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UThe offer letter has the following text-
“16. NO SHOW CLAUSE
16.1. Upon the execution of the letter by the intern/employee, the terms of the Letter are legally binding on the intern/employee. In the event of any default by refusal or failure to commence the performance of duties under this Employment Agreement on the Effective Date of this Agreement, they shall pay to the company a reasonable amount as liquidated damages, which is agreed and understood to be a fair pre-estimate of the damages suffered by the company on account of such action.16.2 Notwithstanding the above, the company retains the right to file a claim for damages or take appropriate action about any breach of the obligations by the employee/intern under this Agreement.”
I signed the offer while ago but after I informed them that I won’t be joining, they asked me to rethink because they would have to enforce the clause
I want to continue at my current firm or quit due to some health reasons and won’t be joining them
1. Would they actually ask me to pay for the damages?
2. Is this legal, should I just pay the penalty or consult someone for legal advice?
3. What are the chances that they will file the lawsuit?For context – it’s a small sized company and I’m in not in the tech side
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D• No legal obligation to pay or join.
• No-show penalties are not enforceable under Indian law.
• Companies use these clauses to pressure employees, but rarely act on them.-
U1. Ok
2. I want to understand since I’m not very familiar with labour laws; why they are not enforceable because in the job offer that I signed it says it is legally binding
3. So it’s rare but not never; worst case scenario they could send out a legal notice? (Sorry I’m just a little worried so trying make sure I’m not making a bad decision)Would it show up in background verification if I get sent a legal notice?
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D1. The No-Show clause is not enforceable in India because offer letters are not binding employment contracts until you start working. Companies must prove actual financial loss, which is very difficult. Unless they are sending you somewhere to train you, spending money on your training, they cannot prove financial loss.
2. Worst-case scenario? They might send a legal notice, but it’s rare. A legal notice is just a demand letter, not a lawsuit. Most companies don’t take further action because it’s costly and unlikely to succeed.
3. Will it affect background verification? No, legal notices do not appear in background checks since they are not criminal records.
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