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Akash Tyagi (NA)     16 November 2014

Company asking for money for the months not served

Hi All,

This is in reference to a dispute with my previous company and I hope to seek guidance on it.
Also I need to know if my case is genuine and whether I could raise it with the labor court.

I joined a company in March 3rd, 2014 as an Senior Associate Consultant. My roles and responsibility was to develop software for Automation. The CTC which they mentioned in the Offer Letter had a component called as “Loyalty allowance”. Below the CTC Table there was a "Terms and Condition" section in which definition of Loyalty Allowance was given as below.

*Terms and Condition
“4. You are eligible to a monthly Loyalty Allowance only for the first year of service. Loyalty Allowance will be change to Supplementary Allowance after a year. However, the same shall be recovered from you in case of earlier dissociation from the organization. The recovery will be calculated for the months in the first one year of service that you have not served in the organization.

To my bad, I did not paid much attention on it as it was something not as per the IT Industry Standards. I accepted the offer and joined this organization on March 03rd, 2014.
I worked there for 4 months. I resigned from the Company on July 14th, 2014. I served One Month Notice Period and my last day in the company was August 8th, 2014.

Now as per their Loyalty Allowance rule, they are demanding recovery for the remaining 7 months which I have not served in the company.
i.e. Loyalty Allowance for Single month is around Rs 19,459 . I have served 5 months. Remaining months are 7 months. So recovery amount is amounted to Rs 19,459 *7 = Rs 1,36,213.
They have blocked my Service certificate and Salary of July and 8 Days of August i.e. around Rs 75,000 and asking for around Rs 58,000 more.

Now my complaint\doubt is twofold:
1. Company is asking for the money, which I have not even received, i.e. money recovery for 7 months which I have not served. Is this legal?
Personally I feel it is a malpractice and kind of “Passive Bond”. And as per my knowledge bonds are not legal in India.

2. Is it legal to block my service certificate?
Please guide me if I am correct and could raise this issue to Labour court.

 Let me know if additional details are required.

Please anyone help or advice. My current financial situation is very very bad and new company is asking for Service certificate. I do not what to do.

My email Id:

Ph NumberL 9769012260



Akash Tyagi


 4 Replies

Kumar Doab (FIN)     16 November 2014

The employee should consult elders in the family, competent and experienced well wishers, in advance and in particular before signing on the dotted line.... Employees should become member of the employee's unions/trade unions and be well informed.... and unions can guide and support in such times.. IT/ITeS Employees have formed unions and trade unions like CITU/INTUC/AITUC/BMS are willing to embrace them.. Is it stated that employer will pay for rest of the months if it initiates/causes termination? Such clauses/contacts are discriminatory/arbitrary... Although company shall scream that you can't rescind the contract you have signed and accepted.. Do you have any evidence to show that the employer was unworthy of being employed with and you had no other option but to look for source of livelihood elsewhere? e.g. prolonged work hours without payment of OT....bad conduct.. rudeness... late payments. etc..? IT companies are covered by standing orders (and if standing orders are not certified model standing orders shall apply),Shops and Commercial Establishment Act..... Service Certificate has to be issued to all employees....(Model Standing Orders:16) and can't be blocked... Is it stated that employer can deduct loyalty bonus from payment of Wages? If NO employer has committed transgression. No deduction other than statutory ones e.g. PF,TDS etc....without agreement of employee can be made from payment of wages. The deduction that can be made is explained in Shops and Commercial Establishment Act, Payment of Wages Act..... The employee can lodge complaint the moment payment of Wages is delayed even by a day from usual pay day and employer can be penalized say Rs 7500/instance... If you have served the notice period and have handed over the charge/company property (or if during notice period if company has not asked for handover) then nothing is pending at your end.... and you may demand acknowledgement acceptance of resignation, Service Certificate, relieving letter, Form 16,PF number a/c slips, ESIC CARD,NOC/NDC , be supplied to you by Redg post say within 7days... It is almost sure that line management/HR due to internal policies of employer for them won't provide any relief hence try with good offices of appointing authority, MD.... An able Labor Law Consultant /Service matters lawyer may fetch you relief without litigation by applying his skills of arbitration, mediation, conciliation...

Akash Tyagi (NA)     24 November 2014

Is it stated that employer will pay for rest of the months if it initiates/causes termination?

No, any such clause is not mentioned in the offer letter.


Is it stated that employer can deduct loyalty bonus from payment of Wages?

No such thing is mentioned in the offer letter.

I think i could go legal on this.

Secondly, I am not sure whom to contact and how to find a good lawyer and their fees etc. So can you suggest any good firm for this and the cost I might incur for the same.?

I am located at Pune.

Kumar Doab (FIN)     30 November 2014

If you wish to conduct search at LCI then you can search in databank of LCI at:


Your near and dear ones, elders,colleagues etc can also guide you to a good lawyer.


You can visit the Labor Court/Civil court complex and ask around.............

Dist. Bar Association officials can guide you.


Mr Jagadish Paranjape is a senior expert and has advised in many threads at LCI............

If you wish you can get in touch with Mr. Paranjape.

It shall be pleasure and prerogative of the expert to agree to counsel you and you shall have to settle the fee etc on your own. 

1 Like

Akash Tyagi (NA)     01 December 2014

Hi I am not able to find:

Mr Jagadish Paranjape


as suggested by you in the search suggested by  you.

Can you please advice how to find him.?

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