Currently experienced a similar situation.

I had signed the offer letter but changed my mind to stay on the current company. There is a clause in the offer letter that 1 month salary compensation will be needed in the case candidate unable to report on duty.

My current company HR advised me to talk to the new company HR diplomatically if it possible to waive the compensation, else they will ask for my offer letter and will help me to 'settle' it with their HR.

But I'm curious how they gonna 'settle' it? Did this kind of practice normal for HR?

Thanks.