ravneet (Software Engineer) 09 November 2013

No-shop agreement by the employer

Hi Admin and Advisers,

I am Jatin, working as a software engineer in giant IT organization in Noida. Last week, I have given interviews in some organizations to get better opportunity and I have got a better opportunity in terms of monitory. Now they have provided me the expected CTC, and send me the offer letter to join their organization. But the issue is that they have sent me a No-Shop Agreement with the offer letter that states:

"No-Shop" Agreement

Date: ...........................

Dear XYZ,

We refer to the continuing discussions and disclosures between the undersigned (XYZ Software Solutions Pvt. Ltd."), on the one hand, and yourself, relating to the

proposed offer of employment by us for the position of Senior Software Engineer.

This letter will state, in consideration of the premises and as a condition of the final

acceptance of employment offer from your end that XYZ Software Solutions Pvt.

Ltd and you undertake on a binding basis that, neither you nor XYZ Software

Solutions Pvt. Ltd. will:

Entertain offers/candidates, or take any steps towards exploring any other alternative

opportunity related to the possible breakdown on the engagement pertaining to the position of

Senior Software Engieer with XYZ Software Solutions Pvt. Ltd.

In case you or XYZ Software Solutions Pvt. Ltd, breach this agreement, post the

acceptance of the offer letter. Defaulting party will be bound to pay 15% of your offered CTC

to other party.

Please confirm your agreement to the above by signing the enclosed copy of this letter below

and returning that signed copy to us.

For XYZ Software Solutions Pvt. Ltd.

Authorized Signatory

Accepted By: XYZ _____________________

(Sign with Date)

Individually and as authorized representative on behalf of XYZ Software Solutions Pvt. Ltd.

And they are asking for the scanned copy of the document which contains my permanent address as my permanent address proof and the scanned copy of my PAN. My questions are:

1) Is this valid in India?

2) If I sign this agreement and then I refuse to join the company, what legal action they can take?

3) Is it only for mental harassment and threat for employee so that the employee often does not entertain other interviews from other employers?

Please give me the suggestion ASAP. Thanks in advance :)

Reply Follow

5 Replies

Adv. Nikhil Seth (legal consultant (9867264707)) 09 November 2013

The said offer letter is way to bind you legally and in further course not to become whistle blower. in organization.

Offer letter is just pressing on their needs and safety and living you in clutches.

Suggestion better look for other options to enjoy healthy work environment .

Regards,

Adv. NIKHIL SETH

Mumbai

BAALASUBRAMANNYAMM (Advocate) 09 November 2013

The terms & conditions of "NO SHOP AGREEMENT, is totally in favour of the XYZ company. No point is stands on your favour. It looks like an " indemnity bond" It needs some more information with regard to the duration of your employment.. It is a legally enforceable document. Once you sign it, you could not escape. 3. It should be binding on you.

Kumar Doab (FIN) 09 November 2013

Learned experts/members have given valuable advice. You should follow it.

After acceptance of the offer if you do not join, the company can claim liquidated damages of an amount equivalent to 15% of offered CTC.

What CTC is offered by the company annual or monthly?

From such company you can expect other agreements at the time of joining e.g. Non compete, Non Disclosure etc………………..

Do not give your Pan Number or copy of Pan Card.

Look for even better opportunities.

T. Kalaiselvan, Advocate (Advocate) 09 November 2013

If you are looking for better monetary ctc, I hope the present CTC offered by this company fully satisfies your expectation, you can very well go ahead with the proposal. One thing you must remember that if a company is offering you a handsome salary and perks better than any other company, the company has to ensure its own safety too simultaneously, do you agree?, so there is nothing wrong in company asking you to furnish certain details and sign an agreement so after employing you, the company should not run in loss due to your sudden shift/discontinuance. This type of agreement will prevail in most of the companies where ever you may seek employment in the future, it is you who got to make a call.

Kumar Doab (FIN) 11 November 2013

In this so called NO Shop Agreement company has inserted the terms that are equitable and apply to both employer and prospective candidate.

Does the offer letter state that other agreements if any are to signed by you upon joining?

If yes or even if no it shall be appropriate to ask in writing and ask for soft copies of such agreements, now before signing, e.g; Non compete, Non Disclosure and if there is any condition to register in NSR of Nascom etc

In case of other agreements if any to be signed by you with the company, you should ensure that the T&C are properly negotiated and are equitable, and safeguard your interest.

You are comparing CTC.

Employee should negotiate properly and look into take home salary/wages, gross salary, CTC………….Your elders, lawyer, IT lawyer, CA can help you to negotiate a CTC that shall be in your favor.

e.g; wage ceiling for ESIC is being increased to Rs.25000/pm ad no group insurance can match the benefits offered by ESIC………………..It provides cover post dismissal, termination, retirement………………..

The company might insert heads e.g; performance linked incentives, variable pay which may be subjected to various T&C and shall not be a guaranteed take home.

There are statues, enactments for recovery of wages.

The incentives, variable pay are not counted as part of wages.

At any stage later in case of conflict for recovery of payables that are not part of wages the T&C and bilateral agreement shall have to be looked into………………

If you are in such a trade where all employers shall not employ without such legal agreements then you should keep access to/retain a competent and experienced labor consultant/service lawyer and consult before signing on the dotted line in haste.

Employee should be fully aware and properly informed.

Once you sign an agreement, later in case of conflict company can claim legal injury…………………………and approach court of law where only reasonableness of the matter and reasonable amounts shall matter…………….

The employees in your sector have been putting in efforts to unite and trade unions are willing to employees in your sector.

You may find the attachments relevant……………….

https://www.itecentre.co.in

https://ithiworld.wikispaces.com/News+Update

IT/BPO Voice of India | Facebook

UNITES Professionals

www.unitespro.org

https://www.wbitsa.org/

www.itpfindia.org

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