Legal Implications On Breaking A Company's Bond Agreement

Hi,

A friend of mine went for on-the-job training to a parent software company abroad. However, it was on an agreement basis for two years after the completion of his training. Currently, he is contemplating leaving the company due to personal reasons. Consequently, he would have to pay a significant bond value of 24 lacs if he decides to break the two-year bond agreement.

Now, what are all the legal implications if he chooses to leave the company? Is it practically possible?

Thank you.

If the employee has signed a bond/agreement with the company, he has to honor it. The company would have the right to recover the agreed amount from the employee if he leaves in breach of the agreement. They can even go to court to recover the amount.

Your friend can talk to the management and discuss the matter with them, telling them his personal reasons. They can come to a settlement if both parties agree to it.

Dear Friend,

What if the company itself changes the dates of the bond (extends the date) and then threatens the employee with legal action? At the time of foreign travel, the end date of the bond was displayed, and later, the company postponed the bond date. The poor employee doesn't have the proof as nowadays it is in soft form. Please explain this matter further for any potential legal proceedings.

Regards

Dear All,

We find a lot of posts on Bond Breaking. It is not as easy as one thinks to break a bond. There are serious consequences that will occur without the employees' knowledge.

Having conducted certain research on the case law of Bond Breaking, we find that it favors the Employer. This is due to the legal route adopted by the Employers for the enforcement of the Bond. Employers go through the process of Arbitration and often receive an award ex parte, i.e., in the employee's absence. The advantage for Employers is that Employees are reluctant to part with their address, so the Employer serves notice on the old address and obtains a verdict from the Arbitrator in their favor. The scope of the appellate process against such awards is very limited, and the Arbitrator's award is usually confirmed. Instances of Employees resisting such claims are minimal. Once the Employer obtains the verdict, the time for enforcement is 12 years.

Therefore, it is better to request your employer to release you from the obligations of the Bond by sending an "escalation letter" to someone higher than your HR Head, such as the HQ if it is an MNC. This approach may sometimes work. If this does not yield results, you can send a "frustration letter" for the record. In case legal action is taken, this letter may be beneficial. To receive these letters, you need to seek legal assistance based on your specific circumstances.

Another option outlined by case law on enforcing negative covenants is where the Employer is compelled to terminate the Employee instead of the employee resigning. This option must be handled with great care as other issues may arise. If termination occurs, the Bond cannot be enforced.

Additionally, creating an Employees Forum with an All India Network to provide Legal Assistance at a nominal cost to defend Bond cases on the Employees' side can be a viable solution. This can balance the legal strength between Employees and Employers.

With Regards,

Advocates & Notaries & Legal Consultants [HR]

E-mail: rajanassociates@eth.net

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