I am working for an R&D-based organization in Bangalore. In this company, freshers are asked to execute a 2-year bond at the time of joining. The bond is signed by the employee, their parents or relatives, along with two witnesses, on a ₹100 bond paper.
Concern:
One such employee has given his resignation letter. He wants to pursue higher studies, which is a full-time M.Tech program. He has just completed 1 year in our organization and will complete his bond period in August 2010. As per the agreement, he has to pay a year's CTC as compensation to the company in case of breach of contract.
Query:
1. Since the bond is not valid in India, would the company be able to recover the money?
2. If the employee moves legally, is there any chance by which the company can win the case in court?
Regards,
Indulekha
From India, Bangalore
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1Concern:
One such employee has given his resignation letter. He wants to pursue higher studies, which is a full-time M.Tech program. He has just completed 1 year in our organization and will complete his bond period in August 2010. As per the agreement, he has to pay a year's CTC as compensation to the company in case of breach of contract.
Query:
1. Since the bond is not valid in India, would the company be able to recover the money?
2. If the employee moves legally, is there any chance by which the company can win the case in court?
Regards,
Indulekha
From India, Bangalore
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Hi Indulekha,
I read your query with great interest. Kindly clarify for what reason the bond is not valid in India, especially when the employee is working in India (Bangalore) and the cause of action has arisen at the place of work (i.e., in Bangalore).
In my considerate view, in case the Company for which you are working is an MNC/having registered office abroad/as per the Bond might have stated that the guilty person shall be proceeded against as per the law of that particular country; still, there is a possibility that the decree could be executed in Indian Courts.
Last but not least, what's about the policy matter of the Company in case your employee could be spared for further studies that would be a value addition. It would be better if the salient features of the Bond could be elaborated; that would be better for proper comments.
From India, Delhi
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I read your query with great interest. Kindly clarify for what reason the bond is not valid in India, especially when the employee is working in India (Bangalore) and the cause of action has arisen at the place of work (i.e., in Bangalore).
In my considerate view, in case the Company for which you are working is an MNC/having registered office abroad/as per the Bond might have stated that the guilty person shall be proceeded against as per the law of that particular country; still, there is a possibility that the decree could be executed in Indian Courts.
Last but not least, what's about the policy matter of the Company in case your employee could be spared for further studies that would be a value addition. It would be better if the salient features of the Bond could be elaborated; that would be better for proper comments.
From India, Delhi
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Hi Indulekha,
There is one small clarification pertaining to the salient feature. What I really meant was that, as a standard practice, the place of jurisdiction and indemnity clause have to be incorporated. Further, in case there is any guarantor, you can also proceed against him (by asking him to furnish a bank guarantee, etc.).
From India, Delhi
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There is one small clarification pertaining to the salient feature. What I really meant was that, as a standard practice, the place of jurisdiction and indemnity clause have to be incorporated. Further, in case there is any guarantor, you can also proceed against him (by asking him to furnish a bank guarantee, etc.).
From India, Delhi
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Dear Sir,
Thank you for your guidance. I was informed that a bond is not valid as per the labor laws in India. Moreover, there is a common perception that if the case is taken to court, the employee has the maximum chances of winning, and the employer won't benefit much.
Points:
1. Our company is registered in Bangalore, and we have designated Bangalore as the place of jurisdiction.
2. Agreement details are as follows:
a) The bond paper includes the following sections:
i) Company and employment details
ii) Employee agrees part
iii) Guarantor agrees part
iv) Breach of contract and jurisdiction part
b) A 2-year employment term is agreed upon.
c) In case of a breach of contract, one year's CTC has to be given to the company as compensation.
3. We have provisions for employees to pursue higher studies, full-time or part-time, once they complete 2 years of service.
Regards,
Indulekha
From India, Bangalore
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Thank you for your guidance. I was informed that a bond is not valid as per the labor laws in India. Moreover, there is a common perception that if the case is taken to court, the employee has the maximum chances of winning, and the employer won't benefit much.
Points:
1. Our company is registered in Bangalore, and we have designated Bangalore as the place of jurisdiction.
2. Agreement details are as follows:
a) The bond paper includes the following sections:
i) Company and employment details
ii) Employee agrees part
iii) Guarantor agrees part
iv) Breach of contract and jurisdiction part
b) A 2-year employment term is agreed upon.
c) In case of a breach of contract, one year's CTC has to be given to the company as compensation.
3. We have provisions for employees to pursue higher studies, full-time or part-time, once they complete 2 years of service.
Regards,
Indulekha
From India, Bangalore
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Dear Indulekha,
In India, the Bonded Labour System is abolished by the Act, so it is unethical to engage someone under the contract/agreement. However, most of these agreements are for pro-training expenses. If the employee can prove before the appropriate government that no training cost was incurred for the training of the employee with valid documentation, then not a single penny can be recovered from the employee.
In the above case, if the company could prove that there were some training expenses incurred by the company for enhancing the skill/knowledge of the employee, then the company can recover to the extent of expenses incurred by the company.
In case of any query, please call.
From India, Pune
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In India, the Bonded Labour System is abolished by the Act, so it is unethical to engage someone under the contract/agreement. However, most of these agreements are for pro-training expenses. If the employee can prove before the appropriate government that no training cost was incurred for the training of the employee with valid documentation, then not a single penny can be recovered from the employee.
In the above case, if the company could prove that there were some training expenses incurred by the company for enhancing the skill/knowledge of the employee, then the company can recover to the extent of expenses incurred by the company.
In case of any query, please call.
From India, Pune
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Dear Prashant,
Please let me know the act by which such agreements are made invalid. Does the general perception "labor laws will give protection to the employee only and no money can be recovered as compensation, except for the pro-training expenses," hold good?
My suggestion was to terminate his services and allow him to go for higher studies. To keep the morale up for other employees who are affected by the same contract, his relieving letter and PF withdrawal sanction can be given by August 2010, instead of recovering the compensation. His training records will fetch a very small sum on recovery. Definitely, we will take the acceptance from the employee in writing for this action.
Regards,
Indulekha
From India, Bangalore
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Please let me know the act by which such agreements are made invalid. Does the general perception "labor laws will give protection to the employee only and no money can be recovered as compensation, except for the pro-training expenses," hold good?
My suggestion was to terminate his services and allow him to go for higher studies. To keep the morale up for other employees who are affected by the same contract, his relieving letter and PF withdrawal sanction can be given by August 2010, instead of recovering the compensation. His training records will fetch a very small sum on recovery. Definitely, we will take the acceptance from the employee in writing for this action.
Regards,
Indulekha
From India, Bangalore
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Dear Indulekha,
Your contract itself is explanatory about legal violations. You can ask the employee to furnish the below information:
1) Your experience certificate would not be issued as the internal contract does not comply.
2) As per employee information, he is going for higher study. If they are found working anywhere, then the company can claim all expenses on training.
3) Rejoining offer letter after completion of higher study, but the terms and conditions would be decided later on.
Nothing is to be claimed from the employee as per the agreement between the employer and employee.
Best Regards,
Sajid Ansari
Delhi
From India, Delhi
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Your contract itself is explanatory about legal violations. You can ask the employee to furnish the below information:
1) Your experience certificate would not be issued as the internal contract does not comply.
2) As per employee information, he is going for higher study. If they are found working anywhere, then the company can claim all expenses on training.
3) Rejoining offer letter after completion of higher study, but the terms and conditions would be decided later on.
Nothing is to be claimed from the employee as per the agreement between the employer and employee.
Best Regards,
Sajid Ansari
Delhi
From India, Delhi
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Dear Sir,
Whether he goes for higher studies or works somewhere else does not make any difference. These contracts do not stand in a court of law because:
1. They are one-sided contracts, meaning if you leave the organization, you will pay this much to the company. However, if the company removes you, then -----
2. Secondly, as per the Contract Act, any contract which restrains you from any trade, business, or profession is void. Therefore, in my view, this contract will not stand in a court of law.
Regards,
JS Malik
From India, Delhi
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Whether he goes for higher studies or works somewhere else does not make any difference. These contracts do not stand in a court of law because:
1. They are one-sided contracts, meaning if you leave the organization, you will pay this much to the company. However, if the company removes you, then -----
2. Secondly, as per the Contract Act, any contract which restrains you from any trade, business, or profession is void. Therefore, in my view, this contract will not stand in a court of law.
Regards,
JS Malik
From India, Delhi
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I agree with Mr. Malik. Such contracts are just moral bindings and not legal as they are one-sided agreements. The company cannot enforce such contracts. I do remember there was a judgment by the Supreme Court on this issue in favor of the employee.
To maintain the company's image (brand) in the market, you should settle it mutually. It will help to maintain the morale of the other employees.
The contract is one tool to retain people, but there are other effective tools for retention. Once an employee loses interest, there is no point in retaining them solely through a contract.
For higher studies, you can sanction leave without pay and keep the option open for both the employer and the employee for possible future assets.
Ulhas Chandratre
Senior HR Professional, Pune
From India, Pune
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To maintain the company's image (brand) in the market, you should settle it mutually. It will help to maintain the morale of the other employees.
The contract is one tool to retain people, but there are other effective tools for retention. Once an employee loses interest, there is no point in retaining them solely through a contract.
For higher studies, you can sanction leave without pay and keep the option open for both the employer and the employee for possible future assets.
Ulhas Chandratre
Senior HR Professional, Pune
From India, Pune
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I found this intresting article on the same issue i.e. bond / contract in the employment. - Ulhas Chandratre
From India, Pune
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From India, Pune
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A brief note on service agreement/bond......
I believe sometimes in these cases, it all depends on how you and the lawyers pursue these cases on behalf of the company. Below is a brief note which relates to the other side of the breach of service agreement:
Human Resources Managers often insist on surety from new recruits by having them execute a bond stating that in case they commit a breach of the agreement, they will have to pay to the employer the damages as may be agreed upon. Generally, the agreements stipulate that the appointee shall not leave the organization for a prescribed period, especially when the employer trains the employee at his cost. The purpose behind such agreements is that the employers who spend money and impart training to their employees should get some benefit from the employees.
Experience, however, shows that several employees execute the bond but break the same within a short period and leave employment. Disputes arise about the legality of the conditions of employment. The agreements are questioned on the grounds of public policy. Disputes also arise about the quantum of damages, which an employer can recover from the employee in breach. Here are some notable cases of breach of service agreements wherein the Courts have laid broad principles for recovery of damages.
In the case of Amar Singh v. Gopal Singh [AIR 1931 Lahore 133], one Amar Singh was employed under Gopal Singh as a chauffeur on monthly wages. He left the service without notice of his own accord, and he was not paid his wages for 23 days. He had worked for only a fortnight and left service when his services were badly needed. Amar Singh filed a suit against Gopal Singh for the recovery of unpaid wages. Gopal Singh claimed damages for leaving service without notice. The dispute went up to the High Court of Lahore. In that case, it was held that when a servant whose wages are due periodically leaves service without legal justification or without proper notice, he is entitled to be paid for the portion of the time during which he served since the last periodical payment, and the master would be entitled to reasonable compensation for the breach of the contract. Very often, the question of the quantity of damages, which an employer may recover from the employee who commits a breach of the agreement, also arises.
A student entered into a bond with the State of Mysore, which agreed to pay for his educational expenses in the U.S.A. The condition for such payment was that after finishing his studies, he would serve the State Government for a period of not less than five years on such salary as the Government may fix. However, if he was not given employment within six months of his return, they should be deemed to have waived their right to claim his services. He would then be free to seek services elsewhere. In the event of a breach of the terms of the bond, the student would be obliged to refund all the expenses incurred by the Government, along with interest. The student finished his studies at the Polytechnic Institute of Brooklyn, New York, in September 1949 and obtained a diploma from that Institute on June 14, 1950, and with the permission of the State stayed on in the U.S.A. for practical training at his expense. Before finishing his training, he returned for domestic reasons and stayed in India for 6 months and again returned to the U.S.A. to finish his training with the State's permission. He finished his training and got employed in the U.S.A, claiming waiver by the State Government. It was held by the Supreme Court that staying on for six months in India, after his return on account of domestic reasons and his being permitted to return for finishing his training, did not indicate that he was waiting for the State to offer him an appointment. [M. Sham Singh v. State of Mysore, AIR 1972 SC 2440.]
The obligation to pay compensation or damages is a contractual obligation. The measure of damages in a contract is compensation for the consequences, which follow as a natural and probable consequence of the breach; or in other words, which could reasonably be foreseen. [Cook v. S., (1967) 1 AII E.R. 299, 302.]
The rule is well settled, that damages due either for breach of contract, or for tort, are damages, which so far as money can compensate, will give the injured party reparation for the wrongful act and for all the natural and direct consequences of the wrongful act. In the absence of special circumstances, the measure of damages cannot be the amount of loss ultimately sustained by the injured party. [Trojan & Co. v. Nagappa Chettiaar, (1953) S.C.R. 789. 799]. If the quantification of loss or damages is not possible, even the party who suffered can request the Court to assess the reasonable damages provided there is damage. [State of Kerala v. United Shippers and Dredgers, AIR 1982 Ker 281].
There is authority to the proposition that substantial damages can be claimed where a breach is proved even though the calculation of damages is 'not only difficult but incapable of being carried out with certainty or precision. In such cases, however, the via-media would be to stipulate the quantum of compensation in the agreement itself. When a contract has been broken and if a sum has been named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for by virtue of s. 74 of the Indian Contract Act. The Indian legislature, by enacting s. 74, sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of a penalty. [Fateh Chand v. Balkishan Das, AIR 1963 SC 1405].
The Supreme Court in Fateh Chand's case said: Section 74 declares the law as to liability upon breach of the contract where compensation is - by agreement of parties, predetermined or where there is a stipulation by way of a penalty. But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff. The section does not confer a special benefit upon any party. It merely declares the law that notwithstanding any term in the contract for determining the damages or providing for the forfeiture of any property by way of a penalty, the Court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated. The same proposition has also received the support of the Supreme Court in Nareshchand Sanyal v. Calcutta Stock Exchange Assn. Ltd., AIR 1977 SC 422, 428.
But in an English case, the House of Lords held: a clause in an artiste's agreement suspending salary upon her failure to appear and perform does not prevent the employers from recovering damages for a breach of contract as well as suspending her salary. The suspension of salary is not a penalty. [Gaumont British Picture Corporation v. Alexander, (1936) 2 All E.R. 1686, 1693]. A sum that is payable in pursuance of a contractual obligation is different from a sum payable on a breach of a contractual obligation. The former is not a penalty. [Tool Metal Co. v. Tungsten Electric Co. (1955) 2 All E.R. 657, 688.] Liquidated damages are the term used to indicate the sum, which the parties have, by the contract assessed as the damages to be paid, whatever may be the actual damage. [Wallis v. Smith (1882) 21 Ch.D. 243, 267]
To claim a penalty or liquidated damages, the onus of proof is on the plaintiff. The plaintiff has to prove that the amount of damages stipulated whether by way of liquidated damages or penalty is a reasonable pre-estimate of damages and he cannot be awarded a sum greater than the one stipulated. [George Pictures Ltd. v. Neelakandaru Gopalakrishna, AIR 1971 Ker 271; Narasimha Rao v. Supdt. of Excise, AIR 1974 AP. 157, 167].
But where the engagement is for one full year, say from 1st April 1908, to 31st March 1909, and the salary is fixed at so much (say Rs. 18) per month, and the servant wrongfully leaves his employer's service on 20th March 1909, he is nevertheless entitled to his salary for the eleven months during which he actually served his employer, less the damages incurred by the employer by the breach, though the salary be payable under the terms of the agreement in a lump sum of Rs. 216 at the end of the year.
Though actual damage has not been proved, the sum stipulated in the contract towards liquidated damages can be recovered by the employer for the breach committed by the employee. [P. Nagarajan v. Southern Structurals Ltd., 1996 (2) LLN 810.
In Fertiliser and Chemical Travancore Ltd. v. Ajay Kumar and others, 1990 LLR 711, the employer selected three trainees who then signed a bond that they would obtain two years training in the Company and after the training they will put in at least five years service in the company. In case of a breach of these conditions by the trainees, Rs.10,000/- was to be paid as reasonable compensation for the damages likely to be incurred by the employer. But the train
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I believe sometimes in these cases, it all depends on how you and the lawyers pursue these cases on behalf of the company. Below is a brief note which relates to the other side of the breach of service agreement:
Human Resources Managers often insist on surety from new recruits by having them execute a bond stating that in case they commit a breach of the agreement, they will have to pay to the employer the damages as may be agreed upon. Generally, the agreements stipulate that the appointee shall not leave the organization for a prescribed period, especially when the employer trains the employee at his cost. The purpose behind such agreements is that the employers who spend money and impart training to their employees should get some benefit from the employees.
Experience, however, shows that several employees execute the bond but break the same within a short period and leave employment. Disputes arise about the legality of the conditions of employment. The agreements are questioned on the grounds of public policy. Disputes also arise about the quantum of damages, which an employer can recover from the employee in breach. Here are some notable cases of breach of service agreements wherein the Courts have laid broad principles for recovery of damages.
In the case of Amar Singh v. Gopal Singh [AIR 1931 Lahore 133], one Amar Singh was employed under Gopal Singh as a chauffeur on monthly wages. He left the service without notice of his own accord, and he was not paid his wages for 23 days. He had worked for only a fortnight and left service when his services were badly needed. Amar Singh filed a suit against Gopal Singh for the recovery of unpaid wages. Gopal Singh claimed damages for leaving service without notice. The dispute went up to the High Court of Lahore. In that case, it was held that when a servant whose wages are due periodically leaves service without legal justification or without proper notice, he is entitled to be paid for the portion of the time during which he served since the last periodical payment, and the master would be entitled to reasonable compensation for the breach of the contract. Very often, the question of the quantity of damages, which an employer may recover from the employee who commits a breach of the agreement, also arises.
A student entered into a bond with the State of Mysore, which agreed to pay for his educational expenses in the U.S.A. The condition for such payment was that after finishing his studies, he would serve the State Government for a period of not less than five years on such salary as the Government may fix. However, if he was not given employment within six months of his return, they should be deemed to have waived their right to claim his services. He would then be free to seek services elsewhere. In the event of a breach of the terms of the bond, the student would be obliged to refund all the expenses incurred by the Government, along with interest. The student finished his studies at the Polytechnic Institute of Brooklyn, New York, in September 1949 and obtained a diploma from that Institute on June 14, 1950, and with the permission of the State stayed on in the U.S.A. for practical training at his expense. Before finishing his training, he returned for domestic reasons and stayed in India for 6 months and again returned to the U.S.A. to finish his training with the State's permission. He finished his training and got employed in the U.S.A, claiming waiver by the State Government. It was held by the Supreme Court that staying on for six months in India, after his return on account of domestic reasons and his being permitted to return for finishing his training, did not indicate that he was waiting for the State to offer him an appointment. [M. Sham Singh v. State of Mysore, AIR 1972 SC 2440.]
The obligation to pay compensation or damages is a contractual obligation. The measure of damages in a contract is compensation for the consequences, which follow as a natural and probable consequence of the breach; or in other words, which could reasonably be foreseen. [Cook v. S., (1967) 1 AII E.R. 299, 302.]
The rule is well settled, that damages due either for breach of contract, or for tort, are damages, which so far as money can compensate, will give the injured party reparation for the wrongful act and for all the natural and direct consequences of the wrongful act. In the absence of special circumstances, the measure of damages cannot be the amount of loss ultimately sustained by the injured party. [Trojan & Co. v. Nagappa Chettiaar, (1953) S.C.R. 789. 799]. If the quantification of loss or damages is not possible, even the party who suffered can request the Court to assess the reasonable damages provided there is damage. [State of Kerala v. United Shippers and Dredgers, AIR 1982 Ker 281].
There is authority to the proposition that substantial damages can be claimed where a breach is proved even though the calculation of damages is 'not only difficult but incapable of being carried out with certainty or precision. In such cases, however, the via-media would be to stipulate the quantum of compensation in the agreement itself. When a contract has been broken and if a sum has been named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for by virtue of s. 74 of the Indian Contract Act. The Indian legislature, by enacting s. 74, sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of a penalty. [Fateh Chand v. Balkishan Das, AIR 1963 SC 1405].
The Supreme Court in Fateh Chand's case said: Section 74 declares the law as to liability upon breach of the contract where compensation is - by agreement of parties, predetermined or where there is a stipulation by way of a penalty. But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff. The section does not confer a special benefit upon any party. It merely declares the law that notwithstanding any term in the contract for determining the damages or providing for the forfeiture of any property by way of a penalty, the Court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated. The same proposition has also received the support of the Supreme Court in Nareshchand Sanyal v. Calcutta Stock Exchange Assn. Ltd., AIR 1977 SC 422, 428.
But in an English case, the House of Lords held: a clause in an artiste's agreement suspending salary upon her failure to appear and perform does not prevent the employers from recovering damages for a breach of contract as well as suspending her salary. The suspension of salary is not a penalty. [Gaumont British Picture Corporation v. Alexander, (1936) 2 All E.R. 1686, 1693]. A sum that is payable in pursuance of a contractual obligation is different from a sum payable on a breach of a contractual obligation. The former is not a penalty. [Tool Metal Co. v. Tungsten Electric Co. (1955) 2 All E.R. 657, 688.] Liquidated damages are the term used to indicate the sum, which the parties have, by the contract assessed as the damages to be paid, whatever may be the actual damage. [Wallis v. Smith (1882) 21 Ch.D. 243, 267]
To claim a penalty or liquidated damages, the onus of proof is on the plaintiff. The plaintiff has to prove that the amount of damages stipulated whether by way of liquidated damages or penalty is a reasonable pre-estimate of damages and he cannot be awarded a sum greater than the one stipulated. [George Pictures Ltd. v. Neelakandaru Gopalakrishna, AIR 1971 Ker 271; Narasimha Rao v. Supdt. of Excise, AIR 1974 AP. 157, 167].
But where the engagement is for one full year, say from 1st April 1908, to 31st March 1909, and the salary is fixed at so much (say Rs. 18) per month, and the servant wrongfully leaves his employer's service on 20th March 1909, he is nevertheless entitled to his salary for the eleven months during which he actually served his employer, less the damages incurred by the employer by the breach, though the salary be payable under the terms of the agreement in a lump sum of Rs. 216 at the end of the year.
Though actual damage has not been proved, the sum stipulated in the contract towards liquidated damages can be recovered by the employer for the breach committed by the employee. [P. Nagarajan v. Southern Structurals Ltd., 1996 (2) LLN 810.
In Fertiliser and Chemical Travancore Ltd. v. Ajay Kumar and others, 1990 LLR 711, the employer selected three trainees who then signed a bond that they would obtain two years training in the Company and after the training they will put in at least five years service in the company. In case of a breach of these conditions by the trainees, Rs.10,000/- was to be paid as reasonable compensation for the damages likely to be incurred by the employer. But the train
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Hi Indulekha,
While a "Service Bond" may not be tenable, a proper "Service Agreement" may somewhat be tenable in a court of law as long as the exit clause is defined and is seen as fair to both parties, i.e., the employer and the employee. It is a lengthy procedure to file a suit to recover the money and also establish the exact amount of loss incurred by the company to impart training. However, even if the employee is leaving the country to pursue higher studies abroad, you can still file a suit and wait for years before it even comes up for hearing! The current status is that more than 3,00,00,000 cases are pending in various Indian courts.
Alternatively, you can send a legal notice to both the employee as well as the surety/ies quoting the relevant portions of the agreement and claiming the amount agreed upon for breach of the agreement. If the employee refuses to respond after two or more such notices, you can appoint an Arbitrator (through your lawyer) and issue a notice to appear for arbitration, again through your lawyer, giving sufficient time for the employee to appear before the arbitrator. If the employee appears for the hearing, the Arbitrator can decide a suitable amount as the compensation to be paid by the employee depending on the evidence produced by both parties. If the employee does not appear for arbitration, the employer can issue an advertisement through the lawyer in the local paper where the employee resides giving a fresh date for arbitration. If the employee still doesn't appear, the Arbitrator can give an ex parte ruling. Once the ruling is given by the Arbitrator, the employer can file an execution petition for recovering the amount from the employee/surety/ies.
Hope the information is of some use to you as the implementation of a service agreement depends on the conditions, ability to quantify the losses, etc. Any legal route is time-consuming, and various options are available for the employee to keep appealing in higher courts and live his full life without paying a single paisa.
However, most employees would prefer to settle the issue amicably because of their inability to fight a case continuously and also because of the stigma that will be attached to them in the job market.
Regards,
Krishnan
From India, Madras
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While a "Service Bond" may not be tenable, a proper "Service Agreement" may somewhat be tenable in a court of law as long as the exit clause is defined and is seen as fair to both parties, i.e., the employer and the employee. It is a lengthy procedure to file a suit to recover the money and also establish the exact amount of loss incurred by the company to impart training. However, even if the employee is leaving the country to pursue higher studies abroad, you can still file a suit and wait for years before it even comes up for hearing! The current status is that more than 3,00,00,000 cases are pending in various Indian courts.
Alternatively, you can send a legal notice to both the employee as well as the surety/ies quoting the relevant portions of the agreement and claiming the amount agreed upon for breach of the agreement. If the employee refuses to respond after two or more such notices, you can appoint an Arbitrator (through your lawyer) and issue a notice to appear for arbitration, again through your lawyer, giving sufficient time for the employee to appear before the arbitrator. If the employee appears for the hearing, the Arbitrator can decide a suitable amount as the compensation to be paid by the employee depending on the evidence produced by both parties. If the employee does not appear for arbitration, the employer can issue an advertisement through the lawyer in the local paper where the employee resides giving a fresh date for arbitration. If the employee still doesn't appear, the Arbitrator can give an ex parte ruling. Once the ruling is given by the Arbitrator, the employer can file an execution petition for recovering the amount from the employee/surety/ies.
Hope the information is of some use to you as the implementation of a service agreement depends on the conditions, ability to quantify the losses, etc. Any legal route is time-consuming, and various options are available for the employee to keep appealing in higher courts and live his full life without paying a single paisa.
However, most employees would prefer to settle the issue amicably because of their inability to fight a case continuously and also because of the stigma that will be attached to them in the job market.
Regards,
Krishnan
From India, Madras
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In my view, the HR people who are trying to deprive the rights of young budding professionals in the name of bond or whatever the nomenclature are detrimental to the interests of any organization or the whole society. Such bad HR policies shall be curtailed.
In this era, you cannot hold any person leaving. Why are they leaving an organization? Because of such bad HR executives.
Regards, RPP
From India, Lucknow
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In this era, you cannot hold any person leaving. Why are they leaving an organization? Because of such bad HR executives.
Regards, RPP
From India, Lucknow
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Dear Mr/Ms.RPP- whilst bonds may be a detrimental endeavor, they are NOT HR policies, but are usually directed by the top leaders in any company.- Deebyay
From India, Bangalore
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From India, Bangalore
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Dear Mdam, Bonds those are one sided are not at all sustainable in the court of law. It’s an encroachment to one’s fundamental right as per section 19 of the constitution of india.
From India, New Delhi
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From India, New Delhi
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Hi Everyone, Can someone help me to give insights that we are not supposed to keep any employee on direct contract beyond 6 months as per Shops & Estt act? Thank you, Srivalli Hyderabad 9885198930
From India, Hyderabad
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From India, Hyderabad
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Hi All,
I am Srikanth. Recently, I attended an interview in Hyderabad where the GM-HR asked me a question, "The company hired 10 contractors, each with 30 contract laborers, but was unable to start the work due to some issues. Consequently, all the contract workers went on strike because their contractors had not paid them salaries for 3 months. As a principal employer, your management is not providing funds to the contractor as there is no work." He asked me, "In that situation, what would you do?"
I provided him with several responses, but he was not satisfied. After the interview, I approached him personally, but he just smiled and left the cabin. Could anybody please advise me on what actions HR can take to handle this situation effectively?
Thank you.
From India, Hyderabad
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I am Srikanth. Recently, I attended an interview in Hyderabad where the GM-HR asked me a question, "The company hired 10 contractors, each with 30 contract laborers, but was unable to start the work due to some issues. Consequently, all the contract workers went on strike because their contractors had not paid them salaries for 3 months. As a principal employer, your management is not providing funds to the contractor as there is no work." He asked me, "In that situation, what would you do?"
I provided him with several responses, but he was not satisfied. After the interview, I approached him personally, but he just smiled and left the cabin. Could anybody please advise me on what actions HR can take to handle this situation effectively?
Thank you.
From India, Hyderabad
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Validity of Bond.pdf