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Querist : Anonymous (Querist) 08 July 2023 This query is : Resolved
I am writing to seek legal advice and representation regarding a service agreement dispute with my former employer. I recently left the company, violating the terms of the service agreement I signed on October 2022.

To provide you with a brief overview of the situation, I joined Company in October 2022 and signed a service agreement that bound me to a two-year commitment. However, due to unforeseen circumstances, primarily the opportunity to pursue higher education, I decided to leave the company before the completion of the agreed-upon period. I regretfully admit that I did not formally resign from my position, but rather had a conversation with my employer about my decision to leave.
And one more thing they didnt have pay PF amount atleast once and last month salary.

Following my departure, I have received communication from Company demanding that I pay a sum of money as compensation for breaching the service agreement. I am seeking your legal counsel to understand my rights and obligations in this matter and to explore possible solutions to resolve this dispute amicably.

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This discussion concerns a dispute over a service agreement with a former employer. The individual left their job before the two-year commitment ended to pursue higher education, without a formal resignation, and is now being asked to pay compensation. The advice provided suggests a formal resignation, offering to compensate for the notice period, and responding to any notices by denying allegations. It also clarifies that while employment bonds don't typically restrict future employment, they can lead to monetary liability for early termination, unless the employer hasn't provided special training with significant expenditure.

Dr. J C Vashista (Expert) 08 July 2023
It is better to resolve the matter amicably.

T. Kalaiselvan, Advocate (Expert) 08 July 2023
You send your formal resignation letter based on the last date of your working with the company and express that you are willing to compensate the notice period that was not served. if you receive any notice you issue a reply notice denying their allegations even if it is true.
An employment bond is a contract and is subject to the provisions of the Indian Contract Act 1872. It would be invalid if it has been made by subjecting the other party (here, employee) to duress, fraud, falsification, or undue influence.
The inquiry that emerges here is whether such employment contracts binds/restricts the employee from the right to free trade or not. The law of contract states that any agreement in restraint of trade or practice can be challenged. Accordingly, if the terms and conditions of a contract prevent an employee from joining another organization, then the contract would be called invalid.

Using this some employees have stated that the clauses in the contract violate their right to exercise lawful profession, trade and business under Article 19(1) (g) of the Constitution and Section 27 of the Contract Act.
Though such statements become invalid as they confuse an employment bond with the non-compete clause. The prime distinction between the two is that the employment bond obtrudes the employee to a monetary liability for premature termination of his/her contract while the non-compete clause obtrudes a condition that refrains the employee from working in any other similar firm competing with that of the employer.

Since an employment bond does not limit the liberty of the employee in pursuing his/her trade or lawful profession after the termination of employment, it cannot be said to be a contravention on either Article 19(1) (g) of the Constitution or Section 27 of the Contract Act. Thus, employment bond does not restraints an employee from practicing free trade.
Do not admit their allegations because you will not be able to defend your interests at a later stage when it is converted into litigation.

P. Venu (Expert) 16 July 2023
As suggested, you may submit your resignation and try to have a honorable exit. Genrally, you are bound by the terms of the employment contract especially serving Notice period. However, employment would not enforceable unless the employer has imparted special training incurring substantial expenditure.

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