Is It Legal for Companies to Enforce Loan Bonds on Employees? Seeking Advice on Rolta's Practices

Hi,

I live in Mumbai, and my wife works for Rolta. She joined the company by signing a bond in which the company takes an education loan of 2.5 lakhs from a bank. This amount is deducted from the employee's salary every month until 4 years. If the employee leaves before 4 years, he/she has to pay the loan amount.

All this is true. Refer: Bank loan for training course weighs on ex-staffers of Rolta - Banking - Banking/Finance - News By Industry - News - The Economic Times (URL: http://economictimes.indiatimes.com/articleshow/4316645.cms). Is this legal?

And now they are trying to force the employees to sign another bond in which the loan amount will be increased to 4 lakhs, and an additional 3000 (apart from the normal EMI) will be deposited as a guarantee in the salary account so that it can be retrieved in case of leaving the company without paying the loan. All this, and also if the company terminates your service, then you also have to pay the loan amount (this is specified in the bond).

The company has given a warning that "They have to sign the bond, or otherwise they will be terminated."

Is all this legal? If not, how are they managing to do all this with the bank's help?

Please help all the people who are suffering from this (see ET article comments). Provide some link or way to complain against this.

Dear,

First of all, we do not think when we want employment. I would like to ask one question: why do people join such companies? In that condition, what is the education loan guarantee the bank has taken? This point has to be taken on a large scale; it is an example of forced labor.

Regards,
J. S. Malik

I live in Mumbai, and my wife works for Rolta. She joined the company by signing a bond in which the company takes an education loan of 2.5 lakhs from a bank. This amount is deducted from the employee's salary every month until 4 years. If the employee leaves before 4 years, he/she has to pay the loan amount.

All this is true, refer to Bank loan for training course weighs on ex-staffers of Rolta - Banking-Banking/Finance-News By Industry-News-The Economic Times. Is this legal?

And now they are trying to force the employees to sign another bond in which the loan amount will be increased to 4 lakhs, and an additional 3000 (apart from the normal EMI) will be deposited as a guarantee in the salary account so that it can be retrieved in case of leaving the company without paying the loan. All this, and also if the company terminates your service, then you also have to pay the loan amount (this is specified in the bond).

The company has given a warning that "They have to sign the bond or otherwise they will be terminated."

Is all this legal? If not, how are they managing to do all this with the bank's help?

Please help all the people who are suffering from this (see ET article comments). Provide some link or way to complain against this.

Vijay,
You should have thought before joining the concern. If there is a bond, you will have to sign it. First, make a proper background verification about the company. Try to meet the people who work in the company or find people who are ex-employees of that concern. You can find information through the net, blogs, Orkut, etc. If the company is well-known, someone will open a community where you can chat with the members and clarify your doubts.

At this point in time, like Mr. Malik, I would like to say that it should be taken on a large scale with the help of our CiteHR members.

Regards,
Arun M

Dear Friend,

Apart from having sympathy with the victims of this fraud, being a legal professional, I must say that you have a strong case under various provisions of the law:

1) Civil Case: You can challenge the legality of the bonds on the basis of coercion, undue influence, and unconscionable agreement.
2) Criminal Case: Criminal breach of trust, cheating, etc.
3) Labour Case: Illegal termination, etc.

Regards

Dear sir,

Apart from IT, where you have a choice of selecting a company, in other fields (GIS), you have limited choices; hence, you have to compromise to earn a good living. However, that doesn't mean the employer can use you to their advantage. That's why there are laws.

Anyways, thanks to everybody for your comments. I will consider all of your opinions once my wife is forced to sign the new bond or face termination on the same basis.

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