1. Return the training fee and the company's devices like laptops

2. If they refuse to accept then write a letter to the company recording its refusal

3. Have a strict legal notice issued by a good lawyer claiming heavy compensation and damages from the company for the treatment meted out to you while you were with the company on probation

4. Also have that legal notice marked to the ministry of labour and also police

5. No company can make a person work in a manner which is in violation of his Right to Life and Personal Liberty which is guaranteed under article 21 of our constitution

6. Dont waive your salary under any circumstances. Infact claim damages and have the training fee which the company is demanding from you, adjusted against your damages claim

7. Give the company a tough fight and dont compromise on your rights

8. If the company infact meted out inhuman treatment against you, then you have nothing to worry

9. I suggest also to write a letter to a good human rights organisation

Dear Client,

Instead issue them legal noitce for refund of due salary and compensation towards medical expanses and mental stressed caused to you due to unhygienic atmosphere and undue pressure at work place. It is responsibility of employer to provide healthy work atmosphere, which company miserably failed to provide, Your not bound by terms of appointment for failure of company.

It is immaterial whether you have signed all the pages of the offer letter or just signed on the last page. You have agreed to their offer and accepted it by duly acknowledging it.

Now having accepted their offer, if you wish to quit the company within the probation period, then the liability for early departure or departure within the probation period clearly states what the company is entitled to recover from you.

In your case, the company is demanding only 60k from you and if you agree the company is willing to take back all its property and also release you as per company norms (F & F, Salary, perks, PF & Gratuity etc., being cleared).

If you wish to contest this, you will have to go to court, alternatively in my opinion, accept their offer and close this issue, as it concerns your health more importantly than anything else.

You are bound to reimburse company money spent on your training

2) inform company that you had o leave organisation on health grounds

3) enclose your medical reports

4) terms of offer letter duly accepted by you are binding upon you

Terms and conditions are not binding, if you are leaving the company, owing to medical reasons.

It is the duty of the employer to provide safe working conditions as well as humane behaviour is expected from them towards the employee.

If they fail todo so, the employee has all rights to leave to company, without following the covenants of the offer letter as such actions of the employer are in violation of right of life and personal liberty guaranteed under Section 21 of the Constitution.

You need to serve a legal notice to your employer for recovery of your lawful dues alongwith interest, damages and legal fee, also asking him to waive off the training amount.

If he fails to do so within 15 days, you can file a complaint with labour commissioner or civil courts.

Dear Sir,

If there is no service bond then you need not pay anything. Let them go to Court you can defend by 1001 reasons. Be at ease. On the other hand get issue a legal notice to them calling upon to pay compensation of Rs.2 lakhs towards mental torture and health hazards. The law is as follows:

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The Indian courts have been reluctant to restrain the employee from joining a competitor/other employer

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Non compete clause, it is prohibited under the Law of Contracts.

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Section 27 of the Indian Contract Act-1872 provides that ”Every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind, is to that extent void”.

Exception : One who sells goodwill of a business with a buyer to refrain from carrying on a similar business within specified local limits so long as the buyer, or any person derivingtitle to the goodwill from him, carries on a like business therein provided that such limits appear to the court reasonable, regard being had to the nature of business.

Indian law is therefore very clear and strict on this point, any such non compete agreement shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, for such type of agreements it has shown that it has kept such non compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non compete clauses in employment contracts as “restraint of trade” is impermissible under section 27 of the Indian Contract Act-1872, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.

However considering the developed social, legal, and corporate circumstances, and the required confidentiality and the integrity of the employments, the judiciary has inclined its view towards giving some regard to the non compete agreements. In the case of ‘Niranjan Shankar Golikari Vs the Century Spinning and Manufacturing Company Ltd.’ , the Hon’ble Supreme Court observed that-“restraints or negative covenants in the appointment or contracts may be valid if they are reasonable”. Further in one case - V.F.S. global services Pvt. Ltd Vs Mr. Suprit Roy, 2008(2) Bom CR 446, the Bombay High court established the principle that a restraint on the use of trade secrets during or after the cessation of employment does not tantamount to a “restraint on trade” under section 27 of the Act and therefore can be enforceable under certain circumstances. In the case of Mr. Diljeet Titus, Adv Vs Mr. Alfred A Adebare & Ors 2006(32)PTC 609 (Del), Delhi High court held that “The real test was the degree of employment control to determine whether it was a contract of service…” .

Like these there are several other judgements of various High courts which have laid down certain tests or guidelines to check the validity and legality of imposition of restrictions on such non competing agreements. It shows that Indian courts may in certain circumstances enforce confidentiality agreements intended to protect an employer’s proprietary rights.

Like these there are several other judgements of various High courts which have laid down certain tests or guidelines to check the validity and legality of imposition of restrictions on such non competing agreements. It shows that Indian courts may in certain circumstances enforce confidentiality agreements intended to protect an employer’s proprietary rights.

Enforceability Of Employment Bond

http://www.mondaq.com/india/x/237806/employee+rights+labour+relations/Enforceability+of+Employment+Bond

1 Central Inland Water Transport Corporation v Brojonath Ganguly, (1986)IILLJ171SC

2 Niranjan Shankar Golikari v The Century Spinning and Manufacturing Company Ltd, AIR 1967 SC 1098

3 IBS Software Services Group v Leo Thomas, 2009 (4)KLT 797

4 Section 73 of the Contract Act, 1872

5 Section 74 of the Contract Act, 1872

6 Nandganj Sihori Sugar Company Ltd v Badrinath Dixit, & Ors, AIR1991 SC 1525

7 Gujarat Bottling Co Ltd v Coca Cola Company, AIR 1995 SC 2372

8 MANU/DE/6554/2011

9 MANU/AP/0416/2011

Introduction

The present era is experiencing phenomenal changes in the economy and industrial processes, which has resulted in greater business competition. To cope up with competition, the employers incur huge expenditure in imparting training to their employees for improving the quality of goods and services of the company. However, sometimes the employees leave their employment after honing the skills & improving the knowledge of the industry for better salary and incentives. The increasing rate of attrition subjects the employers not only to financial losses but also delays in completing the ongoing projects thereby directly impacting their goodwill & reputation in the market. Therefore, in order to safeguard their interest, employers have of late started to obtain an employment bond from their employees who are found suitable for training or skill development. Such employment bonds are agreements between the employer and employee wherein among other terms & conditions of the employment, an additional clause is incorporated which requires the employee to serve the employer compulsorily for a specific time period else refund the amount specified as bond value.

The question that arises here is whether such a method to retain employees is effective, acceptable and enforceable under the law. This article discusses the enforceability of employment bond and the rights available to the employers and employees under the agreement in light of various court decisions.

1. Employment bond: need and enforceability?

Generally before selecting employees for providing training or skill enhancement program, employers take necessary safeguard of conducting interviews, take assurances that employee will stick to complete the projects for which he is being trained and shall also train the other co-employees so that an effective and efficient work environment is created. However, employees still tend to leave for greener pastures and, therefore, it is increasingly becoming necessary for the employers to enter into an employment bond to safeguard their interests. If employee leaves the employment without serving the company for agreed time period, the employer is expected to suffer due to the undue delay in completing the work undertaken, which can ultimately affect its reputation/creditability in the market. To prevent such situations, the employer can compensate the loss incurred if a valid employment bond has been executed. Such bonds also deter the employees from committing any breach of the agreed terms and conditions.

Now, the most pertinent question that arises here is whether the employment agreement with negative covenant is enforceable under Indian laws? The simple answer is yes. Such employment agreements with the negative covenant is valid and legally enforceable if the parties agree with their free consent i.e. without force, coercion, undue influence, misrepresentation and mistake. The courts in India have held in its various judgments that in the event of breach of contract by the employee, the employer shall be entitled to recover damages only if a considerable amount of money was spent on providing training or incurred other expenses for the employee. Further, the courts have been reluctant to restrain the employee from joining a competitor/other employer. The employment bond will not be enforceable if it is either one sided, unconscionable or unreasonable. Therefore, it is pertinent to be cautious while drafting the employment bond because it is mandatory that the conditions mentioned in the employment bond, including the compulsory employment period and amount of penalty are reasonable in order to be valid under the Indian law. The term "reasonable" is not defined under the legislation and, therefore, the meaning has to be determined on a case by case basis depending upon the issues involved and circumstances of the case. In general, the conditions stipulated in the contract should justify that it is necessary to safeguard the interest of the employer and to compensate the loss in the event of breach of contract. Further, the penalty or compulsory employment period stipulated in the contract should not be exorbitant to be considered as valid and to be regarded as reasonable.

2. Challenging the enforceability of employment bond

The validity/enforceability of the employment bond can be challenged on the ground that it restrains the lawful exercise of trade profession or trade or business. As per section 27 of the Contract Act, 1872, any agreement in restraint of trade or profession is void. Therefore, any terms and conditions of the agreement which directly or indirectly either compels the employee to serve the employer or restrict them from joining competitor or other employer is not valid under the law. The employee, by signing a contract of employment, does not sign a bond of slavery and, therefore, the employee always has the right to resign the employment even if he has agreed to serve the employer for specific time period.1 However, the restraints or negative covenants in the agreement or contract may be valid if they are reasonable. For a restraint clause in an agreement to be valid under law, it has to be proved that it is necessary for the purpose of freedom of trade. For instance, if the employer is able to prove that the employee is joining the competitor to divulge its trade secrets then the court may issue an injunction order restricting the employment of the employee to protect the interests of the employer. Whenever an agreement is challenged on the ground of it being in restraint of trade, the onus is upon the party supporting the contract to show that the restraint is reasonably necessary to protect his interests.2

In order to execute a valid employment bond, the parties have to ensure that the following requisites have been complied: (i) the agreement has to be signed by the parties with free consent; (ii) the conditions stipulated must be reasonable; and (iii) the conditions imposed on the employee must be proved to be necessary to safeguard the interests of the employer. Further, the employment bond stipulating conditions such as to serve the employer compulsorily for a specific time period or penalty for incurring the expenses is in the nature of the indemnity bond and, therefore, such kind of employment bond has to be executed on a stamp paper of appropriate value in order to be valid and enforceable.3

3. Remedies available to employer and employee

In the event of breach of employment bond, the employer might incur a loss and, therefore, may be entitled for compensation.4 However, the compensation awarded should be reasonable to compensate the loss incurred and should not exceed the penalty, if any, stipulated in the contract.5 Usually, the court determines the reasonable compensation amount by computing the actual loss incurred by the employer having regard to all circumstances of the case. Even if the bond stipulates payment of any penalty amount in the event of breach, it does not mean that the employer shall be entitled to receive the stipulated amount in full as compensation on the occurrence of such default; rather the employer shall be entitled only for reasonable compensation as determined by the court. While exploring alternate remedies available to the employer in the event of default by the employee, it would be interesting and worthwhile to discuss whether the employers are entitled to seek for reinstatement of their employee or obtain restraining order against the employee from joining any competitor/alternate employer because many such similar reliefs have been sought by the employers in various suits. The apex court, while dealing with similar query, has held that the specific performance action cannot be sought for breach of contract of personal service or bond6 and, therefore, the employer shall not be entitled to seek for reinstatement of their employees as relief in the event of breach of bond. In another matter, the apex court has held that it is not bound to grant an injunction in every case and an injunction to enforce a negative covenant would be refused if it would indirectly compel the employee to idleness or to serve the employer7 and, therefore, the courts are also reluctant to grant injunction against the employees restricting their employment with other employer unless it is necessary for the protection proprietary interests or trade secrets of the employer.

As mentioned, the conditions stipulated in the employment bond should be reasonable in order to be valid and, therefore, even if unreasonable condition/clauses are stipulated in the contract such as imposing exorbitant duration of compulsory employment period or huge penalty upon the employee, the court shall award compensation only if it determines that the employer has incurred loss by such breach of contract. The court normally considers the actual expenses incurred by the employer, the period of service by the employee, conditions stipulated in the contract to determine the loss incurred by the employer to arrive at the reasonable compensation amount. For instance, in the case of Sicpa India Limited v Shri Manas Pratim Deb,8 the plaintiff had incurred expenses of INR 67,595 towards imparting training to the defendant for which an employment bond was executed under which the defendant had agreed to serve the plaintiff company for a period of three years or to make a payment of INR 200,000. The employee left the employment within a period of two years. To enforce the agreement the employer went to the court, which awarded a sum of INR 22,532 as compensation for breach of contract by the employee. It is crucial to note that though the bond stipulates a payment of INR 200,000 as compensation for breach of contract, the judge had considered the total expenses incurred by the employer and the employee's period of service while deciding the compensation amount. Since the defendant had already completed two years of service out of the agreed three year period, the judge divided the total expenses of INR 67,595 incurred by the plaintiff into three equal parts for three years period and awarded a sum of INR 22,532 as reasonable compensation for leaving the employment a year before the agreed time period. Similarly, the High Court of Andhra Pradesh in the case of Satyam Computers v Leela Ravichander,9had also reduced the compensation amount considering the period of service of the employee.

Conclusion

In view of the aforesaid discussions and various court decisions, the employment bond is considered to be reasonable as it is necessary to protect the interests of the employer. However, the restrains stipulated upon the employee in the said contract should be "reasonable" and "necessary" to safeguard the interests of the employer or else the validity of the bond may be questioned. The employees are always free to decide their employment and they cannot be compelled to work for any employer by enforcing the employment bond. The court can; however, issue order restricting the employment of the employee only if the said action is deemed necessary to safeguard the trade secrets/proprietary interest of the employer. In the event of breach of contract by the employee, the only remedy available to the employer is to obtain a reasonable compensation amount. The compensation amount awarded shall be based upon the actual loss incurred by the employer by such breach.

1) If court grants to pay also will ask to pay only actual training cost and not whole cost. The training cost is divided between the all candidates and then taken out cost.

2) Don't worry while apply in new don't show you were working in this company. You can join new company. Don't worry.

If the employee resigned due to health reasons and produces a medical certificate in this regard, the company cannot demand the money whatever that had been mentioned in the employment offer letter.

If the employer seeks compensation due to his health conditions which was affected after taking up this employment then the employer would be held liable to pay the compensation to the employee if it is proved against him

if you want to pursue the matter for the ill treatment, you can claim adjustment of 60k against damages which you can claim from company

if you wish to close the matter once and for all, then pay the 60k demanded by the company for providing training to you against proper receipt

in such cases the company will most likely say that by accepting the offer letter you had accepted and had knowledge that the working hours will be strenous and that you were aware about the strenous working conditions and knowing all this you had accepted the company's offer and so now the employee cannot cry foul

what kind of training was imparted to you? is it worth the money the company is demanding from you?

pat Rs 60 k demanded by employer

litigation is long drawn and expensive proposition

Don't accept any liability.

Let them notify you about this officially.

You can plan to face them legally as per provisions of law.

As i said, issue legal notice, company itself will get down on rebuttal demand by you to compensate towards mental agony and medical expanses.

- Firstly , you should talk to the HR department about your health issues and you should submit proper documents including all the prescription of doctors regarding your health issue and your inability to continue in the company.

- As per the Employment law, the Employer can recover all the belongings provided to its employee including the training fees.

- But a company cannot force its employee for continue the work in a manner which is in violation of his Right to Life and Personal Liberty which is guaranteed under article 21 of our constitution

- If, the company is not ready to accept your reasons for leaving the company, then you should sent a Legal notice to the company after narrating the reasons of your illness and suffering with health problems and further you should blame the work place for the same .

- You can also approach the ministry of labour and welfare for the same.

Dont worry, you will get justice.

Dear Sir,

My answers are as follows:

Medical documents are available for the disorders diagnosed in past 4 months. This includes ECG report, Ultra Sound report, physiologist meet, several prescriptions and medical bills.

Ans: These are all reports and prescriptions only you must establish how such diseases prevented you to work in the company.

No recorded proof available for violation of basic rights, vulgar vocabulary used on the floor, continuous nagging and attempt to make stay uncomfortable through several instances (escalated to HR management in person or call, not on email)

Ans: You must bring some oral evidence through your co-employees to prove harassment by your HR etc.

Given all this, and the fact training happened for 3.5 months of the promised 6 months in offer letter, should we pay 60k or submit to their threat of sending legal notice?

Ans: You may send legal notice. The rules of notice period are as follows:

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Is notice period (3 months) legal in India?

It may help to think of a buyout agreement as a sort of "prenuptial agreement" between co-owners: It determines what will happen if your corporation's owners decide not to stay together 'til death do them part.

The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty.

Every document signed in India is legal in India provided that:

• Adhere and comply within the jurisdiction of the law/s such labor law etc..

• Not Forbidden By Law such as in IPC act 1860.

• If Permitted It Would Not Defeat The Provisions Of Any Law (other subsidiary law such as FEMA, SEBI etc)

• Does not Opposed To Public Policy.

Conclusion:

On the basis of above discussed, it can be easily understood that the ambit and scope of section 23 of the Indian contract act 1872, is vast and therefore the applicability of its provisions is subject to scrutiny by the court of the consideration and object of an agreement and the agreement itself.

Therefore, in order to bring a case within the purview of section 23, it is necessary to show that the object of the agreement or consideration of the agreement or the agreement itself is unlawful.

I'll keep it short and simple:

Either party - employer or employee can terminate the contract by giving sufficient notice or compensating accordingly. In such a case, employer is bound to release the employee without any fuss, assuming that either of the above two conditions are met.

So, if your organization doesn't allow you to buyout the notice period, please feel free to knock on the doors of the Indian judiciary.

The following key issues should be highlighted:

• A 30 to 90-day notice period applies in order to terminate ‘workmen’ (as defined in the Industrial Disputes Act, 1947) – that is, employees whose role is not primarily supervisory, administrative or managerial) for convenience, with 15 days’ pay due for every year worked. In the case of manufacturing units, plantations and mines with 100 or more workmen, termination for convenience requires prior government approval; in other sectors, it requires only government notification.

• Termination for cause does not include non-performance – it includes only behaviour which qualifies as misconduct.

• The ‘last in, first out’ principle requires that the employer first terminate for convenience the last people to join the organisation in the same role. However, this requirement can be contracted out of. When hiring for the same role, workmen who were terminated for convenience should be given the opportunity to re-join the company.

• State laws generally provide for about 15 days of earned/regular leave a year. Employees also benefit from up to 10 days of sick leave and a possible 10 additional days of ‘casual leave’. This is generally more than what most organisations would ideally like to provide.

• Most state laws provide for ‘casual leave’ – the employee can opt not to come to work that day without applying for leave in advance. Many organisations find this disruptive.

• Most state laws restrict women from working at night; if women are to work at night, specific approval must be obtained. This exemption is granted only to limited business sectors (eg, IT sector). Further, the employer must offer door-to-door transport and meet some security-related requirements.

• Most state laws prescribe overtime for any hours worked beyond 48 hours in a week. However, this is seldom observed.

• Indian law regulates and in some cases prohibits the use of contract workers. To engage contract workers, the contractor must hold a licence and the employer must be registered as a ‘principal employer’.

• Non-compete agreements are not enforceable under Indian law, while non-solicitation clauses can be enforced only in limited ways.

• While the ‘work for hire’ principle applies under the Indian copyright regime, it does not apply under the Indian patent regime; employees must thus provide formal assignments.

• Indian laws require employers to maintain a plethora of registers and notices. Compliance with such requirements is difficult and full compliance is rare.

What do you consider unique to those doing business in your country?

Some of the points mentioned above are unique to India. In addition, while Indian employment law is mainly federal in nature, most states have a Shops and Establishments Act. These statutes are similar, but not identical. Further, some states have been permitted to make amendments to central laws, with which are thus applicable in a different manner in such states.

Is there any general advice you would give in the employment area?

India is heavily regulated in the employment arena. Legal assistance should be obtained with regard to employment contracts and employment terms of service. Practical advice should be sought on best practices and common practices, so that policies are HR friendly and legally compliant. Advice should also be obtained on areas where compliance is difficult, so that employers can adopt positions that balance convenience against risk.

Emerging issues/hot topics/proposals for reform Are there any noteworthy proposals for reform in your jurisdiction?

As part of the objective to make it easier to do business in India, the government has proposed that the federal labour laws be revised and possibly amalgamated into two or three labour codes. If this is accomplished, the filing requirements will be streamlined. Amendments have also been proposed to some federal laws relating to factories and the use of apprentices. There has been no progress taking these initiatives forward and it appears unlikely that the government will do so.

Key amendments to law in recent months include a substantial change to the Maternity Benefit Act 1961 through the Maternity Benefit (Amendment) Act 2016. Key features of this amendment include:

• an increase in paid time off for eligible female employees from 12 weeks to 26 weeks in case a female employee has fewer than two children. If she has two or more children, she is entitled to 12 weeks’ leave;

• the introduction of the concepts of a 'commissioning mother' and an 'adopting mother', which widens the scope of the law. Such mothers are entitled to 12 weeks’ leave;

• the option to work from home once the paid maternity leave period has ended, based on an agreement with the employer; and

• requiring an establishment with 50 or more employees to set up a crèche facility.

Overall, the amendments are progressive in nature. From an employer’s perspective, there will be greater financial implications due to the increased maternity leave payment and also the benefits to be paid to the new categories of eligible female employees.

In December 2016 the Employee’s State Insurance Act 1948 was amended, increasing the salary or wages threshold for coverage of an employee to Rs21,000 (approximately $309) per month from the previous wage cap of Rs15,000 (approximately $221) per month. The act applies to commercial establishments and provides for social security insurance for employees in case of sickness. The amendment has led to higher employee coverage under the law.

What are the emerging trends in employment law in your jurisdiction?

After decades of the government and courts adopting a somewhat socialist mind set, there has been a shift to a more pragmatic, business-friendly approach. The old approach, which focused on unskilled and daily wage workers, has given way to a focus on India’s growing service industry. There is heightened interest in rewriting the employment laws to make them more business friendly. India’s newest employment law on the prevention of sexual harassment is also leading to an increased number of sexual harassment complaints and additional processes to be followed.

Another important aspect is the move towards e-governance in the labour law sector. A new web portal launched by the government provides users with a unique labour identification number, facilitating online registration, the filing of self-certified, simplified and single online returns for specific federal laws, and a transparent labour inspection scheme on risk-based criteria. Some concessions have also been provided for start ups in terms of employment law compliances.

The employment relationship

Country specific laws What laws and regulations govern the employment relationship?

Some states require that the employer prepare an appointment order for new hires, although this is seldom observed. There are no direct laws dealing with probation on a general basis in India, which is, however, a common practice. The (federal) Industrial Employment (Standing Orders) Act1946 (which is applicable to workmen), provides for a probationary period of up to three months. Certain states have built in the probation concept indirectly into their local laws, which ranges from three to six months. Ideally, a probation period should not exceed 240 days, as several statutory social welfare laws apply to employees who have worked for such period. The Industrial Disputes Act 1947 (applicable to workmen), prescribes that if certain terms of service change, notice must be given to the employee. It also prescribes requirements for termination for convenience, including notice and compensation.

Who do these cover, including categories of worker?

There are essentially two types of employer and two types of employee. Employers are either:

• ‘establishments’ – a term which encompasses all employers; or

• ‘factories’ – a term which typically encompasses manufacturing units. Mines are sometimes covered along with factories.

Employees are either:

• ‘employees’ – a term which covers all employees in any kind of role; or

• ‘workmen’ (as defined in the Industrial Disputes Act, 1947) – that is, employees whose primary role is not supervisory, managerial or administrative.

In addition, certain state laws may exclude senior management employees from their scope of application.

Misclassification Are there specific rules regarding employee/contractor classification?

Indian law regulates and in some cases prohibits the use of contract workers. To engage contract workers, the contractor must hold a licence and the employer must be registered as a ‘principal employer’.

Contracts Must an employment contract be in writing?

Except in states which require an appointment order, Indian law does not explicitly require that an employment contract be in writing, although this is the typical practice followed by most employers.

Are any terms implied into employment contracts?

Certain legal terms are implied in the employment contract. A duty of care, a right to privacy and a duty to maintain confidentiality are implied in the employment contract.

Are mandatory arbitration/dispute resolution agreements enforceable?

Yes.

How can employers make changes to existing employment agreements?

Under Indian contract law, a contract requires the consent of both parties. Thus, the employer cannot unilaterally make changes to the employment agreement. Typically, compensation terms are set out in an annex to the agreement, which should provide that these will be subject to change from time to time. Standard terms of employment – such as working hours, vacation, benefits, security procedures and disciplinary procedures – are normally set out in the employment terms of service, rather than in the employment contract. The employment contract should state that these terms of service apply to the employee and will be subject to change from time to time.

An employer cannot change specified service conditions (eg, compensation, grade classification and customary concessions) for ‘workmen’ (as defined in the Industrial Disputes Act, 1947) without providing 21 days’ prior statutory notice and notice to the labour authorities. This should be considered when implementing changes to an employment agreement.

Foreign workers Is a distinction drawn between local and foreign workers?

A significant difference between local and foreign employees is evident in the law on provident funds, which is a type of pension. The threshold to qualify, the manner of deduction and the benefits are different for foreign employee, and differ further depending on whether the country of origin has a social service agreement with India. There are no other substantive distinctions between local and foreign employees.

Recruitment

Advertising What are the requirements relating to advertising positions?

Under the Employment Exchange (Compulsory Notification of Vacancies) Act, 1959, if the state so requires, a private sector establishment with 25 or more employees must notify vacancies to specific employment exchanges. However, this is seldom observed.

Background checks

What can employers do with regard to background checks and inquiries in relation to the following:

(a) Criminal records?

While it is possible to conduct criminal background checks, this is extremely difficult in practice because criminal records are not digitised and are not consolidated nationwide. Accordingly, where a criminal background check must be carried out, this is typically done at the police station with jurisdiction over the employee’s current place of residence or anywhere that he or she has lived for a reasonable period.

(b) Medical history?

Employees’ medical histories cannot be accessed easily, since these are not digitised and there is no repository of medical records. Employee consent is required to disclose medical records to the employer. However, some employers require employees to undergo medical checks and have the diagnostic centre send the report directly to the employer. Subject to certain specific restrictions (eg, pre-employment testing for HIV is not permitted), there is no prohibition against this practice under Indian law.

(c) Drug screening?

Indian law does not prohibit drug screening.

(d) Credit checks?

An individual is entitled to obtain information on his or her credit rating. The employer can also access this information, with the employee’s permission and on providing necessary proof of identity. Access to credit rating information is more common in banks and financial institutions.

(e) Immigration status?

Indian law does not specifically require an employer to check the immigration status of a foreigner. Indian law does not prevent the employer from checking whether a foreign employee holds the necessary visa to work in India. If a foreign individual on an employment visa wishes to change employment to another company, he or she must leave India and apply afresh for a visa. The only exception is where the foreigner is changing jobs between a registered holding company and its subsidiaries or vice versa, or between subsidiaries of a registered holding company. In such case the foreigner may not need to leave India, provided that he or she fulfils specific criteria, including obtaining prior government approval for the change in employment.

(f) Social media?

There is no bar against conducting background checks through social media.

(g) Other?

The most common background checks undertaken are of educational qualifications. The employee must consent to this and the employer (or an outsourced provider) will then write to the relevant institution requesting confirmation. The institution may charge a fee for providing this information. Most institutions have a procedure in place in this regard.

Wages and working time

Pay Is there a national minimum wage and, if so, what is it?

There is no national minimum wage. However, the central and state governments can issue notifications on minimum wages in specific industries. The federal government has set the recommended minimum wage to Rs176 per day and advised state governments to implement the same.

Are there restrictions on working hours?

By and large, working up to nine hours a day is permitted, with a weekly limit of 48 to 50 hours. There are laws that restrict women from working at night (between 8:00pm and 6:00am). Some states also have a maximum number of hours of overtime that can be worked.

Hours and overtime What are the requirements for meal and rest breaks?

Most state laws provide for a break of 30 to 60 minutes after four to five hours of work. In practice, it is typical to provide a one-hour lunch break in an eight-hour day.

How should overtime be calculated?

Overtime is usually calculated at twice the rate of normal wages. State law defines what the term ‘wages’ covers; this typically includes basic wages plus normal allowances, but excludes any bonus component.

What exemptions are there from overtime?

There are no exemptions from paying overtime. However, the overtime provisions are seldom observed – generally, companies do not pay overtime when employees stay late to complete their work. It is recommended that employers pay overtime at least when employees are required by the nature of the assignment to work overtime – for example, call centre employees.

Is there a minimum paid holiday entitlement?

Yes. This varies from state to state, but is generally about 15 days. Most states prescribe up to 10 days of sick leave and some states prescribe another entitlement of up to 10 days of casual leave. In addition, most states prescribe about 10 days of public holidays; four to five of these are mandatory national and state holidays, while the remainder are chosen by the employer from a larger list provided by the state.

What are the rules applicable to final pay and deductions from wages?

Final pay must be made within two days of the date of termination where the employee’s services are terminated by the employer. In case of the employee’s resignation, the final pay-out can be made as part of the company’s normal payment cycle.

Deductions are permitted from an employee’s wages, but only for specified reasons (eg, on account of fines, deductions for damage to or loss of goods expressly entrusted to the employee and recovery of loans or advances). Deductions are generally permitted only up to 50% of the employee’s wages.