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moumoumou15 (...)     29 May 2014

3 year term in employment contract against sign on amount

 

This is a long descripttion, but I thought it best to capture my full story for you to understand this. I joined my current employer in a senior position more than 2 years ago. At the time of hiring discussions they agreed to compensate me for the loss of my shares in my previous organization by offering me a sign on amount roughly equivalent to the same. I accepted the offer. After I had made my plans to join and started working towards this (since it involved personal relocation to another city in India), the HR team sent me the employment contract to sign. I was surprised to find that this had a 3 year term of employment as a clause in there. I raised my objection to the clause as well as the lack of transparency at the time of hiring discussions. The HR team admitted their lapse in sharing full details but insisted that this clause could not be removed since it was a standard for all employees for sign on amounts. All this conversation is captured in emails between me and the organization. I accepted though uncomfortable since it was too late anyway and I had plans of continuing in the organization for long term. Now, due to changes in my personal situation I have no choice but to relocate to another country with my family. I am unable to continue with my current employment. I was interested in working from a remote location but the company could not provide me with this option. I am not joining employment anywhere else for the moment. At the time of my last working day as planned, I will be 6 months short of the tenure of 3 years. The company wants me to payback 100% of the amount of sign on. Though they agree that I have completed my projects, there are no financial damages or work discontinuity on my leaving the organization and I am not a threat to trade secrets of the organization, they still feel they cannot offer me a waiver. This amount is disproportionately high and much more than my 3 months’ notice period salary. I did not sign any separate bond with the organization except for the one sentence in my regular employment contract. What I wish to understand is how enforceable is this unfair demand on the part of the organization and what recourse do I have as an employee if I do not wish to pay the amount?



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 5 Replies

Kumar Doab (FIN)     29 May 2014

It is assumed that company wanted you to join hence made an offer on its own in writing to compensate you for the loss that you shall suffer due to separation from current employer……………………….The company did not want to wait for the time the share shall mature and payment shall be accrued to you. The company made this offer as it would benefit from joining and you were deemed to be the most suitable candidate…………………….from whom company shall benefit.

The question arises why would you or any employee join any other employee at your/his-her loss??????

 

The service agreement in lieu of this payment (to make good for your loss) seems to be unconscionable………………..................

 

Although it has been termed as Sign ON it does not seem to be in reality a Sign On.

It was not disclosed during the selection process and it was not negotiated. It was not part of T&C decided by employer/attorney of the employer (HR) with employee. It is good that you have it on record in writing.

The question arises how come it was too late (as posted by you) for you to decline the offer?

Had you on that day initiated separation from current employer or had separated or had tendered notice of resignation and having done that it was not conducive to remain in current employment?

Is there any evidence that is of course irrefutable to establish that you signed the clause/condition under duress……………………………coercion, intimidation, pressure, tactics etc?

You have posted that:

insisted that this clause could not be removed since it was a standard for all employees for sign on amounts.

This clause was not revealed, discussed, agreed upon and could not be inserted.

“The HR team admitted their lapse in sharing full details

The HR team may pay the amounts being claimed by the establishment/employer/HR/Finance/Legal Cell!

Your lawyer may opine to include them by name amongst the list of noticees.

 

 

 

Do you have this also on record ( audio/visual or in writing) “Though they agree that I have completed my projects, there are no financial damages or work discontinuity on my leaving the organization and I am not a threat to trade secrets of the organization”.

If yes, it is good for you.

If not arrange it so that it becomes good for you.

Once you have it your lawyer may opine to convert it into he minutes on record.

 

Did you sign any clause/agreement of trade Secrets?

The notice period/pay does not necessarily depend upon T&C inserted by employer in appointment letter drafted by it and signed with employee…………………………………..

There are many threads on same query that you may find relevant:

e.g.

https://www.lawyersclubindia.com/forum/Notice-period-102337.asp#.U4ccSEeBmXU

 

and other threads mentioned in this thread.

If notice period/pay is applicable in your case then you may ask to adjust it in FnF statement and supply it for verification and acceptance by you.

If your lawyer after examining all docs on record and your inputs in person, opines that you do not have to tender the payment of so called Sign On amounts then you may take a call on it.

Other option if conducive to you is:   

 Pro Rated payment=Amount whatever it termed as e.g. Sign ON Amount/36*6      

 

The last option is to meet demands of the company.

 

You may proceed after understanding the merits from your lawyer/law firm specializing in such cases. 

moumoumou15 (...)     30 May 2014

Dear Kumar Doab,

Thanks a lot for your post. It does give me some direction to proceed. I just got an update from the team here that I will need to pay 100% of the amount of 'sign-on bonus' NOT on pro-rata.

To answer your question on why I signed the contract with the clause in it:

  1. I had already initiated my discussions in the previous organisation.
  2. I had made plans for personal relocation to join this place which was another city in India.
  3. I had plans to continue in the new organisation long term in any case so 3 years appeared reasonable to me.

Perhaps it was a mistake I made but I really did not see a point in going back at that stage of discussion.

 The reason there is no work discontinuity is because the current team is not planning on a succession plan for the role which was dependent on certain projects and remaining work will be absorbed by the current team, so there is no discontinuity. I did not sign any trade secrets agreeement. I think the point made by you in getting in writing about the completion of projects is good, I will get it.

I also wish to mention this is an MNC. I hope the laws of the land still apply to me?

Kumar Doab (FIN)     30 May 2014

You have posted that:

 

---“1. I had already initiated my discussions in the previous organisation.”   

 

 

Was it in writing? Do you have copies?

 

I really did not see a point in going back at that stage of discussion.”

 

The current employer would know that the employee has decided to separate and then it is not conducive to remain in employment. I some organization as per internal/private policies/customs/beliefs the intention to separate can’t be retracted.

Your lawyer can opine on suitable interpretation.  

 

---“ I just got an update from the team here that I will need to pay 100% of the amount of 'sign-on bonus' NOT on pro-rata.”

 

Is it in writing? Do you have copies?       

It is but natural that HR team shall defend the interest of their masers, follow the employer’s policies framed for them, and strive to extract the max………………………….and cite the breach by you, although the same team did not disclose the policy if any at the time of recruitment…………………………..

 

Try to explain you view point in writing under proper acknowledgment.

Let it be preferably be structured by your lawyer/law firm.

 

There are many threads with similar queries that you may find relevant e.g;

https://www.lawyersclubindia.com/experts/Payment-of-indemnity-bond-419196.asp#.UiNgTNKAqWM

and a judgment quoted in it…………

Delhi High Court

M/S. Sicpa India Limited vs Shri Manas Pratim Deb

 

https://www.indiankanoon.org/doc/116592600/?type=print

 

However let your lawyer/law firm choose the citations and references if reqd.

 

Any establishment that operated in India is subordinate and servant to law of the land is within the ambit of Indian Laws, be it a MNC.

 

Don’t sign clauses/agreements on NON Compete, NON Disclosure, NON Solicitation, Trade Secrets, Data Protection etc……………………………..

Indian Courts of law have consistently been declining to enforce injunctions, Non Compete clauses/agreements post termination of employment, since it hits right to earn livelihood and provision of Indian Contract Act……………………………………same can’t be said about a foreign country and its laws and view point of courts of that country. You mentioned that you would be migrating to some other country.

The clauses/agreements on  NON Disclosure, NON Solicitation, Trade Secrets, Data Protection etc…………………………may be found reasonable and decision might be as per reasonableness of the matter.

 

You may proceed after understanding the merits from your lawyer/law firm specializing in such cases. 


Attached File : 946377627 m-s. sicpa india limited vs shri manas pratim deb on 17 november, 2011.pdf, 946377627 m-s. sicpa india limited vs shri manas pratim deb on 17 november, 2011.pdf downloaded: 130 times

moumoumou15 (...)     02 June 2014

Dear Kumar Doab,

Thanks once again for posting your replies to my post. To answer your questions:

  1. I initiated my discussions with the previous employer based on official 'offer of employment' from HR in this organisation, which stated the rest of the terms and the sign on amount but NOT the clause for 3 years term while at the same time the email instructed me to 'go ahead with the discussions with the curent employerbasis that.' The exact words: 'Your acceptance of this offer will constitute a valid contract between you and ... Therefore, you may initiate the necessary formalities of your exit from your current organization based on this email.
  2. The message on 100% payment of sign on amount is 'verbal' and not in writing. I will have a conversation with the HR team soon and try to understand their terms and will request for the same in writing.

Thanks for all your efforts and citations with regard to my query, you have been most helpful.

Kumar Doab (FIN)     02 June 2014

 

>>> You have posted in your last post that:

I initiated my discussions with the previous employer based on official 'offer of employment' from HR in this organisation, which stated the rest of the terms and the sign on amount but NOT the clause for 3 years term

 

 

This offer was probably in line with T&C discussed and firmed up during interviews.

 

“while at the same time the email instructed me to 'go ahead with the discussions with the curent employerbasis that.' The exact words: 'Your acceptance of this offer will constitute a valid contract between you and ... Therefore”

You had accepted this offer in writing and thus entered into a valid contract with this employer that has made the offer.

 

and ... Therefore, you may initiate the necessary formalities of your exit from your current organization based on this email.”

Did you initiate exit formalities, on or after the date you signed acceptance of this offer?

Is the initiation of exit formalities on record in writing and do you have copies?

 

 

 

----“ After I had made my plans to join and started working towards this (since it involved personal relocation to another city in India),

This part is imp.

What plans::::::Is anything on record:::::e.g: booking of tickets, booking of packers and movers, notice to landlord, school of kids, employer of spouse, and most Imp. notice/communiqué to your employer on separation even if in office……………………………………..and has you or your employer documents the communiqué in any of the communications even if by email…………………….

The point is that once employee has disclosed to current employer that he/she wants to separate it shall be practically not possible to remain in job as the employer would start the process to limit the disclosures to outgoing employee, and exit process shall start………………….and also the succession plan for the outgoing employee shall also start………………………….

This process of exit for outgoing employee and succession plan for outgoing employee might be irreversible, for various reasons.

 

Anything on record shall be of help to you.

 

----“the HR team sent me the employment contract to sign. I was surprised to find that this had a 3 year term of employment as a clause in there. I raised my objection to the clause as well as the lack of transparency at the time of hiring discussions. The HR team admitted their lapse in sharing full details but insisted that this clause could not be removed since it was a standard for all employees for sign on amounts. All this conversation is captured in emails between me and the organization.

 

Show what was captured on emails to your able lawyer.

 

----“The message on 100% payment of sign on amount is 'verbal' and not in writing.”

Decline to accept Verbal Demand verbally and record the transaction (audio/visual).

If reqd cover in minutes of discussion.  

 

There is a catch here.

There are tactics, strategies that you may be aware and might not be aware but these exist.

 

It is also amongst the possibilities that even if the employee pays full amounts still the tactics and strategies deployed may haunt him/her………………………….in whole of the future.

It may not be possible to forecast but adequate attempts can be made to counter.

 

>>>“I just got an update from the team here that I will need to pay 100% of the amount of 'sign-on bonus' NOT on pro-rata.

IN the judgment already provided the judge has decided amounts on Pro Rated Basis.

HR is not judge in any court of law. Apply you skills and make them agree to Pro rated basis if the need be.

It shall not be out of place to mention that employer can insert and T&C in appointment letter/contract o employment or any other private agreement it drafts and signs with employee………………………………such T&C and such private policies of the establishment and employer are not law unto themselves.

Thee establishment and employer are subordinate and servant to the law of the land.

  

 After your last post, it should be better to revisit all of your posts and communications and docs on record.

 

What is this establishment: Commercial, Industrial, Small Enterprise?

The registration certificate might have been displayed near entrance or you have to find on your own.  

You were located in which state? Does company have an office at your location?

Redg. office of the company is located in which state?

 

What is trade of this company: IT, Banking etc…..?

How many people are employed in it?

 

Does the company have its certified standing orders(CSO) and has it been extended to your designation?

 

What was your designation and nature of duties…?

This shall help, hence post it.

 

 

It shall be better if you can attach the offer letter, contract of employment, record captured in emails……………………………..Of course it is your sweet wish to do so or not. You may erase the names, logo, etc to maintain the confidentiality.

 

There might be a need to interact.

Hence if acceptable to you, then you may send your contact details by PM.

 

 


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