Can My Friend Be Sued for Breaking a Job Bond Due to Family Pressure? Seeking Advice

My friend signed a bond with a company for 3 lakh rupees. After one year, she got married, and now her in-laws are not allowing her to pursue the job. Can anybody suggest whether the company can sue the employee since her father has signed the surety?

Dear Friend,

Once an employee signs a three-year bond (as mentioned by you) and if the employee leaves the company before the end of the tenure, then the company has full rights to claim the liquidated damages (as mentioned in the bond).

In case the employee does not pay the liquidated damages, then the company will have the option to send a civil court notice to the employee, or the company can even sue the employee for failing to pay the liquidated damages.

If the above-mentioned reason is genuine, then ask your friend to talk to HR or the management about the issue. If she can convince them, the problem gets solved.

- Babu

As you have already mentioned, your friend has signed a bond, which itself means that it is a legal contract, and one party can sue the other if the other party is breaching the contract.

The only solution is negotiation, which your friend can try with the management of her company. It is your friend only who can help herself.

Hi, Garg girl,

First of all, I am impressed by seeing your true care for your friend. As a matter of policy, a company's management takes these bonds primarily to ensure the availability of an individual. As you know, a lot of resources are being devoted towards hiring the proper employees. All the efforts in terms of physical as well as monetary are being wasted away once an employee leaves unplanned. So, a bond of short duration is okay, and generally, as a matter of terms, some monetary payment is tied up for non-compliance. Legally and morally speaking, the company's right is intact, and the company has all the right to sue for the recovery of this damage. For this, both the candidate and/or the surety can be sued.

However, from a legal point of view, framing a contract is a specialized task, and as you have not mentioned the details about the company, it is possible that some loophole must have been left in your favor, as most HR professionals are not from a legal background. But taking this route is not advised for two reasons: 1. this is against good faith, 2. as you have mentioned that the father may not be able to pay for the fees of a lawyer and other associated expenses.

So, the suggested course of action is to take a three-pronged strategy, i.e., 1. To apply for a mercy petition with the company management, even through the union if possible. 2. To persuade the in-laws to let the bride rejoin the company, informing them of the probable consequences, as it is very difficult to make a career. 3. Request the transfer of the candidate to a location near to her in-laws if the company has any branch nearby.

NO ESCAPE. The company has the full right to sue the employee to claim liquidated damages from the employee as per the provisions of the contract detailed in the bond. However, if the company uses its discretion to waive the bond amount as a special case, your friend can be saved. Better try to convince the competent authority through the concerned HR department that the employee has neither taken up any job nor intends to take up any job in the near future due to the reason of her in-laws not preferring her to take up any job.

BUT, if the company still insists on payment for the bond, why should her parents bear the penalty? Why not her in-laws pay the bond amount, who have forced her to leave the job.

PS Dhingra
Chief Executive Officer
Dhingra Group of Management & Vigilance Consultants
New Delhi
dcgroup1962@gmail.com

There is a solution to every problem. I would like to know the full details of the bond. Sometimes we have to break our promise because of some unwanted situations. Please send all the terms & conditions mentioned in the bond.

Best Regards,
Modi Ashok Kumar
[Phone Number Removed For Privacy Reasons]

Actually speaking, any bonds between a company and an employee that curtail basic fundamental rights of the individual are illegal and cannot be executed. In this case, the bond, in my opinion, is illegal and cannot be enforced. Please take advice from a good lawyer and sue back the company. In India, "bonded labour" is prohibited, and any attempts to sign such bonds amount to bonded labour. The bonds were signed by the employee under compulsion of need, and it amounts to exploitation of the situation by the company.

Further to my above post, however, there is a specific case. For example, if the company has incurred costs on specific training for the employee, which provides her immense advantage in the future... For instance, if an employee was sent abroad for technical training specific to the job, in such cases, if the employee has signed a bond, then such bonds can be executable!

Every contract and bond has a clause of termination. Kindly act on that clause. Even though I agree with Kdccorp, in today's high attrition-based scenario, companies do find measures to reduce attrition and loss of talent and knowledge. My suggestion is that it can be sorted out by mutual consent with your seniors and HR department. Try to convince them of the problem, and they will certainly provide you with better solutions. Also, be sure to read the clause of jurisdiction to be on the safer side.

Regards,
Nikhil

Section 5 of The Bonded Labour System (Abolition) Act, 1976 states the following:

Section 5: Agreement, custom, etc., to be void.- On the commencement of this Act, any custom or tradition or any contract, agreement, or other instrument (whether entered into or executed before or after the commencement of this Act), by virtue of which any person, or any member of the family or dependent of such person, is required to do any work or render any service as a bonded laborer, shall be void and inoperative.

The above provision will disqualify the contention of any management emphasizing the signing of bonds.

Naveendran David
Head HR of an MNC

Generally, service bonds are illegal in India as they are said to be one-sided contracts. The Supreme Court has stated that by entering into a contract of employment, a person does not sign a bond of slavery, and a permanent employee cannot be deprived of his right to resign.

However, if the company has spent money grooming the employee, which is not usual training, and the employee has been asked to sign a bond for such grooming, then the company may initiate legal proceedings for breach of the bond.

Regards,
Rijuta Misra
Legal Executive

Dear Naveendran,

This is the answer for which I have been searching on many forums. I, too, said the same to a couple of colleagues and friends. Some of them argued, "If it is so, why are many organizations taking bonds, including large organizations?" I quoted the same section of the Bonded Labour Act. Still, they denied my point. Your comment boosted my point.

Thanks,
Sankar Alla

I fully endorse the opinion of kdccorp, but how this bond system got this umbrella for MNCs, I do not know.

It is surprising to hear that the girl has been asked to leave the job during the bond period by her in-laws, who should understand the heavy penalty to be paid. If they still wish that their daughter-in-law should leave the job, then they should pay the penalty.

Hi Team,

As appropriately commented by Modi Ashok, it depends on the terms laid down in the bond and the substance of the case (the grounds created for the case by the Company). For example, if the bond specifies a commitment for a defined period in exchange for the training provided, the Company has the upper hand.

Please feel free to reach out to me for any further clarifications.

Regards,

Satheesh Thalapalli
M: +91-98660-17111

Steps to Resign from a Job Due to Personal Reasons

Send a registered AD letter to the company citing the reasons why you cannot continue the job for the sake of your marriage. Also, know that there is no bonded labor in India. Otherwise, you can always provide some medical reasons for leaving the job.

There are two sides to the issue:

1) The company, which has spent time, money, energy, and efforts on this person, has secured a contract to protect their interest. Whether legal or illegal, standing the test of law, etc., is secondary. Let's, for a minute, put ourselves in that position and imagine what our response would be. In all fairness, the opportunity would have gone to another person, wherein that person and the company would have benefited if your friend, in the first place, had thought of these things.

2) Speaking for your friend, yes, it is not entirely her fault that this situation has come about. Her intention at the time of hiring was genuine but has now changed. Possible options could be: discuss with the company HR to 1) take a break now and join after maybe 6-12 months; maybe things would have changed by then. 2) Explore work-from-home options for the same company. 3) Take a break and pursue higher studies with an undertaking to work for the same company later in a different job/location. 4) Work on convincing your spouse to see the bright side, especially since she is a career woman.

If none of the above is workable, negotiate for a reduction in the bond (some %), agree on an EMI payment mode spread over a period of time, which may be beneficial for all concerned.

I absolutely agree with the following statements of Vedwati. In my viewpoint, it is apt to work mutually, maybe with the company or the in-laws of the lady. All the best.

Hi, I am Siju Mathew, and I am not an HR professional. I am bringing a different dimension to this issue. It is a genuine query that I have come across with many people. To my knowledge and from discussions with various individuals, I have found that signing a bond itself is illegal. The company can never take you to labor court if you violate the contract that you signed as a bond. Secondly, if the company holds your rights citing the bond, then as a consumer and an employee, you have all the rights to take the company to court.

Once an employee signs a three-year bond (as mentioned by you) and if the employee leaves the company during the tenure, then the company has full rights to claim the liquidity damage (as specified in the bond).

If the employee does not pay the liquidity damage, then the company will have the option to send a civil court notice to the employee, or the company can even sue the employee for claiming the liquidity damage.

Whether the following is applicable to the bond or not?

Section 5 of The Bonded Labour System (Abolition) Act, 1976

Dear Garggirl,

After going through your concern for your friend, let me inform you that as per the provisions of the labor law, no company can forcefully retain any employee. However, the employer has the option to have a bond in place if they have invested in the employee for training or any other purpose.

You may have noticed that many companies have employees sign an agreement before joining for a maximum period of one year. If an employee wishes to resign after completing one year, they are required to give a two-month notice. If they choose to resign before that, they may have to pay a certain amount (usually 1 or 2 times the monthly basic pay) that the employer might have spent on sourcing the employee through a consultant. However, this is also limited to a maximum period of one year.

In your case, where the bond is signed for a period of three years and any breach of the contract requires the employee to pay 1 lakh, there needs to be more clarity on why the bond was set at this value.

If the bond was signed without any specific reason, such as specialized training provided by the employer, you have every right to seek legal advice.

It would be advisable to consult with someone well-versed in labor laws and legal aspects.

Regards.

The provisions of the Act apply to the labor force who are under an agreement to serve on account of some debt from a particular person. The forms of forced labor are: Adiyamar, Baramasia, Basahya, Bethu, Bhagela, Cherumar, Garru-galu, Hali, Hari, Harwai, Holya, Jana, Jeetha, Kamiya, Khundit-Mundit, Kuthia, Lakhari, Munjhi, Mat, Munish system, Nit-Majoor, Paleru, Padiyal, Pannayilal, Sagri, Sanji, Sanjawat, Sewak, Sewakia, Seri, Vetti.

So, the service people do not come within the purview of the Bonded Labor Act. Of course, the Act needs to be amended to cover any type of bond.

Though the reason cited by your friend is genuine, rules do not sometimes accept this excuse as she knew that she had signed the bond for 3 years at the time of recruitment. In my opinion, there are only two/three alternatives to this problem:

1) Give a representation to the company requesting them to waive off the penalty as she is forced to quit due to a genuine reason.

2) Somehow manage to pay the money.

3) Consult an advocate to find loopholes to come out of this problem.

4) Try with the company for a reduction in the penalty amount.

I am fully in agreement with KDCCORP. There is no law to bind an employee to a company. Don't be afraid.

Regards,
Suresh Thakur

Dear Friend,

In order to combat attrition and attract talent, employers have been actively engaging with employees. It has become a common practice to have an agreement with employees stating that, for a specified period, such an agreement will not be constitutionally valid. This has been clarified multiple times by both the Supreme Court and the High Courts. Reference is made to a case wherein it was held that the freedom to change employment for the purpose of improving service conditions is a vital and important right of an employee that cannot be restricted or curtailed.

American Express Bank Ltd. vs. Ms. Priya Puri, 2006 LLR 682 (Del. HC)

Thanks & Regards,
Jayanta Basak
HR Professional