Understanding Appointment Letters vs. Bonds: What Should Each Include for Your Company?

Hi,

Please tell me, how are appointment letters different from bonds? What things should be mentioned in a bond and in an appointment letter? I need to remake our company's appointment letter and create an employee bond as well.

Looking forward to quick help.

Thanks,
GS

Dear [Recipient],

An appointment letter is an offer of appointment given by the company to a candidate based on certain terms & conditions. These terms specifically mention the posting details, designation, pay scale, training period, probation period, notice period in case of resignation, etc.

On the other hand, a bond is a service agreement in which a company makes an agreement with the candidate to serve for a minimum period. If the candidate leaves the organization without serving the minimum specified period in the bond, then the candidate has to return the bond amount.

Thus, an appointment letter outlines the terms and conditions of the work being offered to a candidate, whereas a bond is a "retention strategy" for a particular period.

Thank you.

G. Sanju

Hi,

In our company, we were asked to sign the appointment letter, which mentions that we must adhere to the terms and conditions outlined in a separate Rules and Regulations Manual (which they mention could change periodically).

Within the Rules and Regulations Manual, the terms of the bond are specified. However, we have not signed a separate bond document. Are we still required to adhere to the bond terms outlined in the R & R?

Regards,
Rajmathi S.

As per my knowledge, in India, we have a Right to Employment wherein we can take up employment of our own choice, and no one can refrain us from doing so. Hence, a bond is considered invalid. However, there is one exception which states that if the employer has incurred substantial training expenses for training the employee, then the employer can prevent the employee from taking employment elsewhere.

Thanks & Regards,
Kavita Amol Kapse

Hi Gunjan,

There are two distinct clauses that separate an appointment letter from a bond:

1. Bonds are appointments given to employees for a fixed period of time, such as 6 months, 1 year, 2 years, etc., which automatically come to an end with the expiry of that specified time.

2. Normally, bonds have a restrictive clause that prevents the employee from leaving the company before the end of the specified period; otherwise, the employee has to pay a compensation amount as stated in the appointment letter.

Regards,

Dear Gunjan,

An appointment letter is an official document that mentions all terms and conditions, as well as information about the location (place of posting), CTC components, and eligibility as per the designation. Some companies include a bond agreement in the appointment letter, which states that the candidate is bound for three years. During these three years, a small portion of their salary will be kept by the company and reimbursed after the bond period.

A bond is an agreement between the employee and management. Breaching or breaking the bond leads to civil action, and no criminal offense is committed.

Thank you.

Dear all,

Thank you for the information. I noticed that every person has provided a new definition. A bond is a fixed interest financial asset issued by governments, companies, banks, public utilities, and other large entities. Bonds pay the bearer a fixed amount at a specified end date. A discount bond pays the bearer only at the ending date, while a coupon bond pays the bearer a fixed amount over a specified interval (month, year, etc.) as well as paying a fixed amount at the end date.

An appointment letter is an offer of appointment given by the company to a candidate based on certain terms and conditions, which specifically mention his posting details, designation, pay scale, training period, probation period, notice period in case of resignation, etc.

Thank you,
Hari Krishan Bains