SERVICE BOND BY EMPLOYEER - CiteHR
Saswatabanerjee
Partner - Risk Management
Tajsateesh
Recruitment/talent Acquisition, Career Counselling
NK SUNDARAM
Soft Skill Trainer / Hr Consultant - India
B K BHATIA
Director Of Company
Jkumarjk
Senior Manager Hr
Vinay62
Resouce Plannin
+3 Others

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HI, I AM WORKING IN A PHARMA COMPANY FROM LAST 16 YEARS IN I.T. DEPARTMENT, NOW OUR COMPANY IS GOING TO IMPLEMENT NEW ERP SYSTEM, OUR H.R. MANAGER ADVISE ALL I.T. DEPARTMENT STAFF TO SIGN A BOND FOR 5 YEARS IF WE WANT TO GET TRAINED FOR NEW ERP SYSTEM. HE IS SAYING THAT THE COST OF TRAINING IS ABOUT RS. 1 LACS PER PERSON & COMPANY WILL IS GOIUNG TO PAY THE SAME FOR US.
NOW THE MATTER IS, IF WE SIGN THIS BOND, WE WILL BECOME PUPPET OF OUR COMPANY, THEY CAN REDUCE OUR ANNUAL SALARY INCREMENT & OTHER PERKS (SAME HAS BEEN HAPPEN IN PAST WITH OTHER EMPLOYEES).
ON OTHER HAND, IF WE REFUSE TO GET TRAINED ON NEW ERP SYSTEM, WE WILL BECOME NON UTILIZE STAFF FOR COMPANY.
KINDLY ADVISE WHAT WE CAN DO IN SITUATION.
REGARDS
MATHUR
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Dear Mr. Mathur,
The system of taking employment bond from employees has been held as illegal by the Apex Court of India in several judgements.Employers are forbidden from obataining bonds from employees as the contract of employment has to be based on the essence of Equity, justice and fareplay.Both employer and employee have equal rights to enter in the contract and also to terminate the same in terms of agreement.
Employees cannot be made bonded labour.
Dev
Dear Mathur,
This is usual practice being followed by some company at the time of implementation of ERP. You have notb mentioned the amount for which your company is going to sign a bond. Is it same for all employees of IT department or the amount is varying. What is existing role in your deptt and what is your basic qualification. If you like, then please clarify above for me to give the suitable guidance.
Vinay

Dear Mr. Mathur

Having worked with the company for 16 long years and been a commited employee of the Company, i feel your statement of becoming puppet ridiculous.

Whenever there is a new technology being introduced in the company and the company incurs training cost, they do not wish the trained employees to leave the company as soon as they get trained. So, some companies ask for bond for a said period.

In this case, your HR Manager has asked you to sign a bond of 5 years for getting updated and trained. In my view, being a commited employee you should take the opportunity to serve the company.

Otherwise, if you enter the bond, you also ask the HR Manager, the exit criteria in the following cases

a) if you find the training is not good and you wish to come out of the bond

b) if the training has not met the organizational requirements and you wish to come out of the bond

c) if the training is half done and you are not satisfied

d) if you wish to quit the company within these five years

e) what would be the benefits you would be receiving after getting trained

If you receive satisfactory answers from HR Manager on the above, you may consider going ahead with signing. This is my view only.
Hello Mathur,

What's the ERP being implemented?

For the Training costs to be ~1.0 Lac, it needs to be a very reputed one. There are umpteen number of ERPs all over the place.

IF it's something like SAP, Oracle, etc, then this WOULD add value to YOUR overall profile--which would be good for you in the long-term.

@Dev--Bonds are legal IF the company can prove that Training was imparted to the employee--since they need to recover their training costs. This topic was discussed many times in this Forum.

@ J Kumar--I am not sure if DISCUSSING the points you mentioned with HR is advisable--there's every chance that they would view Mathur differently, even though his intent is different. While the points you mentioned are, no doubt, relevant, I would suggest Mathur get the replies discretely than directly discussing with HR.

Pl also respond to the queries raised by Vinay--more clear suggestions can emanate with such info.

You mentioning about 'past exp of reducing increments & perks' does indicate that you need to be cautious.

All the Best.

Rgds,

TS
Even Govt. departments ask employees to sign bonds while detailing them on various training programs. It surely is not an illegal practice since training imparted to an individual is not for the purpose of working somewhere else. Employers are well within their rights to get a bond signed with exit options well defined in the same.
The basic idea of signing the bond is like this. The company is spending a large amount of money for imparting a new technology, an advanced method for its employees. After learning the technique and also undergoing extensive training, suppose the employee decides to leave the company and utilise his knowledge somewhere else.... can you imagine the situation. The company has to again identify some more people and again go through the same process,which will entail in loss of knowledge, loss of money and so on.
Before jumping to conclusion, we should look at both sides first. Similarly, employees are sent abroad for training with principals or technology partners. There also a bond is excuted so that the money spent on acquiring knowledge for the employee is utilised in the same organisation for a given number of years.
It is morality and ethics which is involved and not a bonded labour kind of control. Hope my learned HR friends will agree to this logic.
I generally take the employer's side, but in this case, I don't agree with what they are trying to do.

Today ERP is a common feature, not something great and exclusive,

The company is training the employees not because they want to upgrade their skills, but because they can't get their work done without it. They are not doing the employee a favour. What the employee will gain will be a side effect of,the exercise of implementing the employee.

The company is to training you to implement an erp, but just on how to make entries and take reports. That's all. This knowledge is not of any use except in doing his work which he was doing before the erp was put into effect. In another company, he will probably get a preference or a slightly higher pay only because he has worked in the sap environment and not because of any training.

Rs. 100,000 would be the cost of the training of you were getting in depth training that would enable you to work for sap implementation, which is definately not what you are getting.

In any case, a bond of 5 years makes no sense, it is too long. A year or so, I would accept a justified.

As you already know how the company would be treating you after you sign the bond (less increments etc since they know ou can't leave) it makes no sense to sign it. You probably need to search for a new job.

Incidentally, erp like sap are easy to use once you understand which screen does what and how it is accesses. In sap, you need to know the T-code for your functions. And probably how to generate different reports and access and analyse the data by changing the layouts. Does not take more than a weeks time to familierise your self with the system.
Incidentally, one of our clients had the same problem 5 years ago.
They wanted to retain the emoloyees who would be trained in SAP.
They asked people to sign bonds. Most if them refused.
To sweeten the deal and to assure the emoloyees that they will benefit from staying on, they put in fixed with kra defined for each person and a guaranteed bonus if they work for at least 4 years from the start of the training period. That made a lot of sense to people and they signed, as there was definately benefits on the table
There is no need for signing bond, because it is company's requirement to train the employee's in their respective module related to their job profile. Training will be provided to employees based on the requirement of the Module. As you belongs to IT department, Company wants you to be involved in SAP implementation and administration for the same. Then training will be having importance, it cost company to organize the training. First you go through the overall details of the training and based on the importance of the same in the present market conditions take decision. Most definitely discuss the Bond in detail with the HR.
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