Corporate Appointment Letter and Mafia Loan Agreement

This entry is part 2 of 4 in the series IT Life

IT Employees Life : Fun or Problems? – 2 

Shyam Sundar, member of NDLF IT union, has around 20 years experience in information technology. He writes this article “IT employees Life Fun or Problems” to create awareness on various issues faced by IT employees.

I asked 2 questions at the end of part 1. We will try to find answer to both the queries asked.

The first query is from HR officer asking employee to resign based on the offer letter clause signed by the employee. Let us get a closer look at this problem and see whether what HR officer mentioned here is correct or not.

Law of Land

So in all cases, the law of the land supersedes any agreement between two private parties. So if two parties enter into an agreement which violate any of the Indian laws, then the agreement will be voided.

I want to tell a small story to understand the problem better.

Varun is an entrepreneur running his own business. To meet his business needs, he urgently required Rs 1 lakh. He found it difficult to arrange money from bank or other sources as he wanted the money very urgently. He came to know that Tarun who lives nearby gives unsecured loans for interest.

Varun approached Tarun for money and Tarun conveyed that the interest rate for the money borrowed is 120% pa.

Tarun prepared an agreement document stating that Tarun has given Rs 1 lakh as loan and Varun has to pay interest of Rs 10,000 every month. Varun agreed to Tarun’s condition, signed the document and got the loan amount.

Varun paid interest for the next few months on proper due date. But after some months, Varun was not able to pay that high interest. Tarun asked for the interest payment and as Varun was not able to pay, Tarun approached the court

In the above story, can anyone guess in whose favor court will stand?

The Industrial Disputes Act

Industrial dispute act – 1947 is the master legal document that protects employee rights and this law definitely does not confer such rights to companies. So companies do not have the right to terminate employees based on offer letter or based on any new company policies.

No doubt, the court will be in favor of Varun.

As per “Prohibition of Charging Exorbitant Interest Act”, document signed by both parties will be deemed void. Court will deduct the higher interest paid on actual loan and order Tarun to pay only balance amount. Court may also penalize Varun for charging high interest rate and take criminal action against him. The document which Varun feel is in his favor will go against him.

A law is enacted only after the majority of elected members of legislative assembly (MLA) OR Members of Parliament (MP) of both Rajya Sabha and Lok Sabha accept it. Then it goes for approval by president and only after president’s approval the law gets finalized.

So in all cases, the law of the land supersedes any agreement between two private parties. So if two parties enter into an agreement which violate any of the Indian laws, then the agreement will be voided. So IT employees should understand that law of land is always more powerful than company’s offer letters and we need to check if agreement in offer letter is acceptable under law.

Now let us check if company trying to separate employee based on offer letter is legally right. Certainly Indian Laws do not provide the right to any company to terminate employees based on offer letter signed. Industrial dispute act – 1947 is the master legal document that protects employee rights and this law definitely does not confer such rights to companies. So companies do not have the right to terminate employees based on offer letter or based on any new company policies.

The Interest of the Workers and the Interest of the Country

Just for argument sake, let us consider that Indian laws grant the companies the right to terminate employees at will and check what will be the impact of such a practice.

We don’t have any specific law for IT industry and IDA is applicable for all companies in all sector. If in all sectors, companies can terminate employees by giving 2 months notice, it creates the following impact:

Next to agriculture wage labour is the most prevalent employment opportunity for working people in India. Agriculture is already in a deep crisis due to multiple levels of exploitation and corporate attacks.

  1. If Industry also has the right to terminate employees with 2 months notice job security will not be there for any of the employees.
  2. Employees will not make any big financial decisions. They will not buy flats, cars, luxury items and it badly affects demand in all these sectors
  3. People who got loans from bank will not repay if they lose the job. It creates big crisis for banks and other financial sectors.
  4. IT sector involves mental work and people with high experience can perform better. But in manufacturing jobs where physical labour is needed, only young workers will be retained and all workers older than 40 will be forced our of employment. (In IT also it is happening now)

The assumption we made above is already implemented in many ways through contract employees, trainees, appendices etc. We witness the impact of such practices on Indian economy and people of our country.

So all employee in IT industry should understand clearly that none of the IT companies has the right to terminate employees based on agreement signed in offer letter. If an employee signed that he/she and his/her entire family are slaves to the company, this agreement is not accepted as slavery is not legal in India.

Let us discuss the answer to the second query: if the top management decides, do the employee not have any option to save his job.

The answer to this is even if top management decides, if their decision is against Indian law, this is not acceptable. Top management people have authority only inside the company. The company is registered under Indian laws and have to oblige the rules and regulations of Indian government.

The government gives subsidized land, uninterrupted electricity, corporate tax rebates and other such benefits to corporate companies only as they provide employment opportunities. So if a company wants to separate employees, then it has to follow all laws related to retrenchment. If any company does not follow such rules even it is dictated by top management, then we can seek remedy as per law.

In such scenarios of separation, employee should complain in labor commissioner office and if necessary go to labor courts to seek justice. They should not be afraid about HR threats and enroll themselves with NDLF Union (NDLF IT Employees Wing) and seek advice.

We NDLF provide legal advice, guide employees to file petitions in labor office and labor court and help in protecting employee rights. IT employees should improve their legal knowledge and take legal steps to seek protection in crisis situations.

We have answered 2 common queries related to HR threats in this part. We will try to answer more common threats from HR and validate if they are correct in the subsequent parts.

  1. We will blacklist you and terminate you. If we terminate, you will not get any job in other companies.
  2. You will not get Provident fund and gratuity if we terminate you.
  3. You will not get relieving letter if we terminate you.

Just think whether the above 3 queries are legally correct. We will discuss this in the next part

– Shyam Sundar

(Continued…) the next part will be published on Friday 01-09-2017 at 1 pm.

To Read the Other Parts

Series Navigation<< IT Employees Life : Fun or Problems?Don’t Resign without a Job in Hand >>

Permanent link to this article: http://new-democrats.com/life-of-it-employees-fun-or-problems-en-2/

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