Hello, I am working as an HR Manager in one of the IT companies in Pune. It's a mid-level IT company with only 30 employees. I want to have details on what actions HR needs to take if an employee breaks a bond. What are the requirements to create the bond? Does it need to be on bond paper, or will a letterhead suffice? Although we have included clauses stating that employees need to pay a certain amount if they break the bond, employees still break it. To date, I haven't handled any cases like this, but I want to prepare myself for such situations in the future. Please help me with this. If someone has specific processes for this, please share them with me; that would be greatly appreciated. I am expecting a kind reply from all of you. You can also reach me at harshada.kulkarni@fideltech.com. Regards, Harshada
From India, Pune
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From India, Pune
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Harshada,
Usually, the service agreements are made in line with the amount you want to recover in case of an employee leaving the company before the expected date. In that case, the agreement/amount should be in line with the stamp act in India. Ensure that there are guarantors available and they sign. They should be an earning member of the family or a relative, and proof of their work should be provided.
Some companies have tied up with banks, i.e., the employee gives the bank guarantee and if he leaves, the bank will recover the damages from him, and the company will be paid by the bank.
Hope this helps!
From India
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1Usually, the service agreements are made in line with the amount you want to recover in case of an employee leaving the company before the expected date. In that case, the agreement/amount should be in line with the stamp act in India. Ensure that there are guarantors available and they sign. They should be an earning member of the family or a relative, and proof of their work should be provided.
Some companies have tied up with banks, i.e., the employee gives the bank guarantee and if he leaves, the bank will recover the damages from him, and the company will be paid by the bank.
Hope this helps!
From India
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Hi,
Thank you very much. However, I still have some queries. Generally, small companies do not have these kinds of processes. I have only worked in small-scale companies where we did not have any processes, and since I am not aware of them, I am unable to implement them. If possible, could you please provide a brief explanation so that I can understand it better?
Thank you for the information.
Regards,
Harshada
From India, Pune
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Thank you very much. However, I still have some queries. Generally, small companies do not have these kinds of processes. I have only worked in small-scale companies where we did not have any processes, and since I am not aware of them, I am unable to implement them. If possible, could you please provide a brief explanation so that I can understand it better?
Thank you for the information.
Regards,
Harshada
From India, Pune
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Hi Harshada,
In this case, you need to draft an agreement where the company and the employee agree to a minimum prescribed period of service. If the employee fails to fulfill this obligation, they must compensate the organization. The amount of compensation should vary depending on the year, such as the 1st year, 2nd year, etc., as per the company's discretion. However, it should align with the expenses incurred by the company on the employee during that year.
The agreement should be written on a ₹100 non-judicial stamp paper, which is available at courts. When submitting this agreement to the company, the employee should also provide one surety, who will be included in the agreement to recover the amount on their behalf. Typically, the surety should be a PSU/Central employee or a property owner, for your protection. Additionally, a witness from the company's side, such as someone from HR or the department head, should be present to witness and collect the signatures of the employee and the surety on the agreement on our behalf.
The standard procedure for recovery involves initiating all disciplinary actions against the employee, conducting a thorough legal inquiry to establish their fault, and then submitting these documents to the labor court.
Regards,
Y. Gangadhar
Email: ganga0203@yahoo.co.in
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In this case, you need to draft an agreement where the company and the employee agree to a minimum prescribed period of service. If the employee fails to fulfill this obligation, they must compensate the organization. The amount of compensation should vary depending on the year, such as the 1st year, 2nd year, etc., as per the company's discretion. However, it should align with the expenses incurred by the company on the employee during that year.
The agreement should be written on a ₹100 non-judicial stamp paper, which is available at courts. When submitting this agreement to the company, the employee should also provide one surety, who will be included in the agreement to recover the amount on their behalf. Typically, the surety should be a PSU/Central employee or a property owner, for your protection. Additionally, a witness from the company's side, such as someone from HR or the department head, should be present to witness and collect the signatures of the employee and the surety on the agreement on our behalf.
The standard procedure for recovery involves initiating all disciplinary actions against the employee, conducting a thorough legal inquiry to establish their fault, and then submitting these documents to the labor court.
Regards,
Y. Gangadhar
Email: ganga0203@yahoo.co.in
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Hi,
Thank you for the information provided. I am truly grateful to you. It has increased my knowledge and provided a way to apply these concepts in practice. However, should a company have its own lawyer for all of this? As an HR person, I have never been to a labor court before, and I lack knowledge of the processes involved. Can you please advise me on this?
Regards,
Harshada
From India, Pune
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Thank you for the information provided. I am truly grateful to you. It has increased my knowledge and provided a way to apply these concepts in practice. However, should a company have its own lawyer for all of this? As an HR person, I have never been to a labor court before, and I lack knowledge of the processes involved. Can you please advise me on this?
Regards,
Harshada
From India, Pune
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Hi Harshada,
Actually, every company has one legal adviser who takes care of these service agreements. First, you need to prepare articles of agreement in consultation with your legal adviser.
Generally, you need to submit the case to the labor office after completion of all disciplinary steps, i.e., advisory letter, show-cause letter, final show-cause letter, and finally, an inquiry letter. After proving his misconduct, we then need to submit the case to the labor department.
Regards,
Gangadhar
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Actually, every company has one legal adviser who takes care of these service agreements. First, you need to prepare articles of agreement in consultation with your legal adviser.
Generally, you need to submit the case to the labor office after completion of all disciplinary steps, i.e., advisory letter, show-cause letter, final show-cause letter, and finally, an inquiry letter. After proving his misconduct, we then need to submit the case to the labor department.
Regards,
Gangadhar
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Hi,
Thank you for your valuable reply. It will help me handle things better in the future if a similar situation arises. Until we actually face the case, it's difficult to get an exact idea, but with this information, at least I'll be prepared to face and solve it with confidence. I appreciate your assistance and hope to receive guidance in the future.
Regards,
Harshada
From India, Pune
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Thank you for your valuable reply. It will help me handle things better in the future if a similar situation arises. Until we actually face the case, it's difficult to get an exact idea, but with this information, at least I'll be prepared to face and solve it with confidence. I appreciate your assistance and hope to receive guidance in the future.
Regards,
Harshada
From India, Pune
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Hi Friends,
It is really a good topic to be discussed. I have a doubt relating to this point, i.e., can you tell me if making a bond with any employee is legally correct, and if so, specify according to which law it can be done.
Members, can you clarify this for me?
Regards,
Amith R.
From India, Bangalore
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It is really a good topic to be discussed. I have a doubt relating to this point, i.e., can you tell me if making a bond with any employee is legally correct, and if so, specify according to which law it can be done.
Members, can you clarify this for me?
Regards,
Amith R.
From India, Bangalore
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Hi Amith,
As per the Contract Act, no employer can enforce a candidate to serve the company for a specified period, and it is not enforceable if the agreement is only from one side of the coin.
Regards,
Y. Gangadhar
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As per the Contract Act, no employer can enforce a candidate to serve the company for a specified period, and it is not enforceable if the agreement is only from one side of the coin.
Regards,
Y. Gangadhar
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Hi,
I work for a retail firm, and we do have contracts with a few individuals, but we term it as a retainership agreement. This is, however, not done on any stamp paper but is written in the appointment letter, where a part of their salary is withheld every month, to be given when their contract lapses. This is mostly accepted as it acts as a saving for the employee, and the employer is ensured that there won't be a breach in the contract. It is worded in such a manner.
Regards,
Karuuna
From India, Mumbai
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I work for a retail firm, and we do have contracts with a few individuals, but we term it as a retainership agreement. This is, however, not done on any stamp paper but is written in the appointment letter, where a part of their salary is withheld every month, to be given when their contract lapses. This is mostly accepted as it acts as a saving for the employee, and the employer is ensured that there won't be a breach in the contract. It is worded in such a manner.
Regards,
Karuuna
From India, Mumbai
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