In the case of Inderjeet Singh Sidhu v. Union of Indiathe Delhi High Court (“HC”) on October 10, 2019, observed that any alteration in the principal terms of employment as stipulated by the employer in a job offer, post appointment of the employee shall be impermissible.
In the present case, Fertilizers and Chemical Travancore Limited (“FCLT”), one of the respondents, issued an advertisement dated December 28, 2015, inviting applications for the post of Chief Operating Officer (“COO”) for its division FACT Engineering & Design Organisation (“FEDO”) at New Delhi. Inderjeet Singh Sidhu (“Petitioner”) who was working with another organisation, applied and was appointed as the COO of FEDO vide appointment letter dated May 7, 2016 (“Appointment Letter”).
As per the terms and conditions of the Appointment Letter, the Petitioner was kept on probation for a period of 6 (Six) months from the date of his joining i.e., June 20, 2016 and was posted at New Delhi. Within a few months of appointment, FCLT issued an order transferring the Petitioner to its Kochi office. The Petitioner filed a request before FCLT to allow him to continue at the New Delhi office citing personal reasons, which was rejected by FCLT. The Petitioner sought repeated postponements of the transfer order citing personal reasons, which were allowed by the FCLT on multiple occasions. However, due to personal constraints the Petitioner sent an email requesting FCLT to relieve him from service (“Resignation Letter”) on March 29, 2017. Subsequently, On March 31, 2017, FCLT sent its acceptance of the Resignation Letter stating that Rule 36A of the FACT rules (“FACT Rules”) required the Petitioner to pay 3 (three) months’ salary (“Notice Amount”) in lieu of notice for resignation. The Petitioner was served with a demand notice for payment of the Notice Amount on August 31, 2017, to which he responded stating that he was not in a position to pay the Notice Amount and requested that the notice period be set off against his unclaimed leave, or he may be allowed to serve his notice period as required by Rule 36A.
A writ petition (“Writ Petition 1”) was filed by the Petitioner which was disposed off by the court by deciding against the Petitioner, and directing him to make payment of 3 (three) months’ salary in lieu of the Notice Period. Aggrieved by the decision in Writ Petition 1, the Petitioner filed Writ Petition 2 before the HC.
Issues before the HC
Two pertinent questions were posed before the HC: (i) Whether the Petitioner’s resignation was “voluntary”?, and (ii) Whether the email sent by the Petitioner could be considered as a valid resignation?
Observations of the HC
Whether the Petitioner’s resignation was “voluntary”?
To answer the first question, the HC examined the advertisement displaying the job offer and the Appointment Letter handed to the Petitioner. The HC noted that these documents clearly stated that: (i) the COO will be deputed at FCLT’s headquarters in Delhi; and (ii) the COO may be required to serve FCLT anywhere in or outside India.. The HC observed that: (i) the Petitioner was already employed and left his erstwhile job to join FCLT on the stipulation that he wanted to work from the New Delhi office; (ii) that the Petitioner made repetitive representations seeking to extend his transfer to Kochi, which implied that the Petitioner did not voluntarily make the application for resignation, and was compelled by his circumstances.
Whether the email sent by the Petitioner could be considered as a valid resignation?
Furthermore, to answer the second question, the HC examined the Resignation Letter and noted that the Petitioner had not mentioned a specific date from which his resignation would be deemed to be effective. Further, he had not abandoned his service, and he appeared to have written the email in order to cope with the external pressure which is apparent in the circumstances of the case. The HC also examined Rule 36-A of the FACT Rules which stipulated for the employee to serve 3 (three) months’ notice to FCLT prior to his/her resignation, or pay 3 (three) months’ salary in lieu of such notice period.
However, the HC took note that this rule is not clear on whether the requirement of making payment in lieu of notice will be applicable in cases where the employee has communicated his resignation and the employer has accepted it. The Court observed that since FCLT accepted the resignation within two days of its receipt, it cannot be said that the Petitioner’s liability to make the payment is in consonance with the FACT Rules.
Finally, the HC allowed the petition and directed FCLT to release any outstanding dues to the Petitioner, without insisting on payment of the Notice Amount.
Stringent notice requirements in employment contracts constitute contractual liabilities that can often be an unfair burden on the employees due to the existence of an imbalance of power in the relationship between an employer and an employee. The intent behind imposing a notice period is to ensure that the employee hands over all pending work to its successor in the organisation and to make sure that the organisation is not left in the lurch. Ordinarily notice provisions are structured to ensure that the employee has the option between serving notice period and making payment in lieu of such period, which was the case envisaged by Rule 36A discussed above. The court took note of the fact that the rule only envisaged situations of unilateral termination of employment by the employee or the employer suo motu. However, the instant case was one of bilateral termination of employment, as the employer treated the email of the employee as a resignation letter and accepted it. In the court’s opinion, it was apparent in the rule that the liability (of serving notice or making payment) was only in case of unilateral termination of employment, and not when the other party accepted the termination/resignation. Finding the rule not to be applicable in this scenario and taking note of the employee’s grievances, the court granted relief to the employee. This demonstrates the importance of drafting essential clauses in employment contracts and understanding their importance while signing on the dotted line. This case also demonstrates that where the laws do not govern certain areas, contractual understanding can limit the employer’s actions, and the employer cannot be allowed to greatly diverge from the principal terms of employment to the detriment of the employee.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.