Facing a Surety Bond Dilemma: How Can I Navigate This as a New HR Executive?

Hi Guys,

I joined a company 2.5 months ago as an HR Executive. I am afraid that management will want me to sign a surety bond (3 years) after completion of the probation period. I am continuously looking for a better opportunity since I am not satisfied with the company I'm working in. Now please help me deal with this issue. 😕

Dear Friend,

A surety bond is not a legal compulsion, as any type of bond is abandoned. Additionally, if you decide to leave your job after signing the bond, they cannot take any legal action.

Thanks,
Ranjit

Let the probation period end and papers relating to the surety bond reach your table. Why should you worry till then?

A Surety Bond signed by an employee reflects only one major clause of 'indemnity'. That is, if the company had incurred an amount by way of providing training to you, then that amount should be repaid to the organization if you leave before the stipulated period. In fact, the period (bond period) signifies the duration required for the employer to 'recoup' the amount spent on training you. If you can demonstrate that the company did not incur any special costs to train you, the bond will become unenforceable. On the other hand, if the company did spend on your training, you are obligated to either serve the stipulated period with the company or reimburse the training costs in full if you leave before the specified date.

Please be aware that 'bonded labor' is an offense, and compelling an employee to stay with an employer could also be construed as 'bonded labor'.

Regards,

Madhu.T.K

Thanks for your response.

Actually, two of my colleagues will have to sign a Surety Bond within 2-3 days, so the Surety Bond is in my hands before time. As far as my probation period is concerned, it will end by Nov 22nd. Now, what is worrying me is that I don't want to get into a contract with this company for 3 years in the first place. Secondly, the bond states that if I leave before three years, then I'll have to pay 1 lac (which is ridiculous) plus training cost of Rs. 50,000. (Now, I don't understand what that 1 lac is for).

I understand your point against the training cost, but what if I get a good opportunity? According to the Surety Bond, I can't leave unless I pay them money. To make things more complex, I'll have to inform three months before resignation (why not one month?).

There is another clause in the bond that if I don't sign the Surety Bond, then my status will be converted to daily wages. Should I go for it, or should I negotiate over the duration and surety?

Help, please.

As mentioned in my post, there is nothing in a surety bond. If you are mentally strong to face it, you can go for a surety bond. But if you feel that you will get a better opportunity in the near future and if you are not capable of facing bond formalities, you can opt out of it and continue until the next opportunity as a daily-rated employee.

Daily wages do not mean that he/she is not eligible for any statutory benefits or protection. Provisions of EPF/ESI Acts, Maternity Benefit Act, Gratuity Act, Payment of Wages Act, Bonus Act, Industrial Disputes Act, etc., are applicable to all employees, including daily-rated employees. It is only a matter of mental satisfaction to say that I am 'regular', 'permanent', or 'confirmed' employee. A daily-rated employee who has been in service for one year shall be terminated only after serving notice and paying compensation at par with any other 'regular' employee.

Regards, Madhu.T.K

Dear Sana Nazir,

I will go with Madhu T.K. has explained the whole matter correctly and lawfully. Moreover, it is nothing but a matter of satisfaction regular/confirmed/permanent. If your daily wages are at par with your existing wages with the same profile and if you are afraid of facing the bond formalities, then continue as a daily wage worker and explore new opportunities. Actually, these bonds are not null and void. In these bonds, you indemnify the employer that the company may recover the amount incurred on training, etc., if one does not render the services for a specified period under the surety bond. If you think you can grab another opportunity in the near future, just go with daily wage status. If you can serve the company for a specified period and actually receive the required training, then the surety bond is not a big deal.

Thanks,
Mohd. Arif Khan