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Kishor (engineer)     08 October 2013

Need advice - ex-employer sent letter to pay contract amount

I need expertise help in my scenario. I start from first.... As a fresher, I joined a company 15 month back. In appointment letter there was condition that if i leave the company before 2 years then as per the appointment letter contract I need to pay 60 thousand to the company. This is on company letter head. Unfortunately, I decided to quit the company after 11 month as there was no growth prospect (I am avoiding to speak on work culture). There were many problems like salary was not credited on time, normally it was delayed 20-25 days. I resigned and requested company to issue experience letter and reliving letter against my 2 month’s salary. My last drawn salary was 7 thousand per month. But company was not agreed to issue letters without 60 thousand. As I had worked for 11 months and had to give justification to my future employers about this period, getting letters was very important for me. My company asked me to give in writing that i will pay 60 thousand in instalment in next 3 months period so they will issue me letters. As letters were important to me, I gave written note on white paper. The company hold my last moth salary and also taken 12 thousand cheque as first instalment and issued me reliving letter and experience letter without serving notice period. After that I joined other company and stated working and not paid any instalment to old company. Now its 6 month’s past when i left my old company but they did not deposit the cheque (given as first instalment) during these 6 months period and suddenly last week they deposited the cheque which got bounce due to exceeded cheque validity period. Now I have received warning letter from my old company to pay 60 thousand before end of month. My Question is: Is such clause legal in India, employee would have to pay the money before leaving the company at a particular time period? Although the company has not spent any money on staff training and development. According to me, employers are taking advantage of need of employment by such clauses. As per my understanding, I have paid reasonable compensation amount which is equivalent to my one month salary (7 thousand). In my case, it is not worth to pay 60 thousand to old company. Please advise me on 1) how I will reply to old company to stop sending warning letters. 2) If old company approach to court then what next process need to foll


 4 Replies

Kumar Doab (FIN)     08 October 2013

Question arises that “Why the employees do not consult elders in the family, competent and experienced well wishers, lawyer/law firm, trade union leaders…………………. before signing on the dotted line.

Everyone understands that it is better to consult in advance than to repent later.


If employee has signed an agreement employee should fulfill it.


The agreement are not to be signed to be flouted later.


The HO/redg. office of the company and you are located in which state?


What was your designation and nature of duties?


Were you appointed as ‘Trainee’ under some training programme vide standing orders of the management? If yes management is ought to have its standing orders which should have been extended to your designation and should have been displayed at a conspicuous place/notice board and a certified copy should be supplied against a nominal charge say Rs.10/-

Or you may obtain a copy from certifying officer (DLC) in o/o Labor Commissioner at location of Redg office/HO of the company against a set fee.

The Standing Order Act is applicable to all establishments to which the Payment of Wages Act, 1936 applies. Section 2 (e) (iv)…………..

The service agreement  may be violative of the standing orders applicable to the company.


Or you were appointed as an ‘Apprentice’ under Apprenticeship Act?

The demand to serve the company was incorporated in lieu of what consideration or favor by company to employee:::: Did the company incur any expense to provide any training that added to extra ordinary skills or to qualification of employee?

It is a matter of common sense that if company want to get something then it is imperative to look into what is offered by it in lieu of the items/service it wants from employee.

The salary offered by employer in peanuts. How much is paid by other companies to same position in same trade?

Did the company declare in appointment letter that employee shall be eligible for increments in salary and did it provide raise?

Did you ever complain in writing on record to lodge your grievances?

Do you have any evidence to term employer as unworthy of being employed with.

As per Model Standing Orders:(16.          Certificate on termination of service) company has to supply ‘Service Certificate’ to all employees.

Company can not charge any amount of money for it…………………….

You may demand the cheques in original back from company.

You may also demand correct FNF statement, Form 16 as per correct FNF statement, payment of FNF dues by bank DD, pay slip for all months, PF number, PF a/c slips for whole tenure of service as issued by PF office, ESIC number/Card, NOC/NDC etc………………by redg. post


You may show the job advertisement, job application, interview call letter, selection letter, offer letter, standing orders applicable to the company (certified or model) appointment letter, service agreement, letter issued by company asking to deposit security cheques of Rs.50000/ and receipt issued by company for it, cheque bounce letter, warning letter etc and any other record………… etc to your labor consultant/service lawyer……………….and proceed under the expert advise of your lawyer.

The lawyer that has seen your entire docs and has analyzed your inputs can advise you the best.

Employee can approach:

>> Lawyer/Law firm: The legal notice/reply by lawyer can drill sense into the heads.

>> Trade Unions, employee’s group/union/IC/Guild…………………..

>> O/o Labor Commissioner: labor Inspector………..

>> Inspector under Shops and Commercial Establishments Act of the State…………

>> Inspector under Payment of Wages Act ( Applicable to all employees drawing wages as per def. of wages in the Act  up to Rs.18000/pm)

2. Definitions………3*[(vi) "wages" means………………..(d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made;

>> RPFC in o/o PF Commissioner


>> Inspector in Local/jurisdictional ESIC office………….

Attached File : 345983228 417759075 validity of employment bonds.pdf, 345983228 background paper.pdf, 345983228 model%20standing%20orders.doc downloaded: 175 times

Kishor (engineer)     08 October 2013

Company HO and Me located in Maharashtra. My designation was Jr. Developer. Company was not spent any money on any professional training for me. I was observed that attrition rate was countable in company and in past many employee left the company by breaking employment contract and without ‘service certificate’ due to rude nature of director as well as there was no growth prospect.

Kumar Doab (FIN)     08 October 2013

Bombay Shops and Commercial Establishments Act is so employee friendly.

You must take current/next employer in confidence………………….

As far as warning letter for cheque bounce is concerned, don’t take in lightly and  approach your lawyer without any delay along with elders in the family and proceed under expert advice of your lawyer.


The lawyer that has seen your entire docs and has analyzed your inputs can advise you the best.

Rohan (Manager- Legal)     18 March 2014

My dear fellow, you have willfully , with open eyes and a clear mind- entered into the agreement with your ex-company on two occasions. The first one being the original agreement at the time of joining. The second one when you chose to leave the company after 11 months and then agreed to pay the 60k amount.

Now you are complaining on the very validity of the clauses which you could and should have objected at the time of joining the ex-company.

You are clearly in a habit of taking everyone for granted. You should be honouring the caluses which you willfully signed in the first place.

I ask you- you had no right to break the bond of 2 years and now that you have broken it is your duty to honor the penalty clauses. It is immaterial that the company deposited the cheques after 6 months. I agree you were not reponsible for the delay. (For that if the company is demanding interest amount they are in the wrong. But remember you might have to demonstrate that you had the funds in your accounts equal to the installment at the due dates of the cheques deposits).Why you did not inquire when they failed to deposit it in the time period. You probably expected them to waive off the cheque amount. Now that they are demanding what is legally theirs in thier Notice you have suddenly raising the question of the validity of the clauses.

In my opinion the comany has a strong case to fight in the court. You have foolishly undertaken to agree to pay ( it is immaterial if that was on white paper or a indigo clored paper). Hence you have effectively ackowledged your debt liability to the company and they have a string case to pursue the recovery.

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