provided in the user reply is accurate and relevant to the situation described in the original post. The references to the Supreme Court cases of S. Golikari vs. Century Spinning & Manufacturing Company and M/s Gujarat Bottling Company Limited vs. Coca Cola Company are appropriate in discussing the validity of employment contracts and negative covenants. Additionally, the mention of Section 73 of the Act regarding compensation for breach of contract aligns with legal provisions. (1 Acknowledge point)
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Is Gujarat Bottling Company Limited vs. Coca Cola Company free from criticism? Moreover, the case pertains mainly to the Trade Marks Act, 1999, Trade and Merchandise Marks Act, 1958, and Sections 27, 41, and 82 of the Indian Contract Act, 1872. The Niranjan case, a case from 1967, as already mentioned, verified whether the contract will be enforceable during the tenure of the contract and not beyond the termination of the contract. Anyway, thanks for the update. I will continue to advocate that employment bonds, not other trade contracts, are illegal. Demanding an employee to remain with an employer who has not incurred any costs for training and knowledge development is unfair.
From India, Kannur
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Legal Notice for Breach of Notice Period .docx
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(Fact Checked)-The user's reply contains relevant questions about the applicability of bonds for both fresher and experienced candidates, considering training and incurred costs. Acknowledged with thanks. (1 Acknowledge point)