Dear All,
One of the employees who joined a week ago wants to resign now. He is bound by a 2-year contract which he signed on the joining date by agreeing to the terms and conditions. We have called him for a meeting to discuss his reasons:
1. He is not interested in working due to the bond.
2. He is not interested in working on Saturdays.
3. He is seeking a higher salary.
Regarding the first two points, we had already communicated with him before his joining. As for the third point, we are willing to accommodate his request by offering an additional monthly charge of (12K).
However, he is still not expressing readiness to continue. Please suggest how to proceed with this situation. Additionally, it is important to note that we waited for him to join for 90 days.
Regards,
Vasavi
From India, Bangalore
3One of the employees who joined a week ago wants to resign now. He is bound by a 2-year contract which he signed on the joining date by agreeing to the terms and conditions. We have called him for a meeting to discuss his reasons:
1. He is not interested in working due to the bond.
2. He is not interested in working on Saturdays.
3. He is seeking a higher salary.
Regarding the first two points, we had already communicated with him before his joining. As for the third point, we are willing to accommodate his request by offering an additional monthly charge of (12K).
However, he is still not expressing readiness to continue. Please suggest how to proceed with this situation. Additionally, it is important to note that we waited for him to join for 90 days.
Regards,
Vasavi
From India, Bangalore
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Every decision will involve a risk, and that principle applies both to you as an employer and him as an employee. After waiting for 90 days, you have inducted him, but suppose that if you find that he is not performing well, and his attitude is very bad, and you finally realize that he will not add any value to the organization. What will you do? You will ask him to leave. At that time, you will just forget about the bond, which should be one-sided (as always), right?
In a similar way, the employee should have resigned from his organization, stayed there for 90 days, and joined you by agreeing to remain with you for two years. After joining, only he found that your attitude is not positive and the work culture is not as expected. He should also have the option of leaving you.
Legally, you cannot enforce the bond. So far, you have not provided him with any training as well. If he decides to leave, you cannot take any legal action against him. The right to work with an employer one likes is a fundamental right. He can say that this is not the employer he expected. The decision to join you was wrong. Therefore, considering that the decision to offer employment to this employee and the decision to wait for this employee for 90 days were wrong, you should allow him to leave. There will be a business loss, which should be treated as one of the many losses that you may face in business.
From India, Kannur
In a similar way, the employee should have resigned from his organization, stayed there for 90 days, and joined you by agreeing to remain with you for two years. After joining, only he found that your attitude is not positive and the work culture is not as expected. He should also have the option of leaving you.
Legally, you cannot enforce the bond. So far, you have not provided him with any training as well. If he decides to leave, you cannot take any legal action against him. The right to work with an employer one likes is a fundamental right. He can say that this is not the employer he expected. The decision to join you was wrong. Therefore, considering that the decision to offer employment to this employee and the decision to wait for this employee for 90 days were wrong, you should allow him to leave. There will be a business loss, which should be treated as one of the many losses that you may face in business.
From India, Kannur
Thank you for your response. That means employees only have all the rights to do anything according to their wish. Employers should keep quiet. How can this be right, sir? If so, tomorrow someone else will come and try to do the same. Still, we should be the same.
Regards,
Vasavi
From India, Bangalore
Regards,
Vasavi
From India, Bangalore
Yes, the employee only has rights under labor laws. The employer can certainly refuse to give employment. If he is ready to offer employment, he should understand that it is not just to provide employment that he is doing business, but beyond that, he would get a return on investment. If he can do the work himself, let the employer do it. Who said that he should employ a worker? If employed, he should follow the law of the land.
From India, Kannur
From India, Kannur
This is completely unfair to the employer. Yes, it's correct that an employer pays a salary for the skills used. It's a mutual agreement. If an employee is not performing well, we will not terminate immediately. Instead, we will see if any training and development methods help improve performance. If the performance does not improve even after this, we will inform the employee three months prior to any action. This is how every organization follows procedures.
However, when it comes to employees, this is not happening.
From India, Bangalore
However, when it comes to employees, this is not happening.
From India, Bangalore
You can insist on the notice period requirements as per the contract of employment. However, this is restricted to human resources who do not hold any supervisory or managerial powers and responsibilities. Enforcing a bond to make an employee work for you for two years is akin to bonded labor, which is impermissible. If there are quantifiable costs related to training and skill development, you can recover that amount if the employee leaves after acquiring skills from you. The cost must be specific and quantifiable.
An employer holds a higher position when offering employment to an employee. The employee, in turn, gains leverage when confident that their skills are valuable to the employer. This often leads to negotiations for a suitable fee or remuneration. The dynamics of supply and demand in the labor market play a significant role; in an inelastic market, employees have more bargaining power, while in an elastic market, employers have more options. Failure to recognize employees as valuable assets can lead to discontent and potential unionization.
In my experience spanning over three decades, I have dealt with both highly skilled and unskilled individuals from both inelastic and elastic labor markets. It is crucial to view employees as assets; otherwise, their trust may be lost. The IT industry faces fewer issues not because employees are unable to voice concerns but due to the presence of strong employer associations. Incidents of harassment in major multinational corporations often come to light only when extreme measures are taken.
From India, Kannur
An employer holds a higher position when offering employment to an employee. The employee, in turn, gains leverage when confident that their skills are valuable to the employer. This often leads to negotiations for a suitable fee or remuneration. The dynamics of supply and demand in the labor market play a significant role; in an inelastic market, employees have more bargaining power, while in an elastic market, employers have more options. Failure to recognize employees as valuable assets can lead to discontent and potential unionization.
In my experience spanning over three decades, I have dealt with both highly skilled and unskilled individuals from both inelastic and elastic labor markets. It is crucial to view employees as assets; otherwise, their trust may be lost. The IT industry faces fewer issues not because employees are unable to voice concerns but due to the presence of strong employer associations. Incidents of harassment in major multinational corporations often come to light only when extreme measures are taken.
From India, Kannur
Dear Vasu,
You are complaining about how employers have no rights and everything is with the employee. Have you checked how many cases there are of employers terminating employees without reason (or for non-business reasons) or just out of spite? Or how many cases there are of recruitment that happened even with companies like Infosys where the joining date is not given for a whole year?
You have a bond and want him to honor it (which is an illegal bond in India). But are you willing to honor it? Are you willing to continue employing him for 2 years even if he contributes nothing or if the particular job/function/client is eliminated?
I am pretty sure you will be getting rid of him without a second thought. So, no, your contention that the employee has all the rights is definitely erroneous.
From India, Mumbai
You are complaining about how employers have no rights and everything is with the employee. Have you checked how many cases there are of employers terminating employees without reason (or for non-business reasons) or just out of spite? Or how many cases there are of recruitment that happened even with companies like Infosys where the joining date is not given for a whole year?
You have a bond and want him to honor it (which is an illegal bond in India). But are you willing to honor it? Are you willing to continue employing him for 2 years even if he contributes nothing or if the particular job/function/client is eliminated?
I am pretty sure you will be getting rid of him without a second thought. So, no, your contention that the employee has all the rights is definitely erroneous.
From India, Mumbai
Aussiejohn
Excellent summary of the situation
Ask the employee to leave by paying the damage in lieu of bond and notice amount.You call the employee for the discussions to settle the matter by paying the amount or else terminate him.
From India, Mumbai
From India, Mumbai
Legal or illegal is a subject before the court. The employee who wants to quit has to abide by the terms of employment. The employee should challenge the bond on the grounds of violation of the employee's freedom or creating bonded labor at the cost of the bond. Why did one accept the offer or sign the bond and buy out the terms from the employer is a matter of question? Employment starts only after one accepts the terms and conditions, and no one is compelled to do so or subjected to any force; rather, it is their own decision.
From India, Mumbai
From India, Mumbai
Hi VV,
I think you have no choice; you have to go by your rule book. There's no point at this stage to consider ethics per se. You, as an HR professional, will have your task cut out. Otherwise, your corporate governance will fail. What's your policy? He joined, then raised so many of his demands. By all means, he's your regular employee; whether he likes it or not is secondary. Wherever possible within your restrictions, you can accommodate if you really don't want to lose him. Is relaxing bonding within your delegated powers and giving an enhanced salary an option? Is he a crucial candidate? You got No. 2 in the panel, right? Why should you worry? Escalate the matter, take a legal opinion, and leave it to your bosses to decide or organize a meeting with your boss and him. Await what transpires there for the present. Probably, he has another offer on hand which might have looked like a better option. That may be a reason for his standoff with you.
From India, Bangalore
I think you have no choice; you have to go by your rule book. There's no point at this stage to consider ethics per se. You, as an HR professional, will have your task cut out. Otherwise, your corporate governance will fail. What's your policy? He joined, then raised so many of his demands. By all means, he's your regular employee; whether he likes it or not is secondary. Wherever possible within your restrictions, you can accommodate if you really don't want to lose him. Is relaxing bonding within your delegated powers and giving an enhanced salary an option? Is he a crucial candidate? You got No. 2 in the panel, right? Why should you worry? Escalate the matter, take a legal opinion, and leave it to your bosses to decide or organize a meeting with your boss and him. Await what transpires there for the present. Probably, he has another offer on hand which might have looked like a better option. That may be a reason for his standoff with you.
From India, Bangalore
Hi,
It is hardly a week's time stint. Why do you want to enforce the terms and conditions of the bond/training agreement?
Was any software skills/concept training imparted to the candidate within a week's time?
There is no loss involved except the 90-day waiting period.
You should be happy that the employee communicated his unwillingness within a week's time.
So, there is no point in harassing the employee by quoting the terms and conditions of the bond. Even if you proceed legally, you will be expected to prove how it will result in a loss for you as the employer. You will also be expected to substantiate the volume of training imparted.
As the proverb says, "You can lead a horse to water, but you can't make him drink," which means that you can give someone an opportunity but not force them to take it. Considering the short stint, I suggest you let him go and close his file. You may mark his profile in the 'not to hire' list.
From India, Madras
It is hardly a week's time stint. Why do you want to enforce the terms and conditions of the bond/training agreement?
Was any software skills/concept training imparted to the candidate within a week's time?
There is no loss involved except the 90-day waiting period.
You should be happy that the employee communicated his unwillingness within a week's time.
So, there is no point in harassing the employee by quoting the terms and conditions of the bond. Even if you proceed legally, you will be expected to prove how it will result in a loss for you as the employer. You will also be expected to substantiate the volume of training imparted.
As the proverb says, "You can lead a horse to water, but you can't make him drink," which means that you can give someone an opportunity but not force them to take it. Considering the short stint, I suggest you let him go and close his file. You may mark his profile in the 'not to hire' list.
From India, Madras
SHASHI PANDEY
agree
Hi,
In the case of a bond as well, you cannot stop an employee from leaving your organization based on the following aspects:
1. Have you legally enforced a bond? This can be seen as coercion, where you, as an employer, set a condition prior to joining that the bond is compulsory. If the employee does not sign the bond, he will not get the job. If the employee wishes to switch for growth or a higher salary, he may accept the bond condition. However, legally, this could be viewed as a forced agreement since it is one-sided in favor of the employer, and the employee has no option but to sign it.
2. If you are binding an employee for a specified period, for example, a 2-year bond, are you providing training to that employee in return? If not, the bond may not be enforceable. If yes, you can claim the training cost from the employee if he leaves early.
3. Bonds usually have a specified fee to be recovered from the employee if he leaves early. You can recover that amount. However, if you set an unreasonably high amount that the employee refuses to pay, you can go to court, where the amount may be reduced, and a settlement reached. The enforceability of your bond may also be questioned.
Overall, a bond is often used to instill fear in employees so that they do not leave early. However, if an employee is well-informed, they may still sign the bond even if they know the terms are illegal and unenforceable.
From India, New+Delhi
In the case of a bond as well, you cannot stop an employee from leaving your organization based on the following aspects:
1. Have you legally enforced a bond? This can be seen as coercion, where you, as an employer, set a condition prior to joining that the bond is compulsory. If the employee does not sign the bond, he will not get the job. If the employee wishes to switch for growth or a higher salary, he may accept the bond condition. However, legally, this could be viewed as a forced agreement since it is one-sided in favor of the employer, and the employee has no option but to sign it.
2. If you are binding an employee for a specified period, for example, a 2-year bond, are you providing training to that employee in return? If not, the bond may not be enforceable. If yes, you can claim the training cost from the employee if he leaves early.
3. Bonds usually have a specified fee to be recovered from the employee if he leaves early. You can recover that amount. However, if you set an unreasonably high amount that the employee refuses to pay, you can go to court, where the amount may be reduced, and a settlement reached. The enforceability of your bond may also be questioned.
Overall, a bond is often used to instill fear in employees so that they do not leave early. However, if an employee is well-informed, they may still sign the bond even if they know the terms are illegal and unenforceable.
From India, New+Delhi
Dear Vasavi,
First question to you from my side is, why should you have an employment bond with employees if everything is going well and planned smoothly? If something is going wrong or missing in your organization in terms of work culture, opportunities for growth and learning, respect for employees, company growth, and management, then you should consider having employment agreements with newcomers.
So, first, you should examine and evaluate the work culture to ensure we are on the right track. What steps should we take to bring about improvements in the organization to reduce employee turnover and foster a culture where employees stay with the company for an extended period?
All these aspects are crucial for any company.
From India, Surat
First question to you from my side is, why should you have an employment bond with employees if everything is going well and planned smoothly? If something is going wrong or missing in your organization in terms of work culture, opportunities for growth and learning, respect for employees, company growth, and management, then you should consider having employment agreements with newcomers.
So, first, you should examine and evaluate the work culture to ensure we are on the right track. What steps should we take to bring about improvements in the organization to reduce employee turnover and foster a culture where employees stay with the company for an extended period?
All these aspects are crucial for any company.
From India, Surat
Dear Vasavi,
The first question from my side is: why should you implement an employment bond with an employee if everything is going well and according to plan? If there are issues present such as a lack of proper work culture, limited growth opportunities, insufficient learning prospects, lack of respect for employees, stagnant company growth, or ineffective management, then it may be necessary to introduce employment agreements with new hires.
Therefore, the initial step should involve examining and evaluating the work culture to ensure that we are heading in the right direction. What actions can be taken to enhance the organization, reduce employee turnover, and foster a culture where employees choose to remain with the company for an extended period? All these factors are crucial for any company.
Thank you.
From India, Surat
The first question from my side is: why should you implement an employment bond with an employee if everything is going well and according to plan? If there are issues present such as a lack of proper work culture, limited growth opportunities, insufficient learning prospects, lack of respect for employees, stagnant company growth, or ineffective management, then it may be necessary to introduce employment agreements with new hires.
Therefore, the initial step should involve examining and evaluating the work culture to ensure that we are heading in the right direction. What actions can be taken to enhance the organization, reduce employee turnover, and foster a culture where employees choose to remain with the company for an extended period? All these factors are crucial for any company.
Thank you.
From India, Surat
All pharma companies are notorious for settling issues such as salary, expenses, leave encashment, and more, except for a few multinationals. I have been fighting in labor court for the last 10 years as an employee of Alembic Pharmaceuticals Ltd. and have been successful in holding them accountable. For more details, you can send an email or contact me on my mobile at 9451544804.
From India, Kanpur
From India, Kanpur
Hi Vasavi,
I understand and would agree with your concern. I'm an HR professional at an e-commerce company in Coimbatore. Before I started consulting here, the Founder also faced the same issue of people just leaving abruptly. And people will come anytime they want and ask for a salary for the days they have worked.
So, I've imposed certain policies after employees agreed:
1) 10% of the salary every month will be held as a security deposit. It will be released after they end their employment with the company only after assessing their performance and behaviour. If any issues, they will be deducted from that 10%.
2) A clear NDA is asked to sign stating certain clauses of penalty. All the penalties and clauses are explained to every employee by me. Everyone has signed on to it. The penalty is like:
a) if they want to stop employment immediately without any prior notice. The entire salary will be held by the company. No salary will be released.
b) if they want to stop employment immediately with prior notice. 7 days' salary will be held. The same implies in terms of bad organizational behavior.
c) If the company terminates any employee, the company can either hold the entire salary or 7 days' salary based on the issue.
d) After signing the NDA, they or anyone from the family or friends cannot dispute over salary.
Every point in the NDA is clearly explained to every employee and duly signed. This has brought great discipline and helped the company to solve issues like this.
Thanks,
Gauri
I understand and would agree with your concern. I'm an HR professional at an e-commerce company in Coimbatore. Before I started consulting here, the Founder also faced the same issue of people just leaving abruptly. And people will come anytime they want and ask for a salary for the days they have worked.
So, I've imposed certain policies after employees agreed:
1) 10% of the salary every month will be held as a security deposit. It will be released after they end their employment with the company only after assessing their performance and behaviour. If any issues, they will be deducted from that 10%.
2) A clear NDA is asked to sign stating certain clauses of penalty. All the penalties and clauses are explained to every employee by me. Everyone has signed on to it. The penalty is like:
a) if they want to stop employment immediately without any prior notice. The entire salary will be held by the company. No salary will be released.
b) if they want to stop employment immediately with prior notice. 7 days' salary will be held. The same implies in terms of bad organizational behavior.
c) If the company terminates any employee, the company can either hold the entire salary or 7 days' salary based on the issue.
d) After signing the NDA, they or anyone from the family or friends cannot dispute over salary.
Every point in the NDA is clearly explained to every employee and duly signed. This has brought great discipline and helped the company to solve issues like this.
Thanks,
Gauri
Hi,
"1) 10% of the salary every month will be held as a security deposit. It will be released after they end their employment with the company only after assessing their performance and behavior. If any issues, they will be deducted from that 10%."
Not a right practice and purely against the law.
As per the Payment of Wages Act, only certain permissible deductions are allowed (Refer Section 7 of the Payment of Wages Act).
Added to the above, you claim that 10% of withheld salary will be released to the employee at the end of the employment term only after assessing their performance and behavior. This does not make sense at all. If an employee is having performance and behavior issues, why are they allowed to continue? Whether any interest amount will be paid for the amount deducted from the salary. If the employee works for a considerable number of years, the employer is supposed to release a huge amount. Will it not be a burden to the employer?
While your intention to safeguard the interest of the employer is right, the method followed is not right.
As an alternative, you may introduce a Retention Bonus Policy. Make all employees eligible for some amount on a monthly basis (the amount will be separate and out of the monthly gross/CTC salary). Let that amount accumulate on a monthly basis. Fix some criteria that the said amount will be released only if the employee completes this many years. This is legal as this amount will not be part of the employee's salary.
From India, Madras
"1) 10% of the salary every month will be held as a security deposit. It will be released after they end their employment with the company only after assessing their performance and behavior. If any issues, they will be deducted from that 10%."
Not a right practice and purely against the law.
As per the Payment of Wages Act, only certain permissible deductions are allowed (Refer Section 7 of the Payment of Wages Act).
Added to the above, you claim that 10% of withheld salary will be released to the employee at the end of the employment term only after assessing their performance and behavior. This does not make sense at all. If an employee is having performance and behavior issues, why are they allowed to continue? Whether any interest amount will be paid for the amount deducted from the salary. If the employee works for a considerable number of years, the employer is supposed to release a huge amount. Will it not be a burden to the employer?
While your intention to safeguard the interest of the employer is right, the method followed is not right.
As an alternative, you may introduce a Retention Bonus Policy. Make all employees eligible for some amount on a monthly basis (the amount will be separate and out of the monthly gross/CTC salary). Let that amount accumulate on a monthly basis. Fix some criteria that the said amount will be released only if the employee completes this many years. This is legal as this amount will not be part of the employee's salary.
From India, Madras
Gauri26031987
Thank you. Will amend
Dear Ms. Gauri,
Do you know what an NDA is? Please ask your lawyers to explain it to you.
The NDA is invalid on many counts, one of which is illegal deductions violating the Payment of Wages Act.
Secondly, under all labor laws, you cannot refuse to pay the salary. At best, you can deduct the notice period salary. You can face serious legal consequences. And yes, there are NGOs just waiting to get such juicy cases, and they have funds to fight you.
Besides, most good employees will laugh and walk off during the interview. You will be getting the more pathetic ones who can't get employed elsewhere.
From India, Mumbai
Do you know what an NDA is? Please ask your lawyers to explain it to you.
The NDA is invalid on many counts, one of which is illegal deductions violating the Payment of Wages Act.
Secondly, under all labor laws, you cannot refuse to pay the salary. At best, you can deduct the notice period salary. You can face serious legal consequences. And yes, there are NGOs just waiting to get such juicy cases, and they have funds to fight you.
Besides, most good employees will laugh and walk off during the interview. You will be getting the more pathetic ones who can't get employed elsewhere.
From India, Mumbai
I wish to share a few things with respect to NDAs. I have come across almost all our clients enforcing NDAs in their contracts/PO/WOs, more so by all MNS companies. After all, we have no employer-employee relationships. Simply, our clients share with us some of their copies of documents relating to purchases, imports, and exports we handle for them for a brief period. We won't get any WOs without this clause being signed by us; such is the criteria everyone tries to take care of by imposing strict clauses for obvious reasons. There's nothing left for the employees concerned to accept or not accept. If accepted and signed on the dotted lines, they can be appointed; otherwise, they have no choice.
Let's come to the very crux of the issue - Is a non-disclosure agreement legally binding? Non-disclosure agreements (NDAs) are legally binding agreements to keep information confidential. They go by other names in certain contexts, including confidentiality agreements (CAs), confidential disclosure agreements (CDAs), and proprietary information agreements (PIAs).
As far as employment is concerned, the clauses vary from employer to employer. Some impose a condition to the effect that those leaving the job shall not join companies of the same business or competitors, use the know-how gained during the tenure they had with this company, and so on for at least one year or so. Many of the startups springing up nowadays can be bracketed in this category.
Imposing NDAs can only be justified to safeguard their business interests. In the attachments, we'll have further insight into this subject for better understanding.
From India, Bangalore
Let's come to the very crux of the issue - Is a non-disclosure agreement legally binding? Non-disclosure agreements (NDAs) are legally binding agreements to keep information confidential. They go by other names in certain contexts, including confidentiality agreements (CAs), confidential disclosure agreements (CDAs), and proprietary information agreements (PIAs).
As far as employment is concerned, the clauses vary from employer to employer. Some impose a condition to the effect that those leaving the job shall not join companies of the same business or competitors, use the know-how gained during the tenure they had with this company, and so on for at least one year or so. Many of the startups springing up nowadays can be bracketed in this category.
Imposing NDAs can only be justified to safeguard their business interests. In the attachments, we'll have further insight into this subject for better understanding.
From India, Bangalore
Mr. Kumar,
Are you saying an NDA providing for a deduction of salary for leaving without notice (not any action concerning misuse or disclosure of confidential data) is valid as a part of the NDA or that it will be enforceable as such?
Nothing in that post was about the breach of data confidentiality.
From India, Mumbai
Are you saying an NDA providing for a deduction of salary for leaving without notice (not any action concerning misuse or disclosure of confidential data) is valid as a part of the NDA or that it will be enforceable as such?
Nothing in that post was about the breach of data confidentiality.
From India, Mumbai
Dear Saswata,
As you are aware, an NDA is a signed document, and employment is a 'contract'. Therefore, any 'breach' has to be dealt with within the ambit of the 'Law of Contract'. Recovery from the salary is a different aspect. Yes, there cannot be any deduction that is not permitted under the PoW Act, etc. But the remedy to the employer under the NDA is to be spelled out in the agreement itself, which has been agreed upon and signed by the employee. How to proceed is between the employer and employee. They can seek the verdict of the designated court or even go before arbitration first.
From India, Bangalore
As you are aware, an NDA is a signed document, and employment is a 'contract'. Therefore, any 'breach' has to be dealt with within the ambit of the 'Law of Contract'. Recovery from the salary is a different aspect. Yes, there cannot be any deduction that is not permitted under the PoW Act, etc. But the remedy to the employer under the NDA is to be spelled out in the agreement itself, which has been agreed upon and signed by the employee. How to proceed is between the employer and employee. They can seek the verdict of the designated court or even go before arbitration first.
From India, Bangalore
Gauri26031987
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BOND AGREEMENT and bond demand_compress ed.pdf
Training Agreement - Bond - Draft.doc
Ommygautam
agree