Serve three years and if you fail to do that, pay half million! My personal opinion is that condition of employment are too harsh. In that case why not to go further and say serve five years else pay a million?
More than draft of the employment letter with this sledgehammer condition, what you need is feedback on the condition itself. The underlying rationale is well discernible. You wanted people to work long in your company. This kind of contract condition is nothing but forced stay in the company. Therefore, you need to investigate, why people are not sticking to you company. Lock-in period for the employment is fine but what about employees' motivation? Do you think they will stay well-motivated in spite this condition?
Lastly, when you reveal this kind of condition to the prospective job candidates, will they accept employment or will it scare them away? In case of latter, how your organisation's purpose will be served?
I have given my critical comments since I conduct training programmes on Contract Management. During my training, I handle disputes arising out of faulty contracts. I foresee, your contract to be faulty. Hence the above comments.
27th November 2016 From India, Bangalore
I understand that such contracts are not general , the reason we want to imply such condition is in particular for few positions in our company.
The said positions involve exchange of core business secrets and information which we want to secure.
This is the first time we are implementing such contract / bond system in company.
So, that is the reason I wanted clarity on it.
I do appreciate your reply & suggestions, thank you.
28th November 2016 From India, Mumbai
Your second post contradicts with the first one. From your first post, one gets a impression that your major concern is retention of the employees. In contrast, in the second post, you have written that "The said positions involve exchange of core business secrets and information which we want to secure."
You wanted to impose employment bond with penalty clause to protect "core business secrets". But then business secrets can be leaked even while in employment also. Suppose some employee wanted to leave before three years by paying three lakhs and he has leaked business secrets also. Will 3 Lakh work as sufficient collateral for the damage caused because of the leakage?
If data security or information security is your primary concern then you need to make exclusive contract with the employee on information security. Employment bonds will not serve purpose. For this kind of contracts, it is better to hire a lawyer who handles cases under Indian Contract Act, 1872. Drafts provided members of the HR forum will not suffice your purpose.
28th November 2016 From India, Bangalore
Employment Bonds are nothing but an agreement between two parties governed by Indian Contract Act. Such bonds are applicable only if the company has spent money on the personal grooming and enhancement of the employees with Educational and Field Studies. Training for performing better alone wonít hold good..
It is emphasized that the Indian Contract Act specified that contracts entered between parties are not to be one sided else it would be considered null and void. Most of the Employment Bonds are one sided and donít suffice in a Court of Law.
Also, as per the Indian Contract Act no contract can be enforced on any person compelling him to work against his willingness or goes against Natural Justice. On the floor of the Court such conflicting or one sided conditions do not hold good as it would cause harm to one of the Parties of the Contract.
In India Bond is illegal in relation to employment since as per the Indian Statute, bonded labor system was long abolished and no bond can force any person to work against the employees wishes.
A bond merely as employee retention tool is bad in law.
Further, under no circumstance does the Fundamental rights under Article 19 of Indian Constitution be waived by any person nor can any person be forced to do something that amounting to the violation of the rights mentioned under Article 19 and it is a Punishable Crime..
More so, as per Sec 368 of Indian Penal Code if any person or institute holds back any document or any use any legal document or threatens any legal suits or actions and thus forces a person to perform any act against his wishes or which is illegal or wrong as per the statute of Law of the land and is punishable.
Any complain on the company would land the Directors and Managing Directors of the company in Jail or face the risk of Exemplary Damages, as the company is not an actual living entity but only a legal entity and the management are hands and heads of the company.
Thus, please refrain your Management to indulge into illegal practice that may lead to closure of Business.
Regards & Wishes,
28th November 2016 From India, Pune