Training Bonds: How Do You Ensure Employees Stay After Costly Programs?

Hi All,

We are sending an employee for training that will involve a significant cost. We would like this person to stay at least until next year. Hence, we are planning to issue a training bond or an undertaking with this individual.

Kindly share the formats related to Training Bonds, undertakings, etc., as soon as possible.

Thanks in advance.

Regards,
Verma HR

I am also looking for a format for a Minimum Service Bond for 2 years for an employee being placed in Overseas operations.

I am providing below the format for a training bond. You may use the same by making certain amendments wherever necessary.

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THIS AGREEMENT is made at ... (Place) on [date] between M/s..., a Company registered under the provisions of the Indian Companies Act 1956 having its registered/Head Office at..., hereinafter referred to as ["The Company"] (which expression shall, unless repugnant to the context or meaning thereof, mean and include its successors and assigns of the FIRST PARTY).

AND

Name: Mr... S/o Shri... Resident of..., hereinafter referred to as ["The Employee"] (which expression, unless repugnant to the context or meaning thereof, means and includes its successors and assigns of the SECOND PARTY).

Shri... S/o Shri... Resident of... Hereinafter referred to as ["The Surety"] (which expression, unless repugnant to the context or meaning thereof, means and includes its successors and assigns of the THIRD PARTY).

WHEREAS the Employee is in the employment of the Company subject to terms and conditions contained in the Appointment Letter dated... and Date of Joining:...

AND WHEREAS the Company has opted for Enterprise Resource Planning Implementation in the Company for enhancing its capability due to Technical Advancement.

AND WHEREAS for this purpose, the Company has opted for a package considered to be the best in India/world, which entails/calls for trained/specialized persons for manufacturing its products, to be trained by... which is an organization of repute.

AND WHEREAS for successful implementation and operation of its manufacturing facilities, M/s... has arranged training for select personnel of this "Company."

AND WHEREAS the Company has agreed to depute the "Employee" to undergo specialized training through... to harness the skills of the "Employee" for its productive use in/for the "Company." The said training is highly specialized and may cost the "Employee" a substantial amount of money in case the Employee has to undergo this training at his own cost.

AND WHEREAS the Employee has accepted the offer for training subject to such conditions as specified.

AND WHEREAS the Surety has agreed to guarantee the due performance/discharge of the obligation of the Employee and, in default/breach of such conditions, indemnify the Company on demand, such amount of money as detailed hereinafter due to the non-performance/breach of this contract/such breach of employment condition for which the "Employee" is responsible.

NOW THIS DEED WITNESSETH AS UNDER:

1. That the "Employee" is desirous of undergoing training for manufacturing its products, to be conducted by... and the Company agrees to depute the Employee for the training program/course, which is for a period of... weeks.

2. It is specifically agreed and understood that the cost of this training is included in the total package cost paid by the Company as mentioned in the preamble. The Employee has been deputed for this training by virtue of his association and employment with the Company and on his request for the said training and further on his assurance to continue in the services of the Company for at least the minimum assured period of... years.

3. The "Employee," after due completion of the training, has to and agrees to serve the "Company" for a period of... years from the date of completion of the training, hereinafter referred to as the "SERVICE PERIOD." The Employee also agrees that once he joins the said training, he shall complete the training and not leave the services of the Company in between the training period or after for... years. In the event of breach of any of these conditions for whatever reasons, the Employee will be liable for damages, which may be on a higher side considering direct and indirect costs but are restricted to Rs... with the consent of all parties hereto.

4. If at any time during the training or post-training Employment Period of three years from the date of completion of training, the "Employee," if found guilty of misconduct or any willful neglect of work or dereliction of the duties assigned by the "Company," will be summarily terminated by giving one month's notice, and the Employee shall be deemed to have brought about such a situation at his own and will be liable for all losses/damages that occur due to his acts of commission/omission to the Company. Any decision of the Company in this regard shall be final and binding on the Employee.

5. All inventions, designs, programs, or other improvements possessed by the trainee during the training period by virtue of the training shall vest with the Company, and the Employee will have no rights to it of any nature.

6. The Surety shall be responsible for the acts/omissions of the Employee and will indemnify the Company on demand for such an amount as calculated by the Company on the breach of terms of the Agreement by the Employee, forming part of this agreement.

7. This agreement shall subsist throughout the employment period of the Employee and shall not be withdrawn in between without the express permission of the Company.

8. This agreement shall be construed to be in force irrespective of the variation in the terms, tenure, and responsibilities and duties of the Employee.

9. The Employee and Surety hereby covenant and agree that the loss that will be suffered by the Company on the breach of any of the above-mentioned terms of the agreement, particularly premature leaving of services or any other reason, cannot be ascertained in terms of money but is a minimum amount calculated to compensate the loss that may accrue due to the said breach of conditions by the Employee. The sum calculated as above is reasonable and just compensation for the loss/damage that may be caused to the Company, and the Surety of the Employee shall not raise any objection whatsoever on the computation of the damages.

10. The Employee and Surety do hereby agree and bind themselves jointly and severally to indemnify and pay the Company the amount of loss mentioned above, computed by the Company or actual loss due to any breach of terms of this agreement or other acts of omission and commission detrimental to the interest of the Company.

11. This agreement is executed at... And the High Court alone shall have exclusive jurisdiction in case of any dispute.

12. Having clearly understood the terms and conditions set forth hereinabove and in witness whereof the parties do hereby affix their signatures on the date mentioned above without any fear, coercion, or duress.

Witness 1: Employee: Mr...

Company: M/s...

Witness 2: Surety: Mr...

Regards,

Sivadasan

I am giving below the format for training bond. You may use the same by making certain amendments , wherever necessary.




THIS AGREEMENT is made at ……………………….(Place) on dated……………… between M/s……………, a Company registered under the provisions of the Indian Companies Act 1956 having its registered/ Head Office at……………………., hereinafter referred to as “ The Company”( which expression shall unless repugnant to the context or meaning thereof, means and include its successors and assigns of the FIRST PARTY).

AND

Name- Mr……………………………………… S/o Shri…………………………….. Resident of …………………………………………………………………………………………………………………………………… ……., hereinafter referred to as “ The Employee” ( which expression unless repugnant to the context or meaning thereof, means and include its successors and assigns of the SECOND PARTY).

AND

Shri………………………………. S/o Shri……………………………. Resident of …………………………………………………………………………………………………………………………………… ……..
Hereinafter referred to as “ The Surety” ( which expression unless repugnant to the context or meaning thereof, means and include its successors and assigns of the THIRD PARTY).

WHEREAS the Employee is in the employment of the Company subject to terms and conditions contained in the Appointment Letter dated………………….. and Date of Joining:…………………………..

AND WHEREAS the Company has opted for Enterprise Resource Planning Implementation in the Company for enhancing its capability due to the Technical Advancement.

AND WHEREAS for this purpose the Company has opted for a package considered to be the best in India/ in the World which entails/ calls for trained/ specialized persons for manufacturing of its…………………products , to be trained by………………….. which is an organization of repute.

AND WHEREAS for successful implementation and operation of its manufacturing facilities M/s…………….. has arranged training for select personnel's of this “ Company”.

AND WHEREAS the Company has agreed to depute the “ Employee” to undergo specialized training through………………… to harness the skills of the “ Employee” for its productive use in the /for the “ Company”, the said training is highly specialized and may cost the “ Employee” substantially high amount of money in case the Employee has to undergo this training at his own cost.

AND WHEREAS the Employee has accepted the offer for training subject to such conditions as specified.

AND WHEREAS the Surety has agreed to guarantee the due performance/ discharge to the obligation of the Employee and in default/ breach of such conditions indemnify the Company on demand, such amount of money as detailed hereinafter due to the non-performance/ breach of this contract/ such breach of employment condition for which the “ Employee” is responsible.

NOW THIS DEED WITNESSETH AS UNDER:

1. That the “Employee” is desirous of undergoing training or manufacturing of its …………. Products, to be conducted by……………… and the Company agrees to depute the Employee for the training programme/ course, which is for a period of ……………….weeks.

2. That it is specifically agreed and understood that the cost of this training is included in the total package cost paid by the Company as mentioned in the preamble. The Employee has been deputed for this training by virtue of his association and employment with the Company and on his request for the said training and further on his assurance to continue in the services of the Company at least for the minimum assured period of……… years.

3. That the “ Employee” after due completion of the training has to/ and agrees to serve the “ Company” for a period of…….. years from the date of completion of the training, hereinafter referred to as the “ SERVICE PERIOD”. The Employee also agrees that once he joins the said training, he shall complete the training and not to leave the services of the Company in between the training period or after for ……. Year. In the event of breach of any of these conditions for whatsoever reasons the Employee will be liable for damages which may be on a higher side considering direct and indirect cost but are restricted to Rs……………………….. with consent of all parties hereto.

4. That if at any time during the training or post training Employment Period of- Three years from the date of completion of training the “ Employee”, if found guilty for misconduct or any willful neglect of work or dereliction of the duties assigned by the “Company”, from time to time, will be summarily terminated by giving one months` notice and the Employee shall be deemed to have brought about such a situation at his own and will be liable for all losses/ damages so occur by his acts of commission/ omission to the Company and any decision of the Company in this regard shall be final and binding on the Employee.

5. That all inventions, designs, programmed or such other improvements possessed by the trainee during the training period by virtue of the training shall vest with the Company and the Employee will have no right on it of whatsoever nature.

6. That the Surety shall be responsible for the acts/ omissions of the Employee and will indemnify the Company on demand such amount as calculated by the Company on breach of terms of the Agreement by the Employee forming part of this agreement.

7. That this agreement shall subsist throughout the employment period of the Employee and shall not be withdrawn in between without the express permission of the Company.

8. That this agreement shall be construed to be in force irrespective of the variation in the terms, tenure and responsibilities and duties of the Employee.

9. That the Employee and Surety hereby covenant and agree that the loss that will be suffered by the Company on the breach of any of the above mentioned terms of the agreement particularly of premature leaving of services or any such other reason can not be ascertained in terms of money but is a minimum amount calculated to compensate the loss which may accrue by the said breach of conditions by the Employee and t he sum calculated as above is reasonable and just compensation for the loss/ damage that may be caused to the Company and the Surety of Employee shall not raise any objection whatsoever on the computation of the damages.
10. That the Employee and Surety do hereby agree and bound themselves jointly and severally to indemnify and to pay the Company amount of loss as mentioned herein above computed by the Company or on actual loss to be or as calculated by the Company due tom any breach of terms of this agreement or such other acts of omission and commission detrimental to the interest of the Company.

11. That this agreement is executed at……. And ………… High Court alone shall have exclusive jurisdiction in case of any dispute.

12. Having clearly understood the terms and conditions set forth herein above and in witness whereof the parties do hereby affix their signatures on the date mentioned above without any fear, coercion or duress.

Witness 1………………………… Employee: Mr……………………..

Company: M/s……………………..

Witness 2 …………………………. Surety : Mr………………………….

Regards,

Sivadasan

I am not sure, but the thing is no bond will have legal compliances because it is the right of that particular candidate to stay or not with the company after his training.

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If you need any further assistance, feel free to ask.

Thank you all for your quick response. I also discussed with a few individuals. Bonds in India are not legally enforceable, be it an employment bond or training bond. However, I believe we can at least have an undertaking from the employee to forfeit the amount spent by the company in case they leave before a specific tenure. What's your view?

Regards, Verma HR

Is Training Bond legal in India? Can a company/consultancy file a case against an employee for a bond?

Waiting for your responses--Group members.

Thanks & Regards,
Chintan K Doshi

Dear Verma,

There is nothing like a training bond. If you are sending an employee abroad for training, then all these clauses should be a part of the appointment letter. In any case, why worry about the employee leaving? If your company's culture is very strong, he is bound to stay. Rather than working on the training bond, work to make the company culture strong.

Regards,
Sonali
Email: wagle.sonali@gmail.com

Hi Sujal_03, Regarding your statement:

"In any case, why worry about the employee leaving? If your company's culture is very strong, he is bound to stay. Rather than working on the training bond, work to make the company culture strong."

I am a foreign national who has been living and working in India since 2007, specifically in the field of Technology. While consulting with multiple companies within this field, I have consistently seen that "freshers" are problematic. In this industry, training takes between 3 to 6 months before anyone can be "productive." So, invariably, the freshers undergo training and then disappear after the company has invested up to 6 months of time, money, and energy into giving them the knowledge required to actually do something.

I have also noticed that other companies, such as Punjab National Bank, have every single employee sign a "Bond," and I have been privy to them also executing the bond and taking 2 lakh+ from errant employees who decide (usually for some financial reason) to "switch banks." I have also seen companies like Google extract large sums of money from employees who do the same.

So, the question is this: If Punjab National Bank can do it, are they doing this activity illegally? If Google can pursue people for it, then are they doing that "illegally"? Many people here are stating that a "bond," either for training or any other reason, is "illegal." If it is, then how can companies like the above get away with doing it? Unless of course, it's actually a "legal" practice in some way, shape, or form.

Are these bonds for the sponsorship of training legal? What are the consequences other than repayment if an employee breaks them?