A.
Dear Client,
When an employee works in an establishment for just one month and fourteen days, the status of such employee is treated as a probationer, even if it is not explicitly mentioned in the offer letter or appointment letter and a probationer is also required to serve a notice period before tendering his or her resignation and for non-compliance of such terms of contract of employment, the employer/MNC can take legal action for breach of contract against the employee. The standing rules or regulations do not apply to the trainee/probationer unless it is specifically mentioned in the offer/appointment letter specifying that even on resignation during the probation, an employee has to serve a notice period or pay in lieu of notice period. As per the mandate of Section 27 of the Indian Contract Act,1872, any terms and conditions of an agreement that directly or indirectly compel the employee to serve the employer or restrict them from joining a competitor or other employer are not valid. The employee has the right to resign from employment even if he has agreed to the employment bond to serve the employer for a specific period. If 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 unliquidated 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 and Section 74 of the Act unless such breach resulted in an actual loss or damage to the opposite party employer. So, in the prevailing situation, on receipt of demand from the company for payment in lieu of notice period, you can approach the concerned Labour Commissioner or the Chief Inspector, Shops and Establishments, at the case may be, seeking their intervention in to the unfair labour practice to resolve or fix the matter. If required, consult or hire an Advocate specializing in service or labour laws to navigate the issue in the right way.
Posted On 27-Oct-2025
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