Dear All,
I have recently shifted to a new job. In this organization, we have a procedure to take a Security Deposit for 1 month CTC from all new joiners. It will be returned if he/she completes 2 years of tenure with the organization. If the employee leaves before 2 years, the amount will be forfeited. We take the employee's signature on a simple format which states that he/she has agreed to the Security Deposit. It is on simple paper.
My question is, is this a valid practice in the law? Please guide.
From India, Mumbai
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1I have recently shifted to a new job. In this organization, we have a procedure to take a Security Deposit for 1 month CTC from all new joiners. It will be returned if he/she completes 2 years of tenure with the organization. If the employee leaves before 2 years, the amount will be forfeited. We take the employee's signature on a simple format which states that he/she has agreed to the Security Deposit. It is on simple paper.
My question is, is this a valid practice in the law? Please guide.
From India, Mumbai
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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
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From India, Mumbai
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Dear Devang,
Normally, those who are joining in the post of Cashier or any financial handling positions only need to keep some security deposit with the company in earlier days. But nowadays, it has become easy to trace out the person's whereabouts as the Security Deposit system no longer exists. Asking all employees to pay a security deposit goes against ethics. Let our other members give their views and opinions on the legality of this issue.
From India, Kumbakonam
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Normally, those who are joining in the post of Cashier or any financial handling positions only need to keep some security deposit with the company in earlier days. But nowadays, it has become easy to trace out the person's whereabouts as the Security Deposit system no longer exists. Asking all employees to pay a security deposit goes against ethics. Let our other members give their views and opinions on the legality of this issue.
From India, Kumbakonam
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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 will 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
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From India, Mumbai
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Dear Saswata ji,
I do agree with this.
My view is different here. Taking a security deposit means you are binding the person to work with you, which restrains the fundamental right given by the Constitution of India. Also, it violates the law of employment. You cannot compel any person to work with you only. A person has the right to quit the employment with reasonable notice.
From India, Mumbai
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I do agree with this.
My view is different here. Taking a security deposit means you are binding the person to work with you, which restrains the fundamental right given by the Constitution of India. Also, it violates the law of employment. You cannot compel any person to work with you only. A person has the right to quit the employment with reasonable notice.
From India, Mumbai
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The fundamental right of employment given by the constitution is not restricted or violated by the security deposit. It is just that you cannot then leave without notice or following the terms of your employment.
The fundamental rights are subject to reasonable restrictions (e.g., the right to free speech is restricted by the law that prevents inciting violence). So just 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 choose who he will work for. But once he joins a particular company, he is doing so by agreeing to the terms of his employment. Because that would mean you can't stop the employee from leaving without notice, as that would be a 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 grounds of undue influence. However, I will leave that for 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
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The fundamental rights are subject to reasonable restrictions (e.g., the right to free speech is restricted by the law that prevents inciting violence). So just 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 choose who he will work for. But once he joins a particular company, he is doing so by agreeing to the terms of his employment. Because that would mean you can't stop the employee from leaving without notice, as that would be a 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 grounds of undue influence. However, I will leave that for 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
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Dear Saswata ji, I am totally confused on your response, Dear Sir.
From India, Mumbai
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From India, Mumbai
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Oops, I thought I was being clear. Let me start afresh.
The Constitution provides a 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 the reasonable control of the law. Therefore, the right to employment as a fundamental right is subject to it not being illegal.
Who does taking a security deposit fit into this? By asking for and 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 a 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 a security deposit and probably a reasonable notice period. It will be illegal for the employer to refuse to return the deposit if the employee fulfills the terms of employment and resigns with a full notice period. But the act of asking for and taking a deposit is not a violation of fundamental rights.
In terms of illegality, it would probably violate the Indian Contract Act (if you consider a job as a contract of service) on account of the 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 a security deposit and things like keeping original certificates. But the question was about the legality of a security deposit, not 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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The Constitution provides a 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 the reasonable control of the law. Therefore, the right to employment as a fundamental right is subject to it not being illegal.
Who does taking a security deposit fit into this? By asking for and 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 a 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 a security deposit and probably a reasonable notice period. It will be illegal for the employer to refuse to return the deposit if the employee fulfills the terms of employment and resigns with a full notice period. But the act of asking for and taking a deposit is not a violation of fundamental rights.
In terms of illegality, it would probably violate the Indian Contract Act (if you consider a job as a contract of service) on account of the 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 a security deposit and things like keeping original certificates. But the question was about the legality of a security deposit, not 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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