INTRODUCTION

What is Corporate Bondage?

A state of being bound usually by compulsion (as of law) by any
controlling body such as a corporate organisation.
 CASE ANALYSIS
In this particular case : -
From January 2008 more than 500 employees of XYZ were deputed abroad for the engineering activities as well as operation related

discussions.

For their overseas travel, XYZ issued a travel policy on 21st December 2007, in which the various rules and regulations were specified.

Nothing was specified as against monitory reimbursements by employees travelling abroad in case they leave the organisation.

On 2nd October, 2008 the policy was modified and an addendum added with monitory clause. Excerpts from the addendum are as

follows:-

The employee would payback all expenses incurred by the organisation which included travel, accommodation, food and other

expenses.

For overseas for training, the employee is liable to payback a sum double the salary and the allowances for the training period

along with 12 % per annum from the date of commencement of employees visit to another country by way of liquidated

damages due to breach of contract.

For overseas project or business tour the employee is liable to pay payback a sum equal to the CTC at the time of separation and

the allowances from the date of start of overseas tour till the announced expected date of completion of the project along with
CONTINUED.

The Overseas Project Office would supervise the travel policy mentioned.
XYZ makes it a point that the employee has no issue with the travel policy.
The employee is not allowed to join any other company before the payment of the dues.
The employee was deputed to London for 8 months.
Got a better offer and wanted to leave the company by proper procedure.
Based on the above mentioned clauses in the policy when the employee was asked to pay
40-45 lacs and on refusing that was given a legal notice.
Could not join the other company because of no relieving letter, forced to join back XYZ till
2012 end or when the project ends.
 ANALYSIS OF THE CLAUSES
CLAUSE 1:
The recoverable expenses amount for the general managers and above is almost double the amount for upto senior
managers
The recoverable expenses allocation as per a range of number of days should have been replaced by fixed expenses or
expenses as a product of number of days and per day expense
CLAUSE 2:
The liquidation damage to be paid is equal to double the salary and the allowances for the training period plus a 12% of
intrest pa if the employee is sent to overseas for training due to breach of contract
This should be some fixed amount upto certain months or a fixed percentage of the CTC for that certain period only
CLAUSE 3:
The liquidation damage to be paid is equal to the CTC of the employee at the time of separation and the allowances for
the whole period of the project plus 12% intrest pa if the employee is sent to overseas for project or business tour
Provided that the employee is expected to stay with the organisation till the completion of the project,if he leaves
before that he will have to compensate for the allowances for the duration he hasnt worked too
 ANALYSIS OF THE CLAUSES
CLAUSE 4:
While in the first addendum it is only written that the employee is expected to stay till the completion of the
project, in the second addendum it says that the employee needs to take an undertaking the travel authorization
for the stay till the completion of the project period and this would also authorize the organization to deduct all the
above dues from his final settlement
CLAUSE 5:
The policy only addresses the reimbursement of the cost and compensation for the convenience or loss to the
project
CLAUSE 6:
This clause must include a non-compete wavier where the organisation can take appropriate action against the non
compliance of the employee
CLAUSE 7:
The employee is free only after the payment of the above dues and also he can not be employed in any
organization where such project is likely to arise
 ADHERENCE OF THE CONTRACT

This can be explained in two ways

1. As per the legal stand point, it can be enforced if the 2 clauses of the original contract hold up in the court of law
The sentence The management proposes to revisit the policy in future, if required, and would communicate the changes to
employees at appropriate time.
The original contract stated that the employees were expected to stay till the completion of the project, this does not create
any obligation or liability on the part of the employees. Whereas, in the addendum, it has become an obligation for the
employees and they are liable to pay XYZ co. liquidated damages etc.
2. As per the practical as well as the ethical point of view, the conditions and the amount payable by the
employees are exorbitant and is unfair for the employee. Especially the clauses 2 and 3 of the addendum
whereby they have to pay a sum 2x the salary and allowance during training along with 12 % interest and the
CTC during the term of the project with 12% interest that too not only for period served or period remaining but
till the expected date of completion of the project which is unfair to the employees
Amount to be paid by employee in question as per the existing contract in the name of liquidated damages is:
[2 (Salary+ Allowance during training) +12% interest p.a.] + [{CTC*(8+3+31) months} +12% interest p.a.]