Repercussion of breaking a service agreement
vishal
(Querist) 07 September 2011
This query is : Resolved
I was employed by an MNC under a service agreement of 3lakh rupees on Non-Judicial stamp paper.
Any document or security was not taken from me.
The issue was that I was made to work day & night & the service period was not fixed.
It was written that the period is 2 years after date of confirmation & there is no definition of date of confirmation in service agreement.
Also it is not written within what period I should pay back the money.
I served organization for 7 months after 2 month training & left with an accepted resignation but no relieving letter in last november.
They did not communicate anything for 10 months & now suddenly asking for bond money & threaten in mails to take legal action.
"6. At the time of joining, the employee had undertaken to complete the training and remain in the
employment of the Company for a period of two (2) years from the date of confirmation of services.
It is hereby agreed that should the employee wish to resign at any time after the date of joining and
two years from date of confirmation, the services of the employee are otherwise terminated on
grounds of misconduct during such period, employee agrees to pay the employer a sum of
Rs.300,000/- (Indian rupees three lakhs only) as liquidated damages for the cost of training,
disruption of work and the possible loss of business to the employer."
In this clause even if they terminate our services, employee has to pay the money.
So is it fine for them not to have any liability.
Let me know what I should do?
ajay sethi
(Expert) 07 September 2011
under terms of contract signed by you if employer has spent meoney on your training it is only fair that you shall be liable to pay back amount they have spent on your training . the contract specifies amount payable in case you leave before period of 2 years . you are liable to pay said sum of rs 3 lakhs . if you do not pay they may file suit against you to recover the amount .
Devajyoti Barman
(Expert) 07 September 2011
Nothing except wait for them to take legal action which nevertheless is unlikely to happen.
vishal
(Querist) 07 September 2011
Hi,
Thanks for quick reply.
So from your replies I am getting an idea that the terms of contract are not questionable after signing & the terms such as indefinite period of contract & indefinite period of payback does not hold in court of law.They should have been checked before signing the bond by me.
Can you please qoute any examples in which such action was taken without naming anybody or company?
Thanks
Raj Kumar Makkad
(Expert) 08 September 2011
Your presumption is correct and you were duty bound to clarify each and every term prior to provide your acceptance thereon. Now wait for action on their part.
Guest
(Expert) 08 September 2011
Dear Vishal,
The clause of agreement is quite damaging. Quite astonishing, irrespective of whether the employee resigns or he is terminated by the company, in both the cases employee has to pay 3 Laks.
Further, if you have quoted the exact text without any omission, even the language of the agreement is quite damaging, i.e., "It is hereby agreed that should the employee wish to resign at any time AFTER the date of joining and two years from date of confirmation." It points out about your binding even beyond (AFTER) two years of confirmation. Nowhere it states "WITHIN" the period of two years.
So, in my views the agreement is quite defective and invalid in nature, as it gives only one sided powers to the company management against the interest of the employee.
I don't understand, why you entered in to such a stringent agreement without weighing pros & cons in a haste to get job with the company?
I would however like to disagree with the opinion of Shri Devajyoti, on the point that the legal action is unlikely to happen, as the company is an MNC, and may be having some lawyers on its panel on retainership basis and would be paying a good chunk of fee just to fight the cases of the company. So, you may better not take any risk. Rather try to create some evidence on record about irregular practices of the company and create some circumstances for them to somehow or the other get rid of you with some mutually agreeable terms, as they won't like other employees get spoiled at your instance and against their terms.
Better start correspondence, at first to ask them about your fixed duty hours, as you have stated that the company is making you to work day & night. Once they commit about your working hours, try to stick to your duty hours only by marking your attendance. Also ask the management about the date of your confirmation. At least by this way you would be able to continue till completion of two years after which their agreement would become quite challengeable even if you resign.
vishal
(Querist) 08 September 2011
Hi,
Can anybody qoute any example because I never heard from anyone in my friend circle of any action being taken against employee?
The judgment in that case might help me a lot.
ajay sethi
(Expert) 08 September 2011
yes many companies have enforced the agreement . generally there is an arbitration clause and disputes are referred to sole arbitartor. company leads evidence and ex employee is also given a chance to put forth his case and award is passed therafter .
in some cases companies have moved court also . the objective being to discourage employees from leaving the organisation within the bond period
vishal
(Querist) 08 September 2011
Actually we are around 50 people who left this way & are being warned by the company so I am not sure whether it will be through court or arbitrator
ajay sethi
(Expert) 08 September 2011
your service agreement will contain a clause as to jurisdcition . read it
Guest
(Expert) 08 September 2011
Dear Vishal,
You need to read carefully the contents of the whole agreement to know the complexity of the agreement or should get help of a local lawyer, who may be expert in service law, by consulting him.
Devajyoti Barman
(Expert) 08 September 2011
Wait till the employer takes any action so we can advise more appropriately.
prabhakar singh
(Expert) 08 September 2011
As per the Indian Statute bonded labor system was long abolished and no bond can force any person to work against the employees wishes .
[a]Article 19 of Indian Constitution talks of fundamental rights, as per the Article 19 the Constitution the write to work is a fundamental right, and under no circumstance does the Fundamental rights under Article 19 be waived by any person nor can any person be forced to do something that can be understood amounting to the violation of the rights mentioned under Article 19.
[b]As per the Indian Contract Act contracts entered between two parties if found one sided then such a contract would be null and void. Most of the Bonds are found one sided.
Again as per the Indian Contract Act no contract can be enforced on any person if the contract which is being so enforced causes any harm to the person on whom its is enforced and if performed would violate principles of natural justices.
[c]As per Sec 368 of Indian Penal Code if any person or institute holds back any document or any use any legal document or threatens any legal suits or actions and thus forces a person to perform any act against his wishes or which is illegal or wrong as per the statute of Law of the land.
Sec 368 of Indian Penal Code talks about extortion by the threatening to file a legal suit. The minimum punishment under this act is 2 two years.
The Supreme Court of India has clearly stated that no employee can be forcefully employed against his will, just because he has signed a contract with the employer.
The court also has stated that the employer can not hold back any personal document of the employees as they are earned by the employees and the company has no claim on the same.
[d]Any complain on the company would land the Directors and Managing Directors of the company in Jail, as the company is not an actual living entity but an artificial legal entity and the management are hands and heads of the company.
Bonds are applicable only if the company has spend money on the personal grooving and enhancement of the employees, but not just a training that helps employees perform better.
These are my understandings abut service bonds in India.
It is surprising that many of us are of view that you should correspond with company to know about your duty hours etc.,etc.,while you have clearly reported that you have resigned in your words to read"I served organization for 7 months after 2 month training & left with an accepted resignation but no relieving letter in last November"
Hope it will help you.
vishal
(Querist) 08 September 2011
Thank you for your detailed answer.
One last question, is there a defined period in which the company can send me legal notice. I mean when can I consider myself to be free from the agreement if I dont get a notice from the company, since there is no definition for date of confirmation.
Is there any default time frame fixed for such cases?
prabhakar singh
(Expert) 08 September 2011
In my opinion it would be 3years from the date you resigned as that would be reason what we say "cause of action" to act against you.
One more thing remarkable in my opinion is this that why not company denied to accept your resignation if in the understanding of the company it was illegal for you to leave the employment because of the terms of the bond,accepting the resignation unconditionally at then will in future act as an estoppel against company providing you an other solid defense.???????????
vishal
(Querist) 09 April 2012
Hello All,
I am back again!
This time I have got a letter from the company at my home after 16months of leaving the job asking for the money.
Can you let me know the difference between the letter sent by the company on its own & the one sent through court case?
Guest
(Expert) 09 April 2012
It is not through court. It is a simple letter reminding you to clear your liability as per the terms of your agreement. I don't think you need to respond to the company's letter.
vishal
(Querist) 09 April 2012
Thanks sir for your response
So at which stage I should reply to their letter?
Also how is the official notice like?
They are intelligently sending me reminders in different forms to know whether I breakdown under pressure, so I need to know which stage would be serious
Guest
(Expert) 09 April 2012
Better wait for advocate's notice. Since the company accepted your resignation without asking for deposit of agreement amount that clearly indicates that the company did not have any claim against you when you were relieved after acceptance of your resignation.
