Demanding money post the termination
2 months ago
I've worked in my company for 10 months, they said , if I resign within 1 year, I have to pay 1 lakh rupees. I'm willing to spend extra 2 month. But they are demanding me to stay, and if I want to leave now, I have to pay 1 lakh. I signed a blank cheque 1 year ago.
A.Dear Client,
If you have tendered your resignation following the terms outlined in the offer or appointment letter, and the notice period has expired, the employment relationship between you and the employer is considered terminated.
It's emphasized that a service or employment bond alone does not establish a relationship between an employer and an employee. For a bond to be valid and enforceable under the law, specific steps must be followed. In India, the validity of employment bonds can be challenged under Section 27 of the Indian Contract Act, 1872, which prohibits agreements in restraint of trade and profession. An employment bond is deemed illegal if it restricts an individual from engaging in a lawful profession, trade, or business.
Section 27 mandates that any terms in an agreement (including employment bonds) compelling an employee to serve the employer or restricting them from joining a competitor or another employer are not valid. Employees have the right to resign even if they have agreed to serve a specific period as mentioned in the employment bond. However, if the employer can prove that the employee is joining a competitor to disclose trade secrets, the court may issue an injunction restricting the employee from joining the competitor.
Section 73 of the Indian Contract Act deals with unliquidated damages (not stipulated in a contract), and Section 74 deals with liquidated damages (stipulated in a contract). Compensation is attracted only if the breach of contract results in actual loss or damage to the employer.
A blank cheque not issued against a loan or debt cannot be utilized for the recovery of the value of the employment bond. If legal action is taken against you and you are categorized as a workman under the Industrial Dispute Act, you may serve a legal notice to the company and approach the office of the Labour Commissioner to file a complaint against the employer for alleged unfair labor practices. Alternatively, if you are not a workman, you may need to file a civil suit against the company in a civil court to seek appropriate relief.
If you have tendered your resignation following the terms outlined in the offer or appointment letter, and the notice period has expired, the employment relationship between you and the employer is considered terminated.
It's emphasized that a service or employment bond alone does not establish a relationship between an employer and an employee. For a bond to be valid and enforceable under the law, specific steps must be followed. In India, the validity of employment bonds can be challenged under Section 27 of the Indian Contract Act, 1872, which prohibits agreements in restraint of trade and profession. An employment bond is deemed illegal if it restricts an individual from engaging in a lawful profession, trade, or business.
Section 27 mandates that any terms in an agreement (including employment bonds) compelling an employee to serve the employer or restricting them from joining a competitor or another employer are not valid. Employees have the right to resign even if they have agreed to serve a specific period as mentioned in the employment bond. However, if the employer can prove that the employee is joining a competitor to disclose trade secrets, the court may issue an injunction restricting the employee from joining the competitor.
Section 73 of the Indian Contract Act deals with unliquidated damages (not stipulated in a contract), and Section 74 deals with liquidated damages (stipulated in a contract). Compensation is attracted only if the breach of contract results in actual loss or damage to the employer.
A blank cheque not issued against a loan or debt cannot be utilized for the recovery of the value of the employment bond. If legal action is taken against you and you are categorized as a workman under the Industrial Dispute Act, you may serve a legal notice to the company and approach the office of the Labour Commissioner to file a complaint against the employer for alleged unfair labor practices. Alternatively, if you are not a workman, you may need to file a civil suit against the company in a civil court to seek appropriate relief.
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A.Dear Client,
If you tendered your resignation following the terms of the offer/appointment letter then on the expiry of the notice period, the relationship between employee and employer gets severed/seized. , A service/employment bond itself does not create any relationship between an employer and an employee unless and until it is followed by the essential steps required to make the Bond valid and enforceable under the law. The validity of Employment bonds can be challenged based on Section 27 of the Indian Contract Act,1872 which prohibits any agreement in restraint of trade and profession. The law states that an agreement (employment bond) will be illegal only if it restrains someone from exercising a lawful profession/ trade/ business. As per the mandate of Section 27 of the Indian Contract Act,1872, any terms and conditions of an agreement 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. In the case where the employer can 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. Further, Section 73 of the Act makes provision for un-liquidated damages (not stipulated in a contract), Section 74 deals with liquidated damages (stipulated in a contract) and no compensation is attracted for mere breach of contract u/s.73. 74 of the Act unless such breach resulted in an actual loss or damage to the opposite party employer. In view of the above proposition of law, a blank cheque which is not issued against a loan or debt, cannot be utilized for recovery of the value of the employment bond. So, in the prevailing situation, if the Company takes any legal action against you and you are not holding the position of Manager/Supervisor but a workman as defined u/s.2(s) of the Industrial Dispute Act then after serving a legal notice to the Company, reach out to the office of the Labour Commissioner concerned for filing a complaint against the employer over alleged unfair labour practice to resolve the grievance. Otherwise, you need to file a civil suit against the Company in Civil Court seeking appropriate relief in the matter.
If you tendered your resignation following the terms of the offer/appointment letter then on the expiry of the notice period, the relationship between employee and employer gets severed/seized. , A service/employment bond itself does not create any relationship between an employer and an employee unless and until it is followed by the essential steps required to make the Bond valid and enforceable under the law. The validity of Employment bonds can be challenged based on Section 27 of the Indian Contract Act,1872 which prohibits any agreement in restraint of trade and profession. The law states that an agreement (employment bond) will be illegal only if it restrains someone from exercising a lawful profession/ trade/ business. As per the mandate of Section 27 of the Indian Contract Act,1872, any terms and conditions of an agreement 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. In the case where the employer can 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. Further, Section 73 of the Act makes provision for un-liquidated damages (not stipulated in a contract), Section 74 deals with liquidated damages (stipulated in a contract) and no compensation is attracted for mere breach of contract u/s.73. 74 of the Act unless such breach resulted in an actual loss or damage to the opposite party employer. In view of the above proposition of law, a blank cheque which is not issued against a loan or debt, cannot be utilized for recovery of the value of the employment bond. So, in the prevailing situation, if the Company takes any legal action against you and you are not holding the position of Manager/Supervisor but a workman as defined u/s.2(s) of the Industrial Dispute Act then after serving a legal notice to the Company, reach out to the office of the Labour Commissioner concerned for filing a complaint against the employer over alleged unfair labour practice to resolve the grievance. Otherwise, you need to file a civil suit against the Company in Civil Court seeking appropriate relief in the matter.
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