Is it possible to terminate a 3yr employment contract without paying the stipulated (and unreasonably inflated) 3mth worth of salary as penalty fee? Is it legal to impose such large fines?

Answer :



    answered on 11/07/2018

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    It is possible to avoid paying if this term in the contract is deemed to be a penalty clause. Any sum payable in a contract that is a genuine pre-estimate of loss is not a penalty and enforceable. However, the payment stipulated in your contract (3 months of salary) does not seem to be a penalty clause in that it is likely considered as a genuine pre-estimate of loss for the employer, particularly since the employment contract is fairly long (3 years). As such, if you do wish to terminate your employment contract, you will likely have to pay the agreed sum.

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