Employment & Service

Company asking me to pay them even though they are terminating my services

When I joined my current company, they made me sign an undertaking on 50Rs stamp paper that if I resign within 2 years then I have to pay them 3 months of salary. Now they have decided to terminate my services and are demanding me to pay the 3 months salary. Can they demand this of me? Also, will I get any compensation from the company?

Expert Advice


Based on the limited facts that you have provided, if the company is terminating your services, then legally you should not be liable to pay the default amount of 3 months’ salary. However, we need to check the language of the undertaking along with your employment contract and company policy, to determine and analyse the case further. How has your termination process been executed; (a) has the company issued you a termination letter; or (b) have they asked you to tender your resignation letter? If its point (a), then a view can be taken that you as an employee didn’t initiate the termination process, while in case of point (b) there is a risk that the company may allege that you have initiated the termination process. However, we can be doubly sure of this once we have a read of the documents pertaining to your employment with the erring company. As for compensation from the company, you will be entitled to your statutory and contractual dues, if applicable. Since we are not aware of the details of your employment, including the start and end date, and the place you operate from, we will not be able to opine on the nature of compensation that may be due to you, at the time of cessation of your service. Assumptions & Qualifications: 1. Please note that the aforesaid views are based solely on the limited facts provided to us. Further, we have not seen any documents pertaining to the validity of the issue raised. In case of any change in the facts and/or submission of documents, our views expressed above may be subject to modification. 2. The views set out above are preliminary in nature based on the summary query raised and on interpretation of applicable laws as on the date of this response. We express no view or opinion in relation to any other legal matter. 3. The views stated above are not binding on any regulatory authority or court and there can be no assurance that they will not take a contrary position. 4. We clarify that the views expressed herein above should be read as a whole and must not be read in parts and/or in isolation. 5. The aforesaid view is given solely for the benefit of the person raising the issue and in connection with the query raised, and may not, in whole or in part, be relied upon by or shown or distributed to any other person. 6. The aforesaid view is strictly limited to the summary query expressly addressed herein and is not to be read as a full-fledged opinion with respect to this matter or any other matter, whether factual or legal.

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