Is employee bond valid as per the labour laws in India?

Dear All,

I have a very serious query on my mind... Is an employee bond valid as per the labor laws in India? If yes, could you please share some information regarding the same and its applicability.

Thank you.

Regards,
Unni

Dear Unni,

According to the law, if an employer is investing in an employee, then a bond is eligible with the condition that before the training/investment, the employee has less than one year of experience.

Regards,
Ruchi

Hi,

Kindly note that no employer can bond any employee by any bond. The legal system of India clearly abolished the bonded labor system long back. Under no circumstance can any person be bound by another through a contract to waive his legal rights guaranteed under the Constitution of India. Article 19 guarantees the right to work, and this right cannot be waived by the employee on his own will, nor can the employer force any contract that contradicts the aforementioned article.

Yes, the employer can bond his employee for payment of any expenses incurred by the employer as part of the training provided to the employee. However, this training should be aimed at increasing the employee's productivity in the organization.

Yes, the employer can prevent his employees from working in a competitor's organization for a certain period of time.

Dear Unni,

When entering into a service contract, there must be a legal framework in place wherein both parties agree to the conditions outlined in the contract. The employer can engage in a contract with the employee under certain conditions:

1) The service is for a specific period, and the employer has not bound the employee for a duration of their choosing. The employee's service will conclude upon the completion of this period.

2) Both parties have the right to terminate the contract after providing notice for a specific period.

3) A service contract cannot be considered part of regular employment.

4) The employer does not impose any restrictions on the employee's mobility. After the specified period or notice, the employee has the right to work in any organization.

5) According to the Bonded Labour Act, no employer can restrict an individual's freedom to work under any circumstance. However, a service contract for a specific period does not fall under the conditions of bonded labor as the employee willingly enters into a contract with the employer.

Suresh

Actually, I am a fresher and have recently joined a bank. Before joining, they made me sign a bond for 4 years, and if I break the bond, I would have to pay Rs 100,000. They have kept all my original certificates.

In this regard, I want to know if such a bond is valid and if there is any duration for its validity. Also, they have provided me training. Basically, I want to know if I serve the bank for, say, 2 years, can they recover the cost of training, so can a bond of 4 years be valid? Please tell.

Your bond is not valid. They have provided you with training related to the bank's work processes, which they would typically do when hiring a fresher. If you are content in your current company, why are you worried about breaking the bond? Spend two more years learning as much as you can from the bank. If you encounter any problems, consider consulting a legal practitioner with your appointment and ask for the right course of action. All the best.

Regards,
Asha

If they really provided training and spent money on your training, yes, you are liable to pay, or they may take legal action.

Hi,

I have signed the bond for 2 years. The clause states that if I resign before 2 years, I am supposed to pay 50,000 to the company. I joined this company as a fresher, and now it's been 1.9 years since I started working here. I am currently looking for a good opportunity.

Can anybody suggest if I break the bond, do I have to pay the amount or not?

Thanks in advance.

Hi,

I do agree with the experts here that negative covenants like restrictions after leaving a job and non-compete clauses in employment bonds are illegal and have no legal standing. But the question is, how to resolve the dispute?

In my case, I left the job by mutual agreement (with written proof) and received full and final settlement. After 8 months of leaving, I started a similar job, and a Legal Notice was served to me, stating that I was absconding without notice and had breached the non-compete clause. The ex-employer invoked the SOLE ARBITRATOR Clause, which will likely be biased.

Please note that the ex-employer didn't spend a penny on my training. In fact, I trained their team for analysis. I was hired as an expert to enhance their product offering and, in fact, helped them generate profits. Later, we both agreed to close down the unit due to insufficient profits as estimated.

Now, they consider me a future threat and have initiated arbitration proceedings against me, demanding 5 years of salary (even though the bond's validity was 5 years, we agreed to end the relationship after 9 months).

Since arbitration is one-sided and likely biased, what options do I have? I believe I stand clean in a court of law.

Please help/suggest!

Thanks,

RshOne

Hi,

I need your help to clarify the clauses in a training agreement (in the Sri Lankan context). I have been asked to sign a six-month training agreement for the post of trainee manager that says, "The trainee should pay this amount (equivalent to the payment for the trainee for six months) if the trainee terminates the agreement. The trainer has the sole authority to assign the trainee to any workplace, prescribe work hours and leave, and will instruct the trainee within the period. The trainee is entitled to annual, casual leave, and superannuation benefits according to the Shop & Office Act 1977 of Sri Lanka.

The trainee should work for 6 years within the company if he/she has been absorbed into the permanent cadre, and this agreement doesn't assure an opportunity after the successful completion of the program. It doesn't include a training schedule or evaluation criteria. Confusing? Please help.

Dear friends,

I have joined a company that is planning to establish an institution and worked for four months without a written agreement. They have paid me for four months, and in the fifth month, they gave me a backdated training agreement for 6 months commencing from February 2012, which asks me to be liable to pay an equivalent amount to my salary for 6 months if I resign within the period of the agreement (6 months).

The letter does not include any information regarding responsibilities, working hours, duties, evaluation, confirmation of service, and it states that I will be trained by a trainer for 6 months. If I am absorbed into the cadre, I should work for 4 years. It also indicates that I am entitled to annual leave, but the agreement is for 6 months.

What should I do? Accept or not to?

Agreement in restraint of trade or profession is void as per the provisions of the Contract Act. Moreover, it is a violation of Article 19 of our Constitution. Further, the employer cannot recover anything more than the actual reasonable loss suffered by it in case of breach of the Bond. In case of transfer of an employee from one PSU to another through proper channel, relevant DPE Guidelines in this regard become applicable.

Dear All,

I am working for a biotech company. I have been given a service bond of 5 years. If I break the bond, I need to pay 10 lakhs to the company. They sent me abroad twice and invested nearly 2.5 lakh rupees in my training. I have already worked for 2.5 years and have implemented all the techniques I learned during my training. However, the issue now is that the company is asking me to work with human pathogenic organisms (such as HPV, HCV, HBV, HIV, etc.) without proper safety measures. I already suspect that I may have contracted latent TB from working with Mycobacterium tuberculosis without adequate safety precautions. I am desperate to leave this job and join another company. Could you please advise me on whether my service bond is still valid?

Thanks in advance to all who reply to me on this!!

Dear all,

I am Mahendra, working in a well-reputed organization. I have an issue with my employer. Firstly, they provided me with one year of training for free. Now, they are asking me to become a permanent employee and sign a bond of 288,000/- for a two-year contract.

My concerns are:
1. Do they have the authority to impose a bond under these conditions?
2. If they do, what should be the minimum salary?
3. How much percentage of sala...

Hi,

I have signed a bond of 6 months in a call center, but due to a health issue, I need to resign from there. However, they are asking me to pay 2 months' salary as a penalty since I have only worked for 3 months. Is there a way to resign without paying the penalty?

Hello, recently my company sent me to the UK for 2 months. Now in the UK, my client offered me a job position, and I accepted it immediately. When I returned to India, I resigned from my post. In response, my company sent me an email demanding that I pay back all my UK allowances to them before they provide me with a relieving letter. According to them, we have a separation policy with clauses that state if an employee is on an international assignment, as soon as they return to their base location, they must pay the cost of investment (minimum charges of the visa) and other allowances.

Does this mean I have to pay back all my UK money? I earned a total of 3000 GBP, and they are asking for 4130 GBP back, including my airfare, insurance, and daily allowances. I don't know what to do now, as 4130 GBP is a large amount for me. Please help me out and suggest what the exact law is regarding breaking a bond.

Hello, recently my company sent me to the UK for 2 months. While in the UK, my client offered me a job position, and I accepted it immediately. Now that I am back in India, I resigned from my previous post. In response, my company sent me an email stating that I must pay back all my UK allowances before they provide me with a relieving letter. According to their separation policy, there are clauses that state if an employee is on an international assignment, they must repay the cost of investment (minimum charges of visa) and other allowances upon returning to their base location.

Does this mean I have to repay all the money I earned in the UK? I earned a total of 3000 GBP, and they are demanding 4130 GBP from me, including my airfare, insurance, and daily allowances. This amount is significant for me, and I am unsure of what to do now. Could you please help me and advise on the exact laws regarding breaking this bond?

Thank you.

My relative had been working in a company for over 4 years. He has recently left the company after serving a 2-month notice period. However, his 2.5 months of salary and PF are still pending with the company. After he left the company almost a month ago, his previous employer is asking him to sign a bond stating that he will not work with any company or engage in any business similar to his previous company. Can somebody please advise on this? Your help will be greatly appreciated.

Hi,

I have signed the Service Agreement for 2 years (Not a Bond). Now I want to resign from the company before the 2-year mark, and the company is requesting that I pay one year's salary if I choose to leave early. However, there is no provision for this in my Agreement.

There are two specific points in the agreement that I would like to discuss:

1. Termination
- Without prejudice to any clause, the employment of the "Conformed employee" may be terminated at any time by either party by giving two months' notice in writing or basic salary in lieu thereof as liquidated damages.

2. Company discussion on termination of employment to be final and binding on the applicant:
- The company's decision regarding the termination of employment shall be final and legally binding on the applicant. The applicant shall not be entitled to question or challenge the decision on any grounds in any court of law.

Based on the points mentioned above, I believe that I, as a conformed employee, have the right to terminate my employment with the company at any time. However, the company is now claiming that "Only the company has the right to Terminate."

Please assist me with this matter.

I suggest that you consult with a lawyer and seek his legal opinion on this employment matter from www.zippserv.com. They offer these services and employment-related legal consultation services that can be availed at http://zippserv.com.

In case you need to send or reply to a legal notice from your employer, Zippserv also offers its Legal Notice service at https://www.zippserv.com/personal-legal/legal-notice.html.

Hope this information is useful!

How many years of service do you have in the company? When were you confirmed by the company? Do you have any documents to confirm your confirmation?

Clause 1 is clear, and you need to pay two months' salary to be relieved.

Clause 2 can be challenged in a court of law. No one can take away your right to go to court. No agreement or bond can restrict the right to legal redress.

I have joined a company before 8 months. I just put in my resignation notice in May, but in my company's offer letter, it is stated that I have to serve at least one year. I had 6 months of experience when I joined, and now it's been a total of 1.2 years in May. They didn't compensate me for my training. I want to leave this company, but they are insisting that I have to pay three months' salary. Is it legal?

Dear seniors,

I joined the company in November 2018 and signed an undertaking for a 2-year service with a 3-month notice period. Due to family problems, I left the job on January 14, 2019, and submitted a resignation letter without serving the notice period. I have not received my salary for January and some days of November. I only accepted the offer letter via email and did not sign the appointment letter due to certain unfavorable conditions. As I left the job without serving the notice period, the company sent me a notice of loss, claiming one lakh against economic loss due to my sudden resignation. My salary as per the offer letter was 37,000 per month.

Please guide me on whether this is legally acceptable and what steps I should take now. I have not been employed since my resignation. I explained my family's poor situation and the reason for my immediate resignation in an email, citing my grandmother's passing and my sick mother requiring my care. I am currently in my hometown with my family and not employed anywhere. I am unable to cover their claimed loss of one lakh.

I worked from November 28, 2018, to January 13, 2019, and only received the December 2018 salary. The company has not paid the remaining amount. According to the undertaking signed during my joining, I am obligated to serve a 3-month notice period if I leave the company, and I am also restricted from offering services to any competitor for 36 months after leaving the present company. The third condition states that if I violate these terms, the company can claim appropriate economic losses.

I would appreciate legal advice on how to proceed in this situation.

I joined the company in November 2018 and signed an undertaking for 2 years of service. The notice period was 3 months. Due to a family problem, I left the job on January 14, 2019, and sent a resignation letter without serving the notice period. I have not received the salary for January and some days of November. I only accepted the offer letter through email and did not sign the appointment letter due to some unfavorable conditions.

As I left the job without serving the notice period, the company sent me a notice of loss. They are claiming one lakh against economic loss due to the sudden resignation. My salary as per the offer letter was 37,000 per month. Please guide me, is it legally okay? What should I do now? I am not working after the resignation and am unemployed. I sent an email regarding my poor family condition and the reason for the immediate resignation. The reason is my grandmother's death, and my mother is sick. My family needs me to take care of them. I am with my family in my hometown and am not working anywhere. I am not in a position to cover their loss of one lakh. I worked from November 28, 2018, to January 13, 2019, and received only the December 2018 salary. The company has not paid the remaining amount.

As per the undertaking signed during joining, I have to serve a 3-month notice period if I leave the company. The second condition is that I will not offer my services to any competition for 36 months after leaving the present company. The third condition is that if I violate these terms, the company will claim appropriate economic loss.

Kindly suggest legal advice on what I should do.

Regards,
Prakash
Tiwari.pc84@gmail.com

Please suggest:

1. Can any organization enforce such a clause in an employment agreement: That the employee shall not leave the services of the company until the completion of at least two years of service. In case the employee leaves the services of the company for any reason whatsoever before the stipulated period of two years, they shall pay the company an amount equivalent to three months' salary rounded to the next thousand as liquidated damages for premature termination of the agreement at the instance of the employee. The company will be entitled to deduct this amount payable by the employee towards damages from wages, bonus, retiring benefits, or any other amount payable to the employee by the company, and/or to recover the same from the employee in accordance with the law.

2. If yes, then please let me know if an experienced candidate (from a relevant or non-relevant background) employed in an organization is also bound by the same clause in the agreement (minimum 2/4 years of working) as a fresher employee.