A viral post on r/indiaworks last week exposed a mid-stage Bengaluru SaaS startup that allegedly forced new employees to sign a “zero notice period bond” requiring them to pay one month’s salary for leaving without manager approval — even during probation. The post, shared on December 8, 2025, included redacted screenshots of emails threatening “disciplinary and legal action” if an employee resigned abruptly. Within hours, hundreds of comments criticised the company for coercive HR practices. The startup has not issued a public statement, but insiders on the thread claimed attrition pressures led to these extreme measures.
Employees across the tech community reacted with anger, disbelief, and empathy for the affected staff. Many said the incident reminded them of past experiences with restrictive clauses disguised as “retention tools.” Early-career workers shared fears that signing such agreements could trap them in toxic environments. HR professionals, meanwhile, expressed frustration because such practices damage trust in the entire function and fuel negative stereotypes about tech startups. The emotional tone across the discussion was one of solidarity and outrage, with workers demanding accountability and legal awareness.
From a compliance lens, such bonds risk violating the Indian Contract Act, 1872, especially if they impose penalties disproportionate to actual business loss. Notice periods during probation are regulated by state Shops & Establishments Acts, many of which require only reasonable notice and prohibit coercive deductions. If challenged, the startup may face claims of unfair labour practice under the Industrial Relations Code, 2020, and scrutiny from labour inspectors if wage deductions are attempted. HR leaders everywhere should see this as a signal to audit employment contracts, ensure notice period clauses are lawful, and train managers to prevent coercive communication. Policies must balance business continuity with employee freedom, or they risk significant legal and cultural fallout.
Should startups rethink notice periods entirely for early-stage teams?
How can HR prevent managers from using coercive language during resignations?
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7Employees across the tech community reacted with anger, disbelief, and empathy for the affected staff. Many said the incident reminded them of past experiences with restrictive clauses disguised as “retention tools.” Early-career workers shared fears that signing such agreements could trap them in toxic environments. HR professionals, meanwhile, expressed frustration because such practices damage trust in the entire function and fuel negative stereotypes about tech startups. The emotional tone across the discussion was one of solidarity and outrage, with workers demanding accountability and legal awareness.
From a compliance lens, such bonds risk violating the Indian Contract Act, 1872, especially if they impose penalties disproportionate to actual business loss. Notice periods during probation are regulated by state Shops & Establishments Acts, many of which require only reasonable notice and prohibit coercive deductions. If challenged, the startup may face claims of unfair labour practice under the Industrial Relations Code, 2020, and scrutiny from labour inspectors if wage deductions are attempted. HR leaders everywhere should see this as a signal to audit employment contracts, ensure notice period clauses are lawful, and train managers to prevent coercive communication. Policies must balance business continuity with employee freedom, or they risk significant legal and cultural fallout.
Should startups rethink notice periods entirely for early-stage teams?
How can HR prevent managers from using coercive language during resignations?
Acknowledge(0)Amend(0)
The issue at hand is the practice of enforcing "zero notice period bonds" which can potentially trap employees in unfavorable work environments and damage trust in HR practices. This is particularly concerning in startups where early-stage teams are often more vulnerable.
Legally, such bonds could violate the Indian Contract Act, 1872, if they impose penalties that are disproportionate to the actual business loss incurred. Notice periods during probation are governed by state Shops & Establishments Acts, which generally require only reasonable notice and prohibit coercive deductions. If such practices are challenged, the startup could face claims of unfair labour practice under the Industrial Relations Code, 2020, and scrutiny from labour inspectors if wage deductions are attempted.
To prevent such situations, HR leaders should regularly audit employment contracts to ensure that notice period clauses are lawful. Training should be provided to managers to prevent the use of coercive language during resignations. This can be done through workshops, role-play scenarios, and regular communication about the importance of respectful dialogue.
Startups should indeed reconsider their notice period policies for early-stage teams. While it's important to maintain business continuity, it's equally crucial to ensure employee freedom and foster a healthy work environment. Policies should be transparent, fair, and in line with legal requirements. For instance, a reasonable notice period could be implemented, which provides adequate time for the company to find a replacement without unduly burdening the employee.
Lastly, HR should actively work towards creating an open and supportive culture where employees feel comfortable discussing their concerns. This includes having clear grievance redressal mechanisms and ensuring that employees are aware of their rights. By doing so, HR can help prevent coercive practices and build a more trusting and positive work environment.
From India, Gurugram
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Legally, such bonds could violate the Indian Contract Act, 1872, if they impose penalties that are disproportionate to the actual business loss incurred. Notice periods during probation are governed by state Shops & Establishments Acts, which generally require only reasonable notice and prohibit coercive deductions. If such practices are challenged, the startup could face claims of unfair labour practice under the Industrial Relations Code, 2020, and scrutiny from labour inspectors if wage deductions are attempted.
To prevent such situations, HR leaders should regularly audit employment contracts to ensure that notice period clauses are lawful. Training should be provided to managers to prevent the use of coercive language during resignations. This can be done through workshops, role-play scenarios, and regular communication about the importance of respectful dialogue.
Startups should indeed reconsider their notice period policies for early-stage teams. While it's important to maintain business continuity, it's equally crucial to ensure employee freedom and foster a healthy work environment. Policies should be transparent, fair, and in line with legal requirements. For instance, a reasonable notice period could be implemented, which provides adequate time for the company to find a replacement without unduly burdening the employee.
Lastly, HR should actively work towards creating an open and supportive culture where employees feel comfortable discussing their concerns. This includes having clear grievance redressal mechanisms and ensuring that employees are aware of their rights. By doing so, HR can help prevent coercive practices and build a more trusting and positive work environment.
From India, Gurugram
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Notice period-Resignat ion-Excerpts from Lawyers Club India.doc
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