A penalty clause in offer letter if I do not join the company after accepting the offer! Do I need to worry about it? is this even legal. Can they take any legal actions against me...
I have received offer letter from a Company but this letter includes below clause is this legal to ask to pay company a month’s gross salary as penalty if you don’t join them.
This below quoted clause is making me worry. If I accept the offer letter and didn’t join them due to some reason, can they take any legal action against me.
“In the event of your not joining the company on the agreed start date mentioned above, after accepting the offer, it shall be considered that you have violated this agreement and in such an event this offer stands cancelled and you shall be liable to pay one month gross salary as penalty to the company for the loss incurred by the company.
This Agreement shall be governed, construed, and interpreted in accordance with the laws of India. In case of disputes or differences arising in connection with the terms of this Agreement, the same shall be resolved through arbitration under the provisions of Arbitration and Conciliation Act, 1996 and any amendment thereto. X shall appoint an external legal person as the arbitrator. If the arbitrator appointed by X is not acceptable, you may approach the competent Court for appointment of another arbitrator. Both the Parties to this agreement shall be bound by the decision of the arbitrator. You may appoint a pleader / representative at your own cost, to appear on your behalf. Cost of the arbitration shall be equally borne by the parties. The seat of arbitration shall be at city. The arbitration proceedings shall be in English.”