If you are stuck in such a situation, here is what to do.

Mr. Sameer was employed with a tech firm, ‘NextGen Innovations Pvt. Ltd.’, in the city of Vidyanagar. After deciding to pursue other opportunities, he tendered his resignation and was serving his notice period, with his last working day scheduled for the end of the week. He had been sent on an international assignment by the company earlier in his tenure. The company has a policy where employees sent abroad must sign a separate deputation agreement, which includes a clause to repay a certain amount if they leave the company within a stipulated period.

However, due to an oversight by the HR department, Mr. Sameer was never made to sign this agreement. Despite this, as his final settlement process began, the company insisted that he pay a sum of ₹3,00,000 as per the deputation policy. They are withholding his final settlement dues and the relieving letter, making them conditional upon this payment. Interestingly, neither his Indian nor his international offer letter contains any such clause. The company has even acknowledged in an email that he never signed the specific deputation contract but continues to pressure him for the payment. Mr. Sameer managed to capture a photograph of this email on his phone as the company’s IT policy prevents forwarding emails to external accounts.

Advice in such cases

• A contract or an agreement is not legally binding unless it is signed by both parties, signifying mutual consent. An employer cannot enforce a clause from a document you have never signed.
• Withholding an employee’s final settlement, including salary for the last working month, gratuity (if applicable), and other dues, is illegal. Similarly, a relieving letter, which is proof of employment and departure, cannot be held hostage for an illegitimate demand.
• Maintain a record of all communications. The email where the company admits the contract was not signed is a crucial piece of evidence. Preserve the photograph and any other written correspondence.
• Do not succumb to pressure or make any payment. Agreeing to pay could be interpreted as an acceptance of their terms.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

Applicable Sections of Law

This situation involves principles from several areas of Indian law:

• Indian Contract Act, 1872: For a contract to be valid, there must be a lawful agreement, which includes a clear offer and acceptance. Since the employee never signed or accepted the terms of the deputation agreement, no valid contract exists in this regard. The employer cannot enforce its terms.
• Payment of Wages Act, 1936 / Industrial Disputes Act, 1947: These laws govern the payment of wages and settlement of dues. An employer making unauthorized deductions or unlawfully withholding an employee’s rightful earnings is a violation of these statutes.
• Bharatiya Nyaya Sanhita, 2023 (BNS): If the employer’s actions involve coercion, threats, or dishonest inducement to make the payment, it could potentially attract provisions related to extortion (Section 326 of BNS) or cheating (Section 318 of BNS). Withholding property (final settlement) dishonestly could also be viewed under the lens of criminal misappropriation.

If you are the complainant

As the employee who is being unfairly pressured, you are the complainant. Your course of action should be:

• Send a Legal Notice: The first step is to have a lawyer draft and send a formal legal notice to the company. The notice should detail the facts, state that their demand is illegal as no contract was signed, demand the immediate release of all pending dues and the relieving letter, and warn of legal action upon failure to comply within a specified period (usually 15 days).
• Approach the Labour Commissioner: If the legal notice does not yield results, you can file a complaint with the Labour Commissioner’s office in your jurisdiction. They can mediate the dispute and direct the employer to release your dues.
• File a Civil Suit: You can file a civil suit for the recovery of your dues, along with interest and compensation for the harassment and damages caused.
• File a Criminal Complaint: If there is a clear element of extortion or cheating, a criminal complaint can be filed, but this is usually considered when the employer’s conduct is particularly malicious.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

If you are the victim

Being in this position can be stressful. As the victim of an unlawful demand, you should:

• Stay Firm: Do not agree to any “partial settlement” or negotiation that involves you paying any amount you are not legally obligated to pay.
• Document Everything: Keep a clear timeline of events. Save all emails, text messages, and take notes of any verbal conversations, including the date, time, and person you spoke with.
• Communicate in Writing: Try to keep all further communication with the company on email so that you have a written record of their demands and your responses.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

How the police behave in such cases

Typically, the police view such matters as civil or labour disputes rather than criminal offenses. If you approach a police station, they will likely advise you to seek remedy through the Labour Court or a civil court. They are often reluctant to file an FIR unless there is clear evidence of criminal intimidation, extortion, or other serious offenses defined under the Bharatiya Nyaya Sanhita (BNS). However, a complaint can still be filed, and the police may choose to call the employer for an inquiry, which can sometimes pressure them into resolving the matter.

FAQs people normally have

What evidence is required?

To build a strong case, you will need the following evidence:

• Your appointment/offer letter, which does not contain the disputed clause.
• Your resignation letter and the company’s acceptance of it.
• The email or any written communication from the employer demanding the money.
• The photograph of the email where the employer admits the deputation contract was not signed by you.
• Your salary slips to establish your employment and salary details.
• Any communication related to your final settlement being withheld.

How long will the investigation take?

The timeline can vary depending on the route you take:

• Legal Notice: The employer is typically given 15 to 30 days to respond. Often, a strong legal notice from a reputable lawyer is enough to resolve the issue.
• Labour Commissioner: Proceedings before the Labour Commissioner can take a few months, depending on the complexity and the cooperation of the employer.
• Civil Court: A civil suit is a more prolonged process and can take anywhere from a year to several years to reach a final decision.

Advocate Sudhir Rao, Supreme Court of India