Dear All,
I have recently shifted to new job. In this organization, we have procedure to take Security Deposit for 1 month CTC from all new joinees. It will be returned if he/she complete 2 years of tenure with the organization. If employee left before 2 years, amount will be fore fitted. We take sign of employee in a simple format which state that he/she has agreed for Security Deposit. It is on simple paper.
My question is, is it valid practice in the law? Please guide.
From India, Mumbai
1I have recently shifted to new job. In this organization, we have procedure to take Security Deposit for 1 month CTC from all new joinees. It will be returned if he/she complete 2 years of tenure with the organization. If employee left before 2 years, amount will be fore fitted. We take sign of employee in a simple format which state that he/she has agreed for Security Deposit. It is on simple paper.
My question is, is it valid practice in the law? Please guide.
From India, Mumbai
Dear Devang pandya, I think, Its purely out of law & its cant come under any employment of law. its exploitation of law & employees also. Regards, Tushar Swar
From India, Mumbai
From India, Mumbai
Dear Devang
Normally those who are joining in the post of Cashier or any financial handling posts only needs to keep some security deposit with the company in earlier days. But nowadays it has become easy to trace out the person's whereabouts the Security Deposit system is not existing. For asking all the employees to pay the security deposit is against the ethics. Let our other members give their views and legality on this issue.
From India, Kumbakonam
Normally those who are joining in the post of Cashier or any financial handling posts only needs to keep some security deposit with the company in earlier days. But nowadays it has become easy to trace out the person's whereabouts the Security Deposit system is not existing. For asking all the employees to pay the security deposit is against the ethics. Let our other members give their views and legality on this issue.
From India, Kumbakonam
There is no provision of the law that specifically bans or prevents the employer from taking such a security deposit.
If the employee agrees to such a condition and is willing to give the deposit, then there is no legal issue as such
however, it iwll be necessary for the same to be specifically mentioned in the offer letter and get a clear declaration of the same when issuing the offer letter.
From India, Mumbai
If the employee agrees to such a condition and is willing to give the deposit, then there is no legal issue as such
however, it iwll be necessary for the same to be specifically mentioned in the offer letter and get a clear declaration of the same when issuing the offer letter.
From India, Mumbai
Dear Saswata ji,
I do agree with this.
My view is different here. Taking security deposit means you are binding the person to work with you which restrains the fundamental right given by Constitution of India. Also, it violates the law of employment. You can not compel any person to work with you only. Person has a right to quit the employment with reasonable notice.
From India, Mumbai
I do agree with this.
My view is different here. Taking security deposit means you are binding the person to work with you which restrains the fundamental right given by Constitution of India. Also, it violates the law of employment. You can not compel any person to work with you only. Person has a right to quit the employment with reasonable notice.
From India, Mumbai
The fundamental right of employment given by the constitution is not restricted or violated by the security deposit.
It is just that you can not then leave without notice or following the terms of your employment.
The fundamental rights are subject to reasonable restriction (eg, right to free speech is restricted by the law the prevents inciting of violence).
So just that you are asking the employee to give a security deposit does not violate his fundamental rights.
The employee is free to look for and take employment elsewhere where the employer is not asking him to give a security deposit.
The employee is not being forced to join a particular employer. He is free to chose who he will work for.
But once he joins a particular company, he is doing so by agreeing to his terms of employment.
Because that would mean you cant stop the employee from leaving without notice cause that would be violation of his fundamental right to employment.
I think you understand my argument.
However, under the contract law (Indian Contract Act), this may be considered an invalid contract on the ground of undue influence. However, that I will leave the lawyers to argue and the courts to decide.
I believe the government needs to make laws to regulate the security deposit and find ways to ensure that the companies pay it back without delay when the employee leaves. But at the moment, there is no such law
From India, Mumbai
It is just that you can not then leave without notice or following the terms of your employment.
The fundamental rights are subject to reasonable restriction (eg, right to free speech is restricted by the law the prevents inciting of violence).
So just that you are asking the employee to give a security deposit does not violate his fundamental rights.
The employee is free to look for and take employment elsewhere where the employer is not asking him to give a security deposit.
The employee is not being forced to join a particular employer. He is free to chose who he will work for.
But once he joins a particular company, he is doing so by agreeing to his terms of employment.
Because that would mean you cant stop the employee from leaving without notice cause that would be violation of his fundamental right to employment.
I think you understand my argument.
However, under the contract law (Indian Contract Act), this may be considered an invalid contract on the ground of undue influence. However, that I will leave the lawyers to argue and the courts to decide.
I believe the government needs to make laws to regulate the security deposit and find ways to ensure that the companies pay it back without delay when the employee leaves. But at the moment, there is no such law
From India, Mumbai
Oops, I thought I was being clear.
Let me start afresh
Constitution provides fundamental right to employment
It does not mean you have a right to be employed (not guaranteed)
It means no one can stop you from seeking work and working for any person and any type of work
All fundamental rights are subject to duties and reasonable control of law.
Therefore, right to fundamental right to employment is subject to it not being illegal.
Who does taking a security deposit fit into this ?
By asking for an taking a security deposit, the employer is not restricting the right of the employee to work.
The employee has the full right to seek employment elsewhere. He is also not, by this demand for security deposit, being prevented from doing any work with anyone else. He is free to refuse this work and work for anyone else.
However, if he does agree to work, he is agreeing to the terms of employment, one of which is security deposit and probably a reasonable notice period. It will be illegal for the employer to refuse to return deposit if employee fulfills terms of employment and resigns with full notice period. But the act of asking for and taking a deposit is not violation of fundamental rights.
In terms of illegality, it would probably violate Indian Contract Act (if you consider a job as a contract of service) on account of doctrine of undue influence. But whether that defense works or not depends on how the lawyer presents it. In the current example, the defense of undue influence is of little practical use.
One last clarification : I am against the concept of security deposit and things like keeping original certificates. But the question was about legality of security deposit not of whether I support it.
(Kargaonkar, if this is still not clear, drop me a mail, I will delete both the posts ;) )
From India, Mumbai
Let me start afresh
Constitution provides fundamental right to employment
It does not mean you have a right to be employed (not guaranteed)
It means no one can stop you from seeking work and working for any person and any type of work
All fundamental rights are subject to duties and reasonable control of law.
Therefore, right to fundamental right to employment is subject to it not being illegal.
Who does taking a security deposit fit into this ?
By asking for an taking a security deposit, the employer is not restricting the right of the employee to work.
The employee has the full right to seek employment elsewhere. He is also not, by this demand for security deposit, being prevented from doing any work with anyone else. He is free to refuse this work and work for anyone else.
However, if he does agree to work, he is agreeing to the terms of employment, one of which is security deposit and probably a reasonable notice period. It will be illegal for the employer to refuse to return deposit if employee fulfills terms of employment and resigns with full notice period. But the act of asking for and taking a deposit is not violation of fundamental rights.
In terms of illegality, it would probably violate Indian Contract Act (if you consider a job as a contract of service) on account of doctrine of undue influence. But whether that defense works or not depends on how the lawyer presents it. In the current example, the defense of undue influence is of little practical use.
One last clarification : I am against the concept of security deposit and things like keeping original certificates. But the question was about legality of security deposit not of whether I support it.
(Kargaonkar, if this is still not clear, drop me a mail, I will delete both the posts ;) )
From India, Mumbai
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Security Deposit.pdf