I was recently selected for an organization where in the Offer Letter there was a clause of Breach of Contract. It said that if I do not join, I will have to pay 8% of the annual CTC. I took the job because I liked the role, but I did oppose the clause since as a candidate, I wanted to look at other options which suited my career path too. They did not agree and said they put this clause since many people do not inform or do not report on the date of joining without intimation. But now, before 3 weeks of my joining, I want to inform them that I wish to decline since I got an offer from my dream company yesterday.
My question is that if they do not agree and I cannot pay the amount, can they file a case against me. This may be termed unprofessional, but I signed because at that time I did not have any other offer. I had been waiting for his other company's call and now that I have it, I do not want to miss it.
From India, Mumbai
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2My question is that if they do not agree and I cannot pay the amount, can they file a case against me. This may be termed unprofessional, but I signed because at that time I did not have any other offer. I had been waiting for his other company's call and now that I have it, I do not want to miss it.
From India, Mumbai
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Dear Friend,
Yes. As you signed the contract with that particular clause, you need to abide by it and clear the amount; failing which, they have every right to proceed legally. Let us wait for the inputs from other senior professionals.
Regards,
Kamesh333
From India, Hyderabad
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Yes. As you signed the contract with that particular clause, you need to abide by it and clear the amount; failing which, they have every right to proceed legally. Let us wait for the inputs from other senior professionals.
Regards,
Kamesh333
From India, Hyderabad
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Strictly speaking, the company can initiate action and claim the cost of recruitment. It will be difficult to quantify how much money was spent to select you only, but proving such costs is not easy. Asking you to pay 8% of CTC is an ad hoc figure and can be contested. No one can predict whether the company will act legally if you do not join. Send them a polite letter expressing your inability to join now and take the plunge to join where you feel fit. Request the clause of 8% CTC for us to read and understand.
From India, Pune
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From India, Pune
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(Fact Check Failed/Partial)-The user's reply is partially correct. While the company can claim recruitment costs, the specific 8% of CTC clause can be contested. Proving recruitment costs is challenging. Please note that the company may or may not pursue legal action based on the circumstances. Kindly refer to Section 73 of the Indian Contract Act, 1872 for breach of contract situations.
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Having signed the offer, you have accepted it as it is and also effectively communicated your acceptance to the offeror. Just because now you have a better offer, you can not rescind it.
From India, Salem
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From India, Salem
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(Fact Check Failed/Partial)-The user reply is incorrect. According to Indian Contract Act, a contract can be rescinded if there is a breach of contract clause. The offer can be declined, but legal consequences may follow.
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Dear Archisa,
The company cannot claim the same from your side because you have joined the organization but are now going to resign from the post. As per your statement, you have mentioned that the clause states, "If I do not join, I will have to pay 8% of the annual CTC," but it does not mention that you are bound to work for a certain period.
Regards,
Shubham
From India, Faridabad
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The company cannot claim the same from your side because you have joined the organization but are now going to resign from the post. As per your statement, you have mentioned that the clause states, "If I do not join, I will have to pay 8% of the annual CTC," but it does not mention that you are bound to work for a certain period.
Regards,
Shubham
From India, Faridabad
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(Fact Check Failed/Partial)-The user reply is incorrect. According to Indian Contract Act, if there is a breach of contract clause in the offer letter, the company can legally claim the specified amount if the employee resigns before joining. The clause binds the candidate to pay if they don't join.
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Thank you, everyone, for your valuable inputs.
Shubham mentioned that he chose not to join this company as he found better prospects elsewhere.
If the offer letter was conditional upon medical check-ups, background verification, etc., does it still hold as a conditional offer that has not been fulfilled? In such a case, would the penalty still be applicable? I welcome suggestions and comments on this matter.
From India, Mumbai
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Shubham mentioned that he chose not to join this company as he found better prospects elsewhere.
If the offer letter was conditional upon medical check-ups, background verification, etc., does it still hold as a conditional offer that has not been fulfilled? In such a case, would the penalty still be applicable? I welcome suggestions and comments on this matter.
From India, Mumbai
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(Fact Check Failed/Partial)-The user reply is partially correct. However, the penalty for not joining as per the breach of contract clause can still be applicable regardless of other conditions like medical checks or background verifications.
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Acceptance must be absolute and unconditional. The company had given you an offer which you had accepted, but some stipulations like verification and medical requirements are there from the company's side. They have given a conditional offer. Your acceptance has been unconditional, and you are bound by it. (But also read my answer above.) The company can still reject you as they have made a conditional offer regarding medicals and verification.
From India, Pune
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From India, Pune
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(Fact Check Failed/Partial)-The user reply is incorrect.
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Dear Archisa,
If you feel that you are getting a better opportunity elsewhere and you are certain about it, please go for it now instead of joining here due to the threat of getting dragged into court. You can't live in fear. Surely, the company can go legal, but it has been seen that usually companies don't prefer doing it.
Also, if they put such a clause in the offer letter, they must have experienced such situations when would-be employees didn't show up on the Date of Joining (DOJ), and they are sure prepared for that. Usually, recruiters for such situations always shortlist 2-3 people to whom they can extend an offer.
Now you still have 3 weeks, be sure first and let them know about your incapacity to join their company, keeping it documented. You should inform them well in advance so that they can work on Plan B.
All the Best...
To Respected Seniors,
I know that my suggestion could seem far from right, but sometimes the opportunity cost is just unbearable. Also, fortune favors the brave.
From India, Pune
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If you feel that you are getting a better opportunity elsewhere and you are certain about it, please go for it now instead of joining here due to the threat of getting dragged into court. You can't live in fear. Surely, the company can go legal, but it has been seen that usually companies don't prefer doing it.
Also, if they put such a clause in the offer letter, they must have experienced such situations when would-be employees didn't show up on the Date of Joining (DOJ), and they are sure prepared for that. Usually, recruiters for such situations always shortlist 2-3 people to whom they can extend an offer.
Now you still have 3 weeks, be sure first and let them know about your incapacity to join their company, keeping it documented. You should inform them well in advance so that they can work on Plan B.
All the Best...
To Respected Seniors,
I know that my suggestion could seem far from right, but sometimes the opportunity cost is just unbearable. Also, fortune favors the brave.
From India, Pune
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(Fact Check Failed/Partial)-The user's reply contains some inaccuracies. The company can take legal action as per the terms of the contract. It's crucial to handle the situation professionally and in accordance with the legal agreement.
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Archisa,
The particular clause is meant to instill fear only. You can certainly pursue better opportunities. The company will not waste its time, money, and energy by taking legal action against you in this regard.
Regards,
Princely Raj
From India, Chennai
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The particular clause is meant to instill fear only. You can certainly pursue better opportunities. The company will not waste its time, money, and energy by taking legal action against you in this regard.
Regards,
Princely Raj
From India, Chennai
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(Fact Check Failed/Partial)-The user reply is incorrect. The company can potentially take legal action for breach of contract, including seeking damages for the stated 8% of the annual CTC. It's advisable to handle this situation carefully.
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(Fact Check Failed/Partial)-The user's reply is incorrect. As per Indian Contract Act, 1872, such penalty clauses are not enforceable. The employer cannot legally force you to pay the 8% of CTC for declining the offer.