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Contract of Employment

Summary- Just to hold the talent Company tries to put a condition in Promotion letter stating 2 months’ Notice period & 2 Months compulsory Gross pay. Even after 2 years’ service in same organization is it valid? Am I liable to pay the penalty. I’m working in an organization where we have Contract of Employment. And it is executed on company letter head, not on any stamp paper or it has not been official registered anywhere. I had an experience of 5 years while joining the organization. On the Date of Joining 15-June-2021, I was given to sign the Contract of Employment and it was not informed to me by the Organization even during the interview or during negotiation of salary and nowhere it was specified that I’m supposed to sign Contract of Employment during joining or it was not shared to me before joining the organization. I had served the notice period from the previous organization, and I didn’t have any choice other than signing the Contract of Employment document. Document was more than 16 Sheets all the terms were printed on Company letter head and in the final sheet I could see General Manager digital signature. All the sheets starting from 1 to 15 sheets were with company Seal without any signature of General Manager, but I was supposed to sign in all the 16 sheets. I wanted to Highlight 2 main points from the document which was holding me. 1. “The Employer is incurring for the benefit of the Employee, the cost of recruiting the Employee and for the training program for the employee. The Employer is incurring an expenditure of a total amount of 8.33% of your annual CTC and onshore / offshore training cost on actuals towards meeting the cost in connection wit the recruitment and training.” 2. Incase He/She got resigned within 2 years from the date of joining, then he needs to settle with 2-Months gross pay and 2 months compulsory notice period. I continued to work with organization and in the 2 year of Hike cycle, which was on 1st July 2022. I was provided with hike based on my performance and market correction of salary was also done due to which in the Hike letter it was specified as follows “Since you are receiving market correction as indicated above your notice period revised to 90 days from 60 days for next one year effect from 1st July 2022. All other terms and conditions of your employment remain unchanged” (Again, it was executed on Company letterhead). I successfully came out of 2 years Contract of Employment again on 1st of July 2023 (hike Cycle) I was prompted as Sr. Electrical Design Engineer from Design Engineer and again a clause was implemented to hold me as specified below in my promotion letter “We wish you good luck for new role & responsibility. We expect your commitment and continuation with (organization name) for a longer tenure. In Case if you breach the service within a year from this letter dated, then you are liable to serve 2 months compulsory notice period and you must settle 2 months Gross pay before the date of relieving. All other terms and conditions of your employment remain unchanged.” (Again, it was executed on company letterhead). Gross amount will be around 1,30,000 Rupees. The Organization is putting all these clauses just because they don’t want Employee to leave the job. I really wanted to go out of this bond, hence I put my resignation on 25-October-2023 and serving my notice period. I wanted to understand on 2 month gross pay so when I reached My General Manager, He specified that they have introduce due to past experience after promotion peoples started quitting the job, hence they have put this as condition such that they don’t want to lose the talents. After my promotion I have not been trained or the company has not spent anything on my grooming. I have completed 2 years, 5 months I have come out of 2 years Contract of Employment am I still liable to pay 2 months Gross just because of Promotion letter Questions. 1. Am I liable to pay 2 months gross 2. How can I get experience letter / service letter without paying the 2 months gross and just serving my notice period 3. Can a Company hold talents just but putting such conditions 4. All the above were documented on Company letterhead not on any stamp paper nowhere it is registered still is it a valid document? even though I have signed on it? 5. What all remedies I’m supposed to do, such a way that I would be safer side if organization tries to prove me guilty 6. How can I prove organization guilty on this bounded Labour policy. 7. Unfair policy is implemented on all the employees in the organization just to hold them not to quite how to avoid this? 8. What if they target me during the notice period for asking 9. How can I raise voice to discusses on this 10. Can you provide cases like the above? To prove organization guilty? And please help me how to download the case details.

( Bangalore, Karnataka )

1 year ago

Reply

:Dear Client,
An employment bond is a contract and is subject to the provisions of the Indian Contract Act 1872. Article 19(1)(g) of the Constitution of India guarantees that all citizens have the right to freely practice their profession and trade, subject to reasonable restrictions. The validity of Employment Bonds can be challenged on the basis of Section 27 of the Indian Contract Act,1872 which prohibits any agreement in restraint of trade and profession. As per the mandate of Section 27, any terms and conditions of an agreement/bond that directly or indirectly compels the employee to serve the employer or puts a restriction on them joining the competitor or other employer is not valid. The employee has the right to resign from the employment even if he has agreed to the employment bond to serve the employer for a specific period of time. In the case where the employer is able to prove that the employee is joining the competitor to disclose the trade secret then the court may issue an injunction order restricting the employee from joining the competitor. The following are the requirements of a valid employment bond /agreement. 1) The agreement must be signed by the parties with free consent. 2) The conditions stipulated must be reasonable and 3) The conditions imposed on the employee must be proved to be necessary to safeguard the interest of the employer. 4) The employment bond is to be executed on a stamp paper of appropriate value in order to be valid and enforceable. Hence, even if you want to leave before the stipulated bond period, you are not legally required to pay any amount to your employer being the bond itself is not enforceable under the law. Further, Section 73 of the Contract Act makes provision for unliquidated damages (not stipulated in a contract) and Section 74 of the Contract Act deals with liquidated damages (stipulated in a contract), and no compensation is attracted for mere breach of contract u/s.73 and 74 of the Act unless such breach resulted in an actual loss or damage to the opposite party. In the context, the case of Superintendence Company v/s Krishna Murugai( 1980 Air 1717) of Delhi High Court and the case of Percept D' Mark v/s Zaheer Khan ( Appeal (Civil) 5573-5574 Of 2004) may be referred to. Normally an employment bond is executed at the time of joining employment that involves certain expenses incurred for training, and grooming of an employee, but the same terms of a bond cannot be reinforced at the time of promotion of an employee that he deserves by virtue of his skill, performance and dedicated service for the growth of the Company. When you tendered your resignation and now serving the notice period in terms of your employment, and on expiry of the notice period, if the company demands any compensation in terms of employment bond, then if you are not holding a position of manager or supervisor in the Company, but a workman as defined under Sec.2(s) of the Industrial Dispute Act, 1947. serving a legal notice to the Company reach out to the office of the concerned Labour Commissioner to file a complaint against the company over alleged unfair labour practice for redressal of your grievance, Apart, you can file an application u/s.33C(2) of I D Act before the concerned Labour Court claiming your F & F Dues dues receivable on your resignation from the employer/company.But, if you are holding the position of manager or supervisor in the Company, you have to file a civil suit against the Company before the Civil Court taking the recourse of the relevant law as explained hereinabove for desired relief in the matter and in addition, you can file a criminal suit against the Company for criminal intimidation under Sec.503 of IPC. Concult with a Corporate Lawyer experienced in the subject of service matters for guidance and steps.

S. K. Dutta

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Helpful

A.Dear Sir,
Your problem may be solved by the following department.
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Please approach the following authority or similar authority in a state

The Office Commissioner of Labour

Section 12 in The Industrial Disputes Act, 1947
12. Duties of conciliation officers.- (relevant section 12(2) of ID Act)

(1) Where any industrial dispute exists or is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under section 22 has been given, shall hold conciliation proceedings in the prescribed manner.

(2) The conciliation officer shall, for the purpose of bringing about a settlement of the dispute, without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute.

(3) If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings the conciliationofficer shall send a report thereof to the appropriate Government 1 or an officer authorised in this behalf by the appropriate Government] together with a memorandum of the settlement signed by the parties to the dispute.

(4) If no such settlement is arrived at, the conciliation officer shall, as soon as practicable after the close of the investigation, send to the appropriate Government a full report setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and for bringing about a settlement thereof, together with a full statement of such facts and circumstances, and the reasons on account of which, in his opinion, a settlement could not be arrived at.

(5) If, on a consideration of the report referred to in sub- section (4), the appropriate Government is satisfied that there is a case for reference to a Board, 2 Labour Court, Tribunal or National Tribunal,] it may make such reference. Where the appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor.

(6) A report under this section shall be submitted within fourteen days of the commencement of the conciliation proceedings or within such shorter period as may be fixed by the appropriate Government: 3 Provided that, 4 subject to the approval of the conciliation officer,] the time for the submission of the report may be extended by such period as may be agreed upon in writing by all the parties to the dispute.