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Kritika Kohli (N.A.)     14 May 2012

Corporate legal issue

An employee of my company required a property on lease for residential purpose but on the demand of the lanlord the company entered into the agreement to facilitate the employee.However it is not a CLA rather the company pays to the lanlord and inturn receives from the employee and adjusts through the HRA route. Now the company wants to enter into a kind of MOU with the employee in connection to the lease agreement that the company has signed with the landlord whereby the employee agrees in writing that the liability created by such lease agreement is his and not of company. I wish to check the legal validity of such a written understanding


 4 Replies

ishaniduggal (law)     14 May 2012

i think this is legally valid. my co. entered into a lease agreement with teh employee and agreed to pay the owner of the property a fixed rent. and also agreed other provisions like liability etc in teh same agreement.. 

sunil (cs)     16 May 2012

I dont think, that type of understanding absolve the company from its liability towards landlord because company being tenant of the premises.

 Further if Company  recd. amount from employee for payment of the rent , how the Company will show this amount  in its account.


Better way to give rent free accomdation to th eemplyee.



S Jadhav 98336 98330 (Jadhav & Associates)     16 May 2012

The agreement would be valid. However, the question is unclear. Does the employee want to leave the company and also vacate the accommodation or he wants to leave the company and keep the accommodation ? The compnay may want to keep the right to themselves, especially if they have found th eproperty and want to give it to another employee. But an employee may refuse to sign such a document and may request the company to provide rentfree accommodation or deal with the landlord directly.

It is all as per the negotiation power of the employee.

S Jadhav

Som Bathla (In-house Legal Counsel)     17 May 2012

the best option is to structure the salary of employee in such a manner, so that amount of rent is reduced from the payout and then company pays the rent directly to the landlord. this way employee would also get tax benefit, on the reduced salary.

If not possible, then there are two agreements, which are to be separately addressed, i.e. company is liable to the Landlord for rent and the employee is under obligaton to pay the amount to the company pursuant to a separate agreement.

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