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

Ms. Anjali joined a tech firm, “Innovatech Solutions Pvt. Ltd.,” in Nagpur and worked there for about seven months. Finding the work environment extremely stressful and detrimental to her well-being, she decided to resign. She informally mentioned her decision to her manager but did not follow the formal resignation process or serve the mandatory three-month notice period. A year later, having taken a break to focus on her mental health, she is ready to re-enter the workforce. However, she is concerned about the repercussions of her previous exit. She does not possess a relieving letter, which is often requested by new employers.

Her appointment letter at Innovatech Solutions included a clause for a 1.5-year service bond, with a penalty of ₹4 lakhs for premature departure. The letter also specified that failing to serve the notice period would result in the non-issuance of a relieving letter. While Anjali has her offer letter, payslips, and bank statements to prove her employment, she worries that the absence of a relieving letter and the breach of the employment bond might jeopardize her future career prospects. She is now contemplating whether sending a legal notice could compel her former employer to issue the letter and what her legal standing is in this situation.

Advice in such cases

Navigating the aftermath of an abrupt exit from a company, especially when a service bond is involved, requires careful handling. Here is some general advice:

• Review Your Employment Agreement: Carefully re-read the terms of your appointment letter and the service bond. Understand the specific clauses related to the notice period, bond penalty, and issuance of a relieving letter.
• Assess the Bond’s Validity: Under Indian law, particularly the Indian Contract Act, 1872, bonds that impose an unreasonable penalty or act as a restraint on trade can be challenged. The employer can typically only claim reasonable compensation for the actual loss incurred due to your early departure, such as costs for training or recruitment. The penalty amount of ₹4 lakhs may not be entirely enforceable.
• Initiate Communication: Before taking legal action, it can be beneficial to open a line of communication with the HR department of your previous company. A polite and professional request, explaining your situation, might lead to an amicable resolution.
• Negotiate a Settlement: You can offer to pay a certain amount in lieu of the notice period. This is often calculated based on your salary for the unserved duration. This shows goodwill and may persuade the company to provide the necessary documents.
• 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 is primarily governed by the Indian Contract Act, 1872. The relevant sections include:

• Section 74 of the Indian Contract Act, 1872: This section deals with compensation for breach of contract where a penalty is stipulated. It states that the aggrieved party is entitled to receive reasonable compensation not exceeding the amount so named. This means a company cannot enforce the full bond amount arbitrarily; they must prove the loss they suffered.
• Section 27 of the Indian Contract Act, 1872: This section voids any agreement that restrains anyone from exercising a lawful profession, trade, or business. While service bonds for a reasonable period are often upheld, especially when the employer has invested in the employee’s training, overly restrictive bonds can be deemed void.

It is important to note that specific performance of an employment contract (i.e., forcing an employee to work) is not granted by Indian courts. The employer’s remedy is limited to seeking monetary damages.

If you are the complainant

If you are the employee who has left the job and are facing issues, here are the steps you should consider:

• Gather All Documentation: Collect all relevant documents, including your offer letter, employment agreement, the signed bond, all payslips, bank statements showing salary credit, and any emails or messages related to your resignation or the difficult work environment.
• Send a Formal Communication: Draft a formal letter or email to the company requesting your relieving and experience letters. You can explain your willingness to settle any outstanding dues, such as payment in lieu of the notice period.
• Issue a Legal Notice: If the company is unresponsive or refuses to cooperate, the next step is to have a lawyer send a legal notice. This notice will formally demand the issuance of the documents and state your legal position regarding the unenforceability of the penal bond.
• 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

If you are the employee feeling victimized by the company’s refusal to issue documents and the threat of a bond, your strategy should be proactive:

• Do Not Be Intimidated: Understand that employment bonds are not iron-clad. The burden of proof is on the employer to show that they suffered a specific, quantifiable loss because of your departure.
• Be Transparent with New Employers: When applying for new jobs, be honest about your situation. Explain that you have proof of employment (payslips, etc.) but are in the process of obtaining your relieving letter from your previous employer. Most companies are understanding, especially if you have a strong profile.
• Focus on Resolution: Your goal is to close the chapter with your former employer. A confrontational approach may not be productive. A negotiation-focused strategy, guided by legal counsel, often yields the best results.
• 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

It is crucial to understand that absconding from a job and breaching an employment bond are civil matters, not criminal offenses. The police have no jurisdiction in such cases. An employer cannot file a police complaint (FIR) against you for simply leaving your job. The police will only get involved if there are allegations of a criminal nature, such as theft of company property (like a laptop), fraud, or data theft. As long as your exit only involves a breach of the employment contract, it remains a dispute to be settled through civil legal channels, such as a civil court or negotiation.

FAQs people normally have

Here are some frequently asked questions in such scenarios:

• Can my former company sue me for the bond amount?
• Yes, they can file a civil suit to recover damages. However, they must prove to the court the actual financial loss they incurred. They are unlikely to be awarded the full penalty amount if it is deemed unreasonable by the court.
• Can I get a new job without a relieving letter?
• Yes. While many companies ask for it, it is not a mandatory legal requirement for new employment. You can provide your resignation acceptance email (if any), payslips, and bank statements as proof of past employment. Being transparent with your new HR department is key.
• Can the old company withhold my final settlement and provident fund (PF)?
• An employer can deduct dues, such as payment for the unserved notice period, from your full and final settlement. However, they cannot legally withhold your PF. Your Provident Fund is your statutory right and is managed by the EPFO.

What evidence is required?

To build a strong case for yourself, you should gather the following evidence:

• The complete employment contract or appointment letter.
• The service bond agreement that you signed.
• All monthly payslips.
• Bank account statements showing the credit of salary from the company.
• Any written communication with your manager or HR, including any emails or text messages discussing your departure or the toxic work environment.
• Your formal resignation letter, if you sent one later.

How long will the investigation take?

Since this is a civil matter, there is no “investigation” in the criminal sense. The timeline for resolution depends on the path taken:

• Negotiation: Direct negotiation or negotiation through a lawyer can resolve the matter within a few weeks to a couple of months.
• Legal Notice: The process of sending a legal notice and waiting for a reply typically takes 30-45 days.
• Civil Suit: If the employer files a lawsuit or you have to approach a court, the process can be lengthy, potentially taking several months or even years to reach a final verdict. Therefore, reaching an out-of-court settlement is almost always the preferred and faster option.

Advocate Sudhir Rao, Supreme Court of India