Hello Seniors,
I am posting a case of my friend who urgently seeks guidance on this -
My friend works in the IT industry and joined this company about 1.5 years back. While joining, she was not briefed about the terms and conditions. A formal appointment letter with a service agreement was handed over only after a month's long tenure and by that time the service had picked up.
Now my friend has resigned with proper handover and notice period served. However, HR claims that according to the service agreement, an employee who resigns before the bond expiry has to repay the whole amount that the company has paid him/her as salary. They are demanding my friend to give a salary for 1.5 years which was the employment period.
There was a discussion between the HR and my friend stating that if the whole amount earned is paid back to the company, it would only mean there was no worthwhile contribution and HR said - YES.
I suggested asking for training cost, negotiate to pay that, and peacefully close the matter. But that was already communicated to the HR despite the fact that there was no training provided by the company.
What should be done in such a thing?
The HR suggested my friend that if no money is to be paid, then they can have a mutual settlement by giving a cheque amounting to the due pay and do not write the date on it and give in writing that no employment would be accepted in 12 months from now.
My friend does not want to initiate any legal procedure. At the same time, wants to know if there would be counter-results if discontinued to go to the office (as the notice period is served as negotiated, pay received, they never accepted the resignation, but the date was clearly mentioned in the resignation letter).
Also, is it fair for a company to include such a clause in the service agreement? We all do know that such agreements are not legally viable and are signed only to discourage employees from resigning but asking an employee to repay every penny that was paid during the service tenure is something that one needs to think of before putting it into the agreement. Please advise and comment on this.
Kindly advise on the situation as early as possible as it is a little urgent.
Thanks in advance for the help and time.
From India, Mumbai
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742I am posting a case of my friend who urgently seeks guidance on this -
My friend works in the IT industry and joined this company about 1.5 years back. While joining, she was not briefed about the terms and conditions. A formal appointment letter with a service agreement was handed over only after a month's long tenure and by that time the service had picked up.
Now my friend has resigned with proper handover and notice period served. However, HR claims that according to the service agreement, an employee who resigns before the bond expiry has to repay the whole amount that the company has paid him/her as salary. They are demanding my friend to give a salary for 1.5 years which was the employment period.
There was a discussion between the HR and my friend stating that if the whole amount earned is paid back to the company, it would only mean there was no worthwhile contribution and HR said - YES.
I suggested asking for training cost, negotiate to pay that, and peacefully close the matter. But that was already communicated to the HR despite the fact that there was no training provided by the company.
What should be done in such a thing?
The HR suggested my friend that if no money is to be paid, then they can have a mutual settlement by giving a cheque amounting to the due pay and do not write the date on it and give in writing that no employment would be accepted in 12 months from now.
My friend does not want to initiate any legal procedure. At the same time, wants to know if there would be counter-results if discontinued to go to the office (as the notice period is served as negotiated, pay received, they never accepted the resignation, but the date was clearly mentioned in the resignation letter).
Also, is it fair for a company to include such a clause in the service agreement? We all do know that such agreements are not legally viable and are signed only to discourage employees from resigning but asking an employee to repay every penny that was paid during the service tenure is something that one needs to think of before putting it into the agreement. Please advise and comment on this.
Kindly advise on the situation as early as possible as it is a little urgent.
Thanks in advance for the help and time.
From India, Mumbai
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Dear Ms. Shah,
While giving consent for the acceptance of an offer of appointment, one has not only the right but also the imperative need to go through all the terms and conditions of employment, particularly those as sensitive as a bond.
It is relevant to mention that the system of taking a bond in the first instance must be formal and expressed, not implied. If your friend did not sign any bond at the time of joining, she is not liable to accept any such conditions now.
Furthermore, it is important to note that the practice of taking employment bonds from employees has been deemed illegal by the Apex Court of India in several judgments. Employers are prohibited from obtaining bonds from employees as the employment contract must be based on the principles of equity, justice, and fair play. Both the employer and employee have equal rights to enter into and terminate the contract according to the agreement.
Employees cannot be subjected to bonded labor.
I suggest that if the current employer does not release your friend upon resignation and completion of the notice period, she should not deposit even a single penny and should leave the office to join another organization. If she is owed any dues from the current employer, she may send a notice giving one month's time. If she does not receive relief, she should file a complaint with the relevant authority under the Payment of Wages Act, 1936. The authority will hear both parties and issue necessary legal orders.
Dev
From India, Pune
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While giving consent for the acceptance of an offer of appointment, one has not only the right but also the imperative need to go through all the terms and conditions of employment, particularly those as sensitive as a bond.
It is relevant to mention that the system of taking a bond in the first instance must be formal and expressed, not implied. If your friend did not sign any bond at the time of joining, she is not liable to accept any such conditions now.
Furthermore, it is important to note that the practice of taking employment bonds from employees has been deemed illegal by the Apex Court of India in several judgments. Employers are prohibited from obtaining bonds from employees as the employment contract must be based on the principles of equity, justice, and fair play. Both the employer and employee have equal rights to enter into and terminate the contract according to the agreement.
Employees cannot be subjected to bonded labor.
I suggest that if the current employer does not release your friend upon resignation and completion of the notice period, she should not deposit even a single penny and should leave the office to join another organization. If she is owed any dues from the current employer, she may send a notice giving one month's time. If she does not receive relief, she should file a complaint with the relevant authority under the Payment of Wages Act, 1936. The authority will hear both parties and issue necessary legal orders.
Dev
From India, Pune
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Hello Ankita Shah,
A few clarifications/queries:
1. You mentioned that your friend worked in this company for 1.5 years. Did she have any appraisal during this period?
2. What is the bond period as per the agreement?
3. You mentioned "...resigned with proper handover and notice period served." Was this from your friend's perspective, the boss's, or HR's? The points that you mention relating to relieving/paying-back should have been discussed at the time of resigning, not at the fag-end.
Also, I suggest waiting for the legal experts in this forum to respond.
Regards,
TS
From India, Hyderabad
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A few clarifications/queries:
1. You mentioned that your friend worked in this company for 1.5 years. Did she have any appraisal during this period?
2. What is the bond period as per the agreement?
3. You mentioned "...resigned with proper handover and notice period served." Was this from your friend's perspective, the boss's, or HR's? The points that you mention relating to relieving/paying-back should have been discussed at the time of resigning, not at the fag-end.
Also, I suggest waiting for the legal experts in this forum to respond.
Regards,
TS
From India, Hyderabad
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Hello TS Sir,
To give further clarifications:
Her performance was found to be contributing. There wasn't any official process with any letters or appraisal given. However, she was always appreciated for her work, contributions, and zeal to learn and unlearn as desired.
But as far as I understand, you mean to ask if any appraisal letter was given. The answer is NO.
As per the agreement, it is 2 years. 3 months' notice period, but she had mentioned that she would serve 1 month and pay 2 months' salary.
She is getting married, and so she has taken this decision.
The clause from her end was mentioned in her resignation. She never received a formal acceptance letter. After a few days of resigning, she went to clarify the clauses but nothing conclusive happened. She asked me from when the notice period starts, and I think all would agree on this, that the notice period starts from the day an employee puts his/her paper down irrespective of whether he/she receives a formal acceptance.
Also, the company has hired someone in her place, and she briefed him about all her duties and pending projects.
She is not too fussy about experience and relieving letter for now. But she needs it because if she may wish to join in the future, her precious 1 and a half year experience would be futile as she'd have to hunt as a fresher or as absconded.
She received her last month's salary from HR, and she had gone to discuss further.
HR said it is okay if you don't pay me 2 months' salary as you're getting married. But give me in writing that you'd not join any firm for at least 12 months from now and give me a signed cheque worth the pay you've got from here, so that if we found you're employed somewhere, we can deposit that cheque.
As far as my knowledge goes, one can't put someone under such pressure.
Another thing was HR said you should have thought before you signed this agreement. But my question is how fair is it to have put a clause that demands the whole earning back if the employee leaves? That is not right. It would just mean they exploited her and used her expertise for free of cost for this time and reaped benefits.
Yes, I am waiting if some legal advisor can also suggest.
She consulted one of the lawyers, and she told it would not affect if she leaves. But my concern is can they list her absconded or file a case against her regarding bond breakage and harass her or her family?
From India, Mumbai
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To give further clarifications:
Her performance was found to be contributing. There wasn't any official process with any letters or appraisal given. However, she was always appreciated for her work, contributions, and zeal to learn and unlearn as desired.
But as far as I understand, you mean to ask if any appraisal letter was given. The answer is NO.
As per the agreement, it is 2 years. 3 months' notice period, but she had mentioned that she would serve 1 month and pay 2 months' salary.
She is getting married, and so she has taken this decision.
The clause from her end was mentioned in her resignation. She never received a formal acceptance letter. After a few days of resigning, she went to clarify the clauses but nothing conclusive happened. She asked me from when the notice period starts, and I think all would agree on this, that the notice period starts from the day an employee puts his/her paper down irrespective of whether he/she receives a formal acceptance.
Also, the company has hired someone in her place, and she briefed him about all her duties and pending projects.
She is not too fussy about experience and relieving letter for now. But she needs it because if she may wish to join in the future, her precious 1 and a half year experience would be futile as she'd have to hunt as a fresher or as absconded.
She received her last month's salary from HR, and she had gone to discuss further.
HR said it is okay if you don't pay me 2 months' salary as you're getting married. But give me in writing that you'd not join any firm for at least 12 months from now and give me a signed cheque worth the pay you've got from here, so that if we found you're employed somewhere, we can deposit that cheque.
As far as my knowledge goes, one can't put someone under such pressure.
Another thing was HR said you should have thought before you signed this agreement. But my question is how fair is it to have put a clause that demands the whole earning back if the employee leaves? That is not right. It would just mean they exploited her and used her expertise for free of cost for this time and reaped benefits.
Yes, I am waiting if some legal advisor can also suggest.
She consulted one of the lawyers, and she told it would not affect if she leaves. But my concern is can they list her absconded or file a case against her regarding bond breakage and harass her or her family?
From India, Mumbai
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Where is she likely to settle after marriage? The options she can exercise will depend on these answers. However, giving the cheque to the company is an ABSOLUTE NO . Rgds, TS
From India, Hyderabad
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From India, Hyderabad
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Hello sir, adding to your further points -
She has got a salary hike.
Currently she's not changing but she wishes to come back after a few months' time.
Her in-laws are in Mumbai itself. So there is no change of city. However, giving the cheque [whether undated or post-dated] to the company is an ABSOLUTE NO [we will figure out how to handle it later].
Rgds,
TS[/QUOTE]
From India, Mumbai
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She has got a salary hike.
Currently she's not changing but she wishes to come back after a few months' time.
Her in-laws are in Mumbai itself. So there is no change of city. However, giving the cheque [whether undated or post-dated] to the company is an ABSOLUTE NO [we will figure out how to handle it later].
Rgds,
TS[/QUOTE]
From India, Mumbai
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Hello Ankita Shah,
Since she got a salary raise, she can use it if and when any discussion comes up again with HR repeating what was said earlier ("meaning there was nothing worthwhile contribution and HR said - YES") to rebut any such trashy argument by HR. Hope you get the point.
Actually, she could have done it earlier itself—maybe it didn't strike her in the tension.
Coming to her career plans, does she intend on returning to the same company? I am sure it depends on her views of her career here for 1.5 years (from the 'job enrichment' angle).
As for the HR advice of giving the undated check, ask your friend to give a counter-suggestion that she will give an affidavit stating what the HR means/wants, since legally that is acceptable (let her involve a lawyer to draft this). If HR doesn't accept this suggestion and insists only on the check, you can be sure that the company wants to avoid going legal. Your friend can use this to her advantage.
Regarding the check, she should take the stand that she doesn't want to give... period. What if the company deposits it based on some false info coming to them that she joined another job? She would rather enjoy her marital life than run after courts just because someone in this company goofed (the best-case scenario). The worst-case scenario would be the company depositing it willfully—though this is best left unsaid to the HR (could mess up the situation further)—whether this can happen, only your friend can say, since she knows the nature/mentality of the top people and HR here better (even though I do have an 'uncomfortable feeling' from this angle).
If she is okay to rejoin here later, she can use this to her advantage.
There's another subtle point here—how come the company wants the undated check for one year when she already completed 1.5 years and has only 6 months left to complete the agreement?
Also, did your friend have any tussle with any of the bosses?
Regards,
TS
From India, Hyderabad
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Since she got a salary raise, she can use it if and when any discussion comes up again with HR repeating what was said earlier ("meaning there was nothing worthwhile contribution and HR said - YES") to rebut any such trashy argument by HR. Hope you get the point.
Actually, she could have done it earlier itself—maybe it didn't strike her in the tension.
Coming to her career plans, does she intend on returning to the same company? I am sure it depends on her views of her career here for 1.5 years (from the 'job enrichment' angle).
As for the HR advice of giving the undated check, ask your friend to give a counter-suggestion that she will give an affidavit stating what the HR means/wants, since legally that is acceptable (let her involve a lawyer to draft this). If HR doesn't accept this suggestion and insists only on the check, you can be sure that the company wants to avoid going legal. Your friend can use this to her advantage.
Regarding the check, she should take the stand that she doesn't want to give... period. What if the company deposits it based on some false info coming to them that she joined another job? She would rather enjoy her marital life than run after courts just because someone in this company goofed (the best-case scenario). The worst-case scenario would be the company depositing it willfully—though this is best left unsaid to the HR (could mess up the situation further)—whether this can happen, only your friend can say, since she knows the nature/mentality of the top people and HR here better (even though I do have an 'uncomfortable feeling' from this angle).
If she is okay to rejoin here later, she can use this to her advantage.
There's another subtle point here—how come the company wants the undated check for one year when she already completed 1.5 years and has only 6 months left to complete the agreement?
Also, did your friend have any tussle with any of the bosses?
Regards,
TS
From India, Hyderabad
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The company HR seems to be overplaying in this case, with unknown motives/interests. The maximum they can ask her to deposit is the cash equivalent of the shortfall of the notice period.
Please suggest to your friend to write a polite yet factual letter to the CEO, by name, and send it by Speed Post; track its delivery and maintain the tracking sheet for her future use (if required). If HR does not accept the payment in lieu of the shortfall of the notice period, a crossed cheque in the Company's name may be enclosed.
In all probability, the CEO may not be aware of such issues related to the functioning of their HR. No individual heading an organization will attempt to be unfair to employees. In most cases, HR professionals (who have limited understanding and experience) forget their role and tend to quote rules about which they lack clarity themselves. They should at least read the views of experts and senior professionals to add to their wisdom.
From India, Delhi
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Please suggest to your friend to write a polite yet factual letter to the CEO, by name, and send it by Speed Post; track its delivery and maintain the tracking sheet for her future use (if required). If HR does not accept the payment in lieu of the shortfall of the notice period, a crossed cheque in the Company's name may be enclosed.
In all probability, the CEO may not be aware of such issues related to the functioning of their HR. No individual heading an organization will attempt to be unfair to employees. In most cases, HR professionals (who have limited understanding and experience) forget their role and tend to quote rules about which they lack clarity themselves. They should at least read the views of experts and senior professionals to add to their wisdom.
From India, Delhi
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Hello TS Sir
Coming to her career plans, does she intend to return to the same company? I am sure it depends on her views of her career here for 1.5 years [from the 'job enrichment' angle].
No, she doesn't intend to join back the same firm having a bad experience now.
As regards the HR advice of giving the undated cheque, ask your friend to give a counter-suggestion that she will give an Affidavit stating what the HR means/wants since legally that is acceptable [let her involve a lawyer to draft this]. If HR doesn't accept this suggestion & insists ONLY on the cheque, you can be SURE that the company WANTS TO AVOID going legal. Your friend can use this to her advantage.
I suggested this to her. Probably she should meet her HR on Mon/Tue and shall share the consequences.
Regarding the cheque, she should take the stand that she doesn't want to give...period. There's another subtle point here--how come the company wants the undated cheque for ONE YEAR when she already completed 1.5 years & has only 6 months left to complete the Agreement?
Exactly something that even I fail to understand. I had told her that a company can recover the training cost that they incurred on an employee if he breaks the bond. But if the employee has served a considerable period, we deduct the training charge accordingly. Ideally that's how it works. But the HR wants the full salary that was earned in the employment tenure. Strange.
Also, did your friend have any tussle with any of the bosses?
She never had any tussles and arguments with anyone.
From India, Mumbai
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Coming to her career plans, does she intend to return to the same company? I am sure it depends on her views of her career here for 1.5 years [from the 'job enrichment' angle].
No, she doesn't intend to join back the same firm having a bad experience now.
As regards the HR advice of giving the undated cheque, ask your friend to give a counter-suggestion that she will give an Affidavit stating what the HR means/wants since legally that is acceptable [let her involve a lawyer to draft this]. If HR doesn't accept this suggestion & insists ONLY on the cheque, you can be SURE that the company WANTS TO AVOID going legal. Your friend can use this to her advantage.
I suggested this to her. Probably she should meet her HR on Mon/Tue and shall share the consequences.
Regarding the cheque, she should take the stand that she doesn't want to give...period. There's another subtle point here--how come the company wants the undated cheque for ONE YEAR when she already completed 1.5 years & has only 6 months left to complete the Agreement?
Exactly something that even I fail to understand. I had told her that a company can recover the training cost that they incurred on an employee if he breaks the bond. But if the employee has served a considerable period, we deduct the training charge accordingly. Ideally that's how it works. But the HR wants the full salary that was earned in the employment tenure. Strange.
Also, did your friend have any tussle with any of the bosses?
She never had any tussles and arguments with anyone.
From India, Mumbai
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Hello Ankita Shah,
Suggest FIRST prepare your friend MENTALLY for the Worst-Case-Scenario--which is not being able to get any Docs for this exp & not being able to show this exp in her resume in the future.
This is NOT to suggest that 'this is what will happen' but to ensure that she takes this issue/topic during her discussions from a 'position of mental strength'. That's Human Psychology--when one is prepared for the WCS, anything else would be a Bonus/Positive result.
When I referred to "how come the company wants the undated cheque for ONE YEAR, when she already completed 1.5 yrs & has only 6 months left to complete the Agreement?", I was referring to the 'Timeframe' & NOT the quantum of the salary the company wants to be returned. Suggest asking your friend to FOCUS on the timeframe part rather than the quantum--since this (focusing on the Quantum) is bound to boomerang on her [since this was a part of the Agreement she signed--howsoever flawed].
I think BK Bhatia has a very valid point--ask your friend to take this up with the CEO [or the Head of the Division, if the CEO sits elsewhere]. If the HR shows signs of preventing this contact, maybe she can put this in writing/mail to the CEO with a cc to HR--your friend has nothing to lose now--and everything to gain, IF this goes well.
Also, let her take the stand that she resigned NOT to join in any other company but DUE to marriage--most often companies have unwritten rules regarding this part in the initial stage itself. They should have included this aspect for unmarried women employees in the beginning itself--while getting the Agreement/Bond signed--only goes to say a lot about the HR policies in practice in this company.
Wish her All the Best.
Rgds,
TS
From India, Hyderabad
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Suggest FIRST prepare your friend MENTALLY for the Worst-Case-Scenario--which is not being able to get any Docs for this exp & not being able to show this exp in her resume in the future.
This is NOT to suggest that 'this is what will happen' but to ensure that she takes this issue/topic during her discussions from a 'position of mental strength'. That's Human Psychology--when one is prepared for the WCS, anything else would be a Bonus/Positive result.
When I referred to "how come the company wants the undated cheque for ONE YEAR, when she already completed 1.5 yrs & has only 6 months left to complete the Agreement?", I was referring to the 'Timeframe' & NOT the quantum of the salary the company wants to be returned. Suggest asking your friend to FOCUS on the timeframe part rather than the quantum--since this (focusing on the Quantum) is bound to boomerang on her [since this was a part of the Agreement she signed--howsoever flawed].
I think BK Bhatia has a very valid point--ask your friend to take this up with the CEO [or the Head of the Division, if the CEO sits elsewhere]. If the HR shows signs of preventing this contact, maybe she can put this in writing/mail to the CEO with a cc to HR--your friend has nothing to lose now--and everything to gain, IF this goes well.
Also, let her take the stand that she resigned NOT to join in any other company but DUE to marriage--most often companies have unwritten rules regarding this part in the initial stage itself. They should have included this aspect for unmarried women employees in the beginning itself--while getting the Agreement/Bond signed--only goes to say a lot about the HR policies in practice in this company.
Wish her All the Best.
Rgds,
TS
From India, Hyderabad
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