Legality Of Bonds Filled In Software Companies - Can One Break Employment Bonds?

Hi,

Are the bonds taken by private firms legal? If so, why are they legal? The bond states that the employee must work for x years but never guarantees that the employer will retain the employee for x years. In such a scenario, if one needs to leave the company, is it necessary to pay the quoted amount (mentioned in the bond) for breaking it?

Is there a way for someone to request an experience letter and relieving letter from the company after breaking the bond?

Even if you see the contract, it says you have to give 3 months' notice or 3 months' salary before leaving the job, but there is no such bonding mentioned for the employer. Is it right? Kindly let me know.

In our company, they are collecting bonds with the above-mentioned terms. However, people are leaving without even one month's notice. What can be done for this? Please help.

Regards,
Anu

I really don't know the solution for this, but if you can give me a solution for the problem of leaving a company by breaking the bond, it would be great. For example, if the bond period is one year and one wants to leave after completing 6 months because they don't find the job great. What if they file a case against the company for not providing certain things and request an experience letter, of course, adhering to the notice period policy if necessary.

Dear Colleagues,

Bonding in Human Resources is one of the major tools used in Employee Retention. However, it should be noted quickly that most times, Corporations and even Executives misuse or misapply it to the detriment of their establishment.

Legality becomes relative depending on who is interpreting the document. The bottom line is that at the point of initiation of an Employment Contract, all terms of Employment ought to be stated categorically without any ambiguities. Attrition occurs when mid-way into your career, an employee who has put in, say, about 5 years is told to come and sign a bond form simply because the Company is sponsoring him/her for a week seminar, which was not in his/her contract papers.

On the other hand, when we talk about bonding, most times Executives do not look beyond their employees. It should be noted that these employees have other "lives" other than the workplace.

For instance, a married lady works in a firm and eventually got to sign a bond document retaining her on the job for the next 2 years - ironically, the husband, about the same time, got an international transfer/posting!

What happens to this couple? Are you going to separate them because of a document signed or sue them for legally migrating...

The issue of bonding has to be clear to all parties concerned:

- Value of the bond - financial implications
- Period/Duration of bond based on Value
- Method of Computation in case of Multiple/Overlapping Sponsorship - Cumulative or Current Calculation
- Remedies in Case of Default - Payback Scheme/Guarantee

The bottom line is that the best kind of bond is the BOND BY LOYALTY. You do not force someone to keep on staying on a job if he/she does not want it anymore simply because there is a bond document signed - but loyalty would keep the zeal alive beyond the bond.

Thanks.

Hi,

It's easy to file a case against a company by X. But if other companies are aware that the employee has filed the case against his former employer, he may not get a chance to work in the future. This is because companies might not be interested in going to court for every employee. At the same time, they can't stand against an employee not keeping up with their word. Hence, they delay in issuing these certificates. In the worst case, it's easy for the employer to find fault with the employee and say that his performance was not good.

Therefore, until a universal law in practice prevails, it's difficult for employees to break away from bonds, especially if they are professionals.

Regards,

N. Neelam

Legally, Bond does not stand a chance in the court of law. However, for the protection of employers, the terminology of the agreement on a stamp paper is reflected differently. Some term it as "Bond", some as "Non-competition / Non-disclosure Agreement", and some as simply "Agreement" with a few clauses related to protection in terms of service period with the company.

A guarantor agreement by a third party on behalf of the employee stands a chance in the court of law in cases where the employer has to protect their rights as per the terms and conditions at the time of the offer. However, whether it stands a chance in the court of law or not in favor of the employer is a different question. Still, there is always a case for litigation where the employee is also pulled into the courts, wherein they have to defend themselves, running around the courts by spending huge sums on legal expenses.

AR Sai.

Hi,

I remember reading somewhere that bonds are not in the spirit of the law as the employee is not in a negotiating position while signing the bond. The two parties should be equal and willing when they sign the bond. In this case, the employee needs the job and has to accept the condition of signing the bond.

Can anyone refer me to a legal expert and shed some light if any judgments have been given in such cases?

Regards, Rajesh

Hi, this is Lokesh, new to the forum. I would like to know whether the bond I gave to my employer is worthwhile. I just signed a printout paper with some clauses mentioned in it about the bond period and termination rules. Is that bond really valid without "court bond or stamp paper agreements"? Please let me know about that.

Thanks,
Lokesh Valluru

Hi folks,

Can anyone tell me whether any indemnity bond holds (or is legal) if there is no insurance company involved?

Regards,
Motee

My suggestion to you is that don't leave your current company as you have to breach the bond. If you are satisfied with the working environment and you are getting monetary benefits, then don't leave the company. It will not show your stability. This is something you have to consider before you signed the bond, as 7 years is not a short period. Although the employer is investing a lot in training, if an employee leaves, they incur losses. Therefore, they have this kind of scheme.