Dear All,
I would highly appreciate if you can please let me know the following :
* Does Bond system exist in India? [whereby the selected employee has to fill up a bond form, which clearly states that you can not leave the organisation for the specified years].
* If it does exist then what are its causes if employee leaves the organisation in between?
Would appreciate your earliest response.
Thanks & regards,

From India, Delhi
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Please let me know your thoughts on:
1. Getting a bond from employees for 1 year or...a particular period, is it completely legal?
2. If an employee breaks the bond and leaves the company, what action (Legal) can be taken against the employee?
3. And from the employee's perspective, if he or she leaves the company and gets a notice from the company, what is the solution?

From India, Madras
Hi Rekha,

Well, as you are aware in India, Legal system is not so strong as compared to US, any action from court might take huge amount of time. Lot of companies do have Bond system especially when they send an employee for any company sponsored trainings or on H1B Visas, however, it is not so successful due to legal flaws. It is also not seen as a very positive policy to be reinforced on the employees. Bonds for making an employee stick to the organization is seen very negatively industry wide. Employees also hesitate to join these kind of organisations. You can put the penalty clause in the bond is the employee breaks the bond and the same amount can be adjusted along with the full & final. However, in case if its an ATL case (Asked-To Leave), the company can deduct the amount depending upon the reason for ATL. But companies can have a Bond system wherever extremely necessary and the Bond needs to be framed very smartly inconsultation with a professionally qualified & experienced lawyer. The same needs to be clearly communicated to the employee before he/she gets into the agreement.

Hope the above info is of some help to you. Pls do let me know incase of any clarifications on the same.



From Singapore, Toa Payoh

Hi Hena,
Thanks for your quick response! However, I heard that this system does prevail in India, but since I was not sure, thats why asked my query in this forum.
What I have heard is, even if the employee leaves, organisation does not take any action, the reason being is simply very clear because of many formalities and legal action are involved in this, thus organisation do implement this but do not take any action against employee. Anyways, thanks for your information.
I would highly appreicate if those members, whose organisation follow this system, can throw their view on this post! I would also request other members to share their knowledge.
thanks & regards,

From India, Delhi

Hi Rekah,
As you said rightly few of the organisation still has such bond execution with employees. But it is not so successful as there are many legal loophole in the system allows them to escape unless a a money component is executed along with it.
So what many organisation does is by putting in a policy clause which prevents him from either moving in shorter period of time from the organisation or joining in competitors organisation like...
"Minimum notice period serving as 60 /90 days depending upon the cadre or in lieu of salary for the same days".
The other one is "not directly joining to a competitor cos."
Even in these cases the employees can leave the organisation without much problem.. as there are ways to deal these.

From India, Madras
Prem Goswami

When challenged, the so called bonds may not stand the scrutiny of labour laws. However, it is being practised in the industry and is working to the extent of 80%. Either the employee pays up or serve the required period. In some genuine cases, the employee is allowed to go amicably.
The reasons are given below.
Most of the employees mainly in IT industry come from middle class and upper middle class backgrounds. When a legal notice goes to the employee's family, it creates an ethical dilema in their minds and would like their ward to settle the matter honourably.
When an employee leaves without meeting the bond conditions, he does not get a relievig letter and experience certificate. Most of the companies ask for this.
His full and final settlement of accounts is not done.
The employee goes with the stigma that he is not known for honouring commitments made to employers.
During the ref. check, there will be not be a positive response from the previous employer.

From India, Delhi

Hi Rekha,
Thanks for initating this topic.
My company asks for a bond to be filled in while joining. I have signed a bond along with two witnesses when I joined here as a fresher that I will serve the company for two years.
If I breach the bond, I have to pay a amount of 2 lakhs to the company.
I would like to know if I stop coming to work all of a sudden one day, will I be summoned and asked to pay the amount?

From India, New Delhi

Rekha Hi!!!
I have some experience in dealing with this problem.
1. We take bond to serve three years after training from the ETs.
2. The turn over of ETs is <10%
3. We quickly follow up with the employee and surety and is able to realise bond money in most of the cases.
4. One method we use is to take pre-receipt/authorisation for entire dues including PF (managed by our trust) and this helps.
So overall I feel is bond money is not a lost game.
Regards Nair KK

From India, Bhopal

ETs are Executive Trainees or Engineering Trainees., if I am not mistaken, am right I Mr. Nair?
I would like to know, what measures would you take if someone breach the contract?
Will sending a notiice work?
What if the candidate moves abroad, and/or chooses a job which doesn't require an experience certificate or so?

From India, New Delhi

Hello Rekha!! u r correct on ET. Along with bond we take a guarantee bond from two sureties. When we sense that the fellow is gone for good, swoop down on the guarantors too. Send repeated notices every three weeks. Stop all payments. Termination letter should specify the dues to the company. Now send letter offering to adjust dues payable to the candidate against Bond money/notice period. In most often cases this works and if the reamaining amount is not worth it leave it at that stage.

In extreme cases, file a civil suit against the person/sureties. Court procedure provides for pre-decree attachment. So house-hold goods like TV, fridge, sofa set, micro-wave, DVD, computer etc can be listed which u can expect in every middle class home and move application in the court. A smart advocate can get this job done. Nobody likes the scene of house-hold goods getting loaded in a truck in the presence of court officials/Police before the eyes of all the neighbours. Another alternative is to provide for arbitration by the company in case of dispute on fulfilment of service bond. Then the court process can be avoided and the kangaroo proceedings would suffice. But provide arbitration condition in the offer of appointment.

I know cases where leading pvt. sector companies have resorted to such proceedings.

If u have any more queries mail me at

From India, Bhopal

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