I want to know that my company is in serious trouble bcoz the senior employees are resigning from the company. So we decided to sign an employment bond with the employees after completing 6 months of continuous service with us and this bond is not compulsory for all employees, actually we will give them an offer, if they want to continue with us then they can sign it or visa versa and the one who will accept the employment bond get more benefits like % hike in salary or other benefits. Can anyone help myself to prepare this type of bond and tell me whether it is applicable or not, what are the cons associated with it.

From India, Lucknow
Dinesh Divekar
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Dinesh Divekar

Dear Sapna,

What is your designation? Are you from HR? My reply is more from management science point of view rather than legal point of view.

If senior employees are resigning from the company then the malaise lies somewhere. What efforts you or your management took to find out the reasons of their exit? Signing bond with the company will lock them to your organisation but then will they be mentally engaged to your organisation? You are dangling carrot of salary hike. Will this carrot motivate senior managers to so that they can pass on this motivation to the down level?

It is a myth to believe that employees work only for the salary. To control their exit, increase in salary is not the only solution. Fault could be the leadership style of top management also.

Secondly, you need to find out what kind of culture your company has. Your management needs to make conscious efforts to give specific shape to company's culture.

Thirdly, between MD and senior managers is there GM? Has MD delegated all the powers to this person? Is this person responsible for the cause of managers' exit.

At this stage, you may try to calculate cost of managerial attrition. Find out whether this exercise opens the eyes of the management.

What type of managerial candidates are ready to sign the employment bond? Obviously needy ones who do not have job at hand. Their main intention is to maintain monthly cash flow in the form of salary. For this, they may prefer to become yes-persons giving short shrift to their professional pride. These type of candidates will have continuance commitment rather than affective commitment.

I have given very straight forward view. Please do not take these personal.


Dinesh Divekar

From India, Bangalore

Under section 74 of Contract Act, a reasonable amount proportionate to expenditure incurred on employee, only can be recovered. Pl see my post on "Bond related" on this site. So by merely signing of bond, one can not be made a bonded labor but the expenditure proportionate to the bond amount has to be incurred. So it is better to introspect as suggested by Mr. Dinesh above.

From India, New Delhi

Dear Sapna99,

There can be various views on it i.e. BOND!

Bondage and bonded labor has long been abolished!

The question arises the BOND is to be created in lieu of what extra Ordinary favor to employee e.g. some certified training from some certified Instt. that can add to some qualification or some extra ordinary skills, for which employer shall have to incur some expenses?

If no such favor is to be granted then the Bond may not be even worth the paper on which it is written.

The allurements i.e. % hike in salary may not be of any use if the workplace and employer does not offer motivation, good HR practices, better career etc........

Instead you should compile the reasons and analyse them to understand the attrition and keep succession plans ready......................

The size of the company does not matter....

Employees do stay and do leave......

It is employer that retain good employees.....

The HR personnel can help the employer to formulate policies that would help retention.....

The Industry Captains are not wary of attrition..

From India, Chandigarh

I think you got to fix the problem at the source. Bond only keeps non-committed people within the company. Otherwise, it is a bit like locking the stable door after the horses have bolted.
As HR professional, you might want to investigate the reason for this exodus of senior employees from the company. Apart from informal chats, Town Hall meets, an exit interview might also give some real good pointers to the existing company policies, which might or might not need an overhaul.
Otherwise, manage the employee expectations right at the start by communicating the job profile well in advance, in job description, during interviews or whilst making an offer.
If you want the employees to hold up their end of the bargain, you got to ensure the management does hold up their bit to make it look a fair bargain.

From India, Bangalore

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