Can I Legally Break My Employment Bond in India for Better Job Offers?

Hi all,

I joined a small software firm over 7 months ago as a PHP Developer after working with another small organization for 19 months. I signed a commitment bond for 2 years on a plain printout offer letter, not on bond paper. I am receiving many interview calls for better packages. However, my current company is not going to increase my small salary until March 2012. I want to break this bond. Please help me, guys. Are these kinds of bonds legal since I did not sign them on bond paper?

Contractual Bond:
You will be required to attend special training and courses arranged by the company. You acknowledge that this is necessary for you to acquire the proper skills and expertise to carry out the duties of your employment, particularly in respect of software development projects for the company, XYZ Technologies, and its affiliates. In consideration thereof, you agree that, notwithstanding anything to the contrary herein, you shall not terminate your employment with the company for a period of two (2) years from the date of joining XYZ Technologies. If you terminate your employment with the company before the two-year period, you shall repay the company immediately an amount equivalent to your monthly salary multiplied by the remaining number of months until the end of the two-year period.

Termination of Employment:
The company may terminate this agreement at any time by providing you with 1-month notice during your probationary period or 2 months notice after confirmation, or in lieu thereof, a sum equal to the salary that would have accrued to you during the notice period.

You may terminate this agreement after the contractual bond period by giving the company 2 months' notice in writing or, in lieu thereof, a sum equal to the amount of salary that would have accrued to you during the notice period.

As mentioned in 1.1, they have not provided any training or courses as I am an experienced candidate, and the technology used is open source. I want to break this bond for better opportunities. Please help me.

Hi Anitha,

The employment bond is still legal as it is signed by the competent authority along with the company stamp/seal, plus your signature is also being made as a token of acceptance. (Most of the bonds are made in this way or on company letterheads).

Now, if you have signed before the matter was written, i.e., on plain paper, it will still be considered a legal bond, as it's a mistake from your side. Even if you go to court of law with the same issue, it will not be easy to defend yourself with that excuse.

As you said that you have not been given the training, etc., as written on the bond, you have every right to terminate the contract as the company violated the terms and conditions. Speak to your authorities regarding the same thing and get the contract terminated on a mutual understanding basis, or else say that you are going to court of law for settlement.

Regards, Manoj Devda Accounts and HR Manager

Hi Again,

Just to keep you more motivated......

In India Bond is illegal as follows

As per the Indian Statute bonded labor system was long abolished and no bond can force any person to work against the employees wishes

Article 19 of Indian Constitution talks of fundamental rights, as per the Article 19 the Constitution the write work is a fundamental right, and under no circumstance does the Fundamental rights under Article 19 be waived by any person nor can any person be forced to do something that’s amounting to the violation of the rights mentioned under Article 19.

As per the Indian Contract Act contracts entered between two parties if is one sided then such contract would be null and void. Most of the Bonds are one sided.

Again as per the Indian Contract Act no contract can be enforced on any person if the contract which is being so enforced causes any harm to the person on whom its is enforced and if performed would violate principles of natural justices.

As per Sec 368 of Indian Penal Code if any person or institute holds back any document or any use any legal document or threatens any legal suits or actions and thus forces a person to perform any act against his wishes or which is illegal or wrong as per the statute of Law of the land.

Sec 368 of Indian Penal Code talks about extortion by the threatening to file a legal suit. The minimum punishment under this act is 2 two years.

The Supreme Court of India has clearly stated that no employee can be forcefully employed against his will, just because he has signed a contract with the employer.

The court also has stated that the employer can not hold back any personal document of the employees as they are earned by the employees and the company has no claim on the same.

Any complain on the company would land the Directors and Managing Directors of the company in Jail, as the company is not a actual living entity but legal entity and the management are hands and heads of the company.

Bonds are applicable only if the company has spend money on the personal grooving and enhancement of the employees, but not just a training that helps employees perform better.

Hope it will help you.

Note:Sharing what is shared on CiteHR

Hi Mani_pooja,

Your first answer really scared me. But the second one gave a little relief. I still have a few small doubts. Can you please clarify for me?

1. Since the bond is for a two-year period and I have worked for 7 months, can they claim the remaining months' salary as compensation from me? As I have mentioned, I have not undergone any training from a third party and have not received any financial benefits from the company.

2. Is there a possibility of imprisonment for breaking the bond legally?

3. Can they still force me to work even after breaking the bond if I do not intend to?

4. Is there a blacklisting process in India that could potentially harm my future career prospects?

I hope you can understand the anxiety and stress I am currently experiencing. Please help clear up these small doubts.

Hi Anitha,

Your answers are below:

1. Since the bond is for a two-year period, and I worked for 7 months, can they claim the remaining months' salary as compensation from me?
Ans: Yes, 24 months - 7 months = 17 months * monthly pay = compensation

2. Will there be any imprisonment for breaking the bond?
Ans: The query shows your fear. Anyways, nothing will happen if you pay the above compensation amount. I strongly feel that's not going to be the situation. As I said earlier, you have every right to break the bond if the agreement terms and conditions are violated by the company.

3. Can they force me to work even after breaking the bond, and I do not have the will to do so?
Ans: The Supreme Court of India has clearly stated that no employee can be forced to work against their will just because they have signed a contract with the employer.

4. Will there be any blacklisting in India that may spoil my future career?
Ans: Blacklisting in India is done in cases of theft or fraud by an employee but not for breaking a contract. Many do so if the contract is not properly enforced.

You have a bright future. I sense that you are very worried and afraid to take action, which is why you have all these negative thoughts.

All I can say is - KEEP IT SIMPLE, SILLY.

Dear Anita,

Pooja has provided the correct answer with all the legal implications. Let me clarify it for you in a very simple manner once again.

You signed the contract based on certain conditions. The employer has not fulfilled obligations such as specialized training. Therefore, your bond has become invalid, and it will not hold up in a court of law. Simply follow the resignation rules, and they are obligated to accept it, or you can take legal action against them.

There is no need to worry; proceed as advised. I thank and commend Pooja for explaining everything to you with such patience.

God bless all.

Hi mani_pooja,

Thank you for your patience and for clearing my last three doubts. However, regarding my first question, your answer momentarily took my breath away. I am still in a dilemma about the same. I would like to mention that they have not violated any rules, and in terms of training, they mentioned that I would only need to undergo it if necessary. Why should I have to compensate them when the bond itself is invalid? Why can they claim money from me? Even if they do claim, they should provide sufficient reasons for the expenses incurred on me, right? Currently, I am unable to afford such a large amount as compensation, and I refuse to be enslaved by a meager salary when opportunities are right in front of me. This is a distressing situation that many bonded employees may face. Please provide guidance on this matter. I have come across discussions stating that companies must justify their claims for compensation by demonstrating the expenses incurred on the candidate. However, these discussions are a few years old. I need assistance on this issue. Thank you in advance.

Hello Anithamb,

Manoj Devda has given you the right perspective as far as the effectiveness of the bond is concerned in your case. However, it seems to me that you have your priorities a bit 'mixed-up'.

Your main grouse in this company is: less salary and the next hike being in March 2012. Why not handle it directly instead of assuming things—that you can't get the hike now?

Since employment bonds are, by and large, illegal and tough to implement legally, many companies adopt the strategy of having a bond for some training or such reasons and then getting the bond signed for this reason, rather than for employment. Your company seems to have adopted the same approach. If...repeat if... one of you decides to go legal, you have the facts in your favor—that you weren't given any training.

But at the same time, please note that it's easier for the company to handle the legal route (even if you go legal) since they can handle it financially and have someone to handle the issue in the courts—their lawyer. I am looking at the worst-case scenario—if you mention the flaw in their bond (about not being given any training), most likely they will only get alerted. If they want to fleece the money from you (quite probable—since they might not want to set a precedence to other employees), they will begin to make efforts to cook up something to show that you were given training. Do you see where this could be leading to? Is it worth your time, effort, and money (to hire your lawyer)? I have not even taken into account the time our Indian courts take to decide—either way—in a case.

You mentioned: I am getting many interview calls for a better package. But that doesn't mean you have something in hand. And until you have something in hand, it means nothing. I suggest beginning to appear for interviews. And then when you get an offer in hand—which you find good—then go to your HR and bargain (showing the offer or not to them depends on the situation then). That's the time for you to mention the training—or the lack of it. Since you have an offer in hand, the HR would most likely respond to hike your salary now. If the hike you get here is good—by your standards—then maybe you can stay back?

And if and when you mention the training issue, please mention it confidently—which will convey the impression that you did your homework about taking legal advice and are prepared to go the whole hog, if needed. Whether you go or not isn't and will not be the issue—it's what you convey and what they perceive that will be the issue.

Also, you haven't mentioned how much the balance 17-month salary will come to if you have to pay back the bond money. Since you mentioned your salary is low, another way of looking at it is: if you get an offer with a real good hike, maybe it's better to pay back and then go freely without any future headaches? We handled one such case recently—the guy was getting 16K per month and he got an offer for 30K per month and his bond money worked out to 46K—he preferred to pay back, since it was just 2-3 months' salary. See the point?

Like they say: Every problem has multiple options/solutions—it all depends on which direction we see.

All the best.

Regards,
TS

Thank you, tajsateesh, for your details.

I am currently earning 17k per month and have been receiving calls offering 22-25k. If I were to give compensation, it would be 17*17k. My question is: why and how can they claim such an amount of money when the sources are open source and there is no third-party training? Which law provides them the right to claim compensation? It's just a five-member company. I am confident that I will receive a better offer package than this, considering the current technology trends. However, I am concerned about such a restrictive bond. Please suggest a remedy for this.

Hello Anithamb,

Let's face it—didn't you know that the software is open-source when you signed the bond? I am sure you knew—anyone associated with the software industry knows that fact. Then why did you sign the bond in the first place? Because it suited you at that time—you desperately wanted a job.

And now when it's inconvenient for you (because other companies are offering you more), you want this forum to suggest a way to break it—legally? If you were in the company's place, how would you react/respond?

That you are seeking advice from this forum is not wrong, but I feel the reasons and intent you are seeking for are, per se, wrong.

In general, it's always easy to throw the blame on others, but quite often we fail to observe how (or why) we made a contribution to a situation. The moment we analyze a situation from this angle, other options emerge.

Coming to your confidence of getting calls for offers of 22-25K, maybe it won't be difficult for this company to match that figure—it's just about a 30-45% hike? If your performance has been very good here, getting this sort of a hike when someone resigns or attempts to resign is not very difficult. For all I know, you may not even need to raise the fact that no training has been given to you. No company wants to lose a person who works and delivers.

With respect to another aspect you clarified—you say that the employee strength is only 5. So that could point to two facts: (1) they can't afford to lose anyone. (2) If you come out with a logical and reasonable bargaining figure—once you have an offer in hand—they, most likely, will not say no.

Regards,

TS

Hi Anitha,

Every company has the right to receive compensation if the agreement/bond is violated or terminated for any reason by the employee.

The reason I say this is because the company makes a lot of investments in recruitment, consultancy charges, training, advertisement, etc., plus time spent on the employee. Now, imagine if one day the employee decides to resign; consider the amount of loss incurred from the company's perspective.

That's the main reason why companies sign bonds with their employees.

Regarding your case, if the company has not provided any training or made any specific investments in you, then you can make the final decision to either stay or leave (without paying any compensation).

What Mr. Sateesh suggested earlier was right in saying that just receiving calls is not sufficient for you to consider changing jobs or terminating the contract. Get an offer letter in your hand first, then think about the next step.

By that time, you might discover more solutions.

Finally, one simple solution to your problem, which actually worked in favor of my friend a few months ago when he was in a similar situation like yours, is to ask for it!

Regards,
Manoj Devda

Dear tajsateesh,

I knew all that it's open source and I had signed up for the understanding that there may be training on new technology, which is paid and may be third-party training. However, that aspect has not come into the picture yet. It's not only a matter of salary. Mentally, I am not feeling inclined to work here anymore because the environment and circumstances have changed. Your response has increased my worry. I can empathize with the company's situation as well. However, I would like to mention that I have performed well in my role and given my best effort, exceeding what was expected of me.

If the company can terminate our service before the bond period, then why can't I? I thought my question would be beneficial for others as well, so I posted it on the forum. I respect your thoughts and value your time. Please try to understand the perspective of a middle-class worker. The company is not a victim here; they are benefiting from my work. If they can dismiss us at any time to find better candidates, then why can't I do the same? I am not deceiving them in any way. Please forgive me if I have said anything that may be irrelevant here. I seek your help and suggestions.

Thank you.

Hello Anithamb,

At the outset, please understand that you don't need to be apologetic by saying, "Please forgive me if I have said anything that may be irrelevant here." You are only presenting the facts of the case and your perspective.

Regarding the facts of the case, you have now added another aspect: "It's not only the salary matter. Mentally, I'm not feeling to work here because the environment and things around have changed." Is there any reason why you didn't mention this aspect earlier (even though I had suspected something like this or a conflict with the boss as the reason for your query)?

As I have always said in my responses to other similar threads, it's your life, career, and so the final decision has to be yours. All the members in this forum, or your friends, or relatives can only provide you with different perspectives on the issue/problem so that you can make a well-informed decision. What to consider or what to ignore is and has to be your decision.

A small reality check: are you so sure that the 'mental dissatisfaction' you are experiencing now won't recur in your new company, wherever you move to? I won't say it will, but I can't say it won't either.

As I mentioned in my first response, I think you are still mixing up the issues/priorities. If you want to change just because you want to run away from the present problem, then this would be a wrong step. Try to change/resolve it. Think of ways on how to do this rather than just jumping out of the boat. Please be assured that the next job would not 'could' have another set of problems if that's how one wants to look at it. So, 'where-to' from there? To resolve this aspect, you need to make an effort to understand the reasons for your current mental dissatisfaction, and don't discount your contribution too.

I suggest you begin to look at the larger picture when you make any decision. That way, the chances of making mistakes that you can't correct would be minimized. Why make a mistake and then try to resolve it?

All the best.

Regards,
TS

Hi Anitha,

You are welcome. I have sent it to your mail id. By the way, your mail id is very interesting.

Also, there are other instructions to be followed in order to break the contract like:

1. Analyze your situation. If you were pressured or rushed into signing the contract of employment, you may have valid reasons to back out. Employers must give new employees a reasonable amount of time, at least 21 days, to consider the terms of the agreement and even seek legal advice if necessary, according to the Age Discrimination in Employment Act (ADEA).

2. Break the contract within seven days after signing it. That's because the ADEA requires that employers allow new employees seven days after signing an agreement to cancel it if the person so desires.

3. Consider the contract invalid if either party fails to meet the contract's obligations.

4. Reach a mutual agreement to cancel the agreement. If you can convince the other party to void the contract, both parties can walk away without legal repercussions.

5. Prove that the contract was executed under false representation. Fraud is another valid reason to break an employment contract.

6. Only adults of legal age can enter into a contract. If either party is under age, the contract is not binding. Legal age varies depending on your state.

7. Consult with a legal advisor to see if there are any other stipulations in the contract or state laws that would allow you to break it. Employment contract laws in each state differ, and they each may contain specific ways to get out of your contract legally.

8. Ask the employer if both parties can agree to void the contract. The contract is not in effect if no one wants to be a part of it any longer.

9. Produce proof that you were forced or intimidated to sign the contract or that you were incapacitated when you signed the contract. Contracts are not binding if you signed them under duress or could not rationally make the decision to sign it.

Regards,
Manoj Devda

Dear mani_pooja and tajsateesh,

Once again, thanks to both of you. I hope this information will be helpful for others who may be facing a similar dilemma. Things have become clear to me. I have made a firm decision to resign in 2 months, citing family reasons. I am unable to continue working in the city and would like to return to my native place. I will request my employer for a two months' notice period and kindly ask them to terminate my employment after that. I will then assess the situation. If any issues arise before then, I will seek assistance from legal experts and this forum.

Once again, thank you to everyone.

Best regards

Well said Manoj Devda -- That's a good move, at least for the moment. And Anithamb, just keep your options open for now. Who knows how things may turn? I recollect a movie dialogue: anything can happen in 6 months [in your case, 2 months]... your boss may realize his faults and make corrections in the system, you may be given an out-of-turn hike, etc... But also keep your efforts at FULL pace in your work. All the best.

Regards,
TS

Just one last thing, anithamb, before you get onto your work and wait till 2 months :-)

Did you ever wonder WHY most of the seniors in this Forum INVARIABLY and ALWAYS suggest that the individual concerned HAS TO TAKE THE FINAL CALL/DECISION and their suggestions have to be treated ONLY as inputs/advice? It's just that it's YOU who has to face the consequences of YOUR ACTIONS/DECISIONS/CHOICES--NOT the members or your friends or EVEN your family members or relatives. Everyone may support or give their shoulders for you to LEAN ON [or cry upon--depending on the context], but at the End-of-the-Day, it's YOU who has to face the music...so to say--NO ONE ELSE. Whether it's career or life.

Regards,
TS

In a way, you are right, Manoj Devda.

However, the intention wasn't to frighten, and neither was it to ensure that she thinks twice before taking a decision.

The main purpose of my last posting was this: I have seen quite a few persons consider only the positive aspects, conclusions, or results of a decision during their decision-making process. They fail to even give a thought or factor in the possibility that what they think will or should happen, or the result they want to take place, may not happen at all. Whether we like it or not, that's life... however well we plan things out, there's always a possibility of things not turning out the way we wanted, expected, or hoped for.

In a way, I think it applies to everyone at some point in time or the other, including me.

Consequently, when the end result turns out to be different, the other person(s), circumstances, or anyone/anything gets blamed... except himself/herself.

Now just apply this to the thread under discussion, and you can grasp why I said what I said.

I just wanted Anithamb not to repeat in the future what she did in the past... of which she's facing the consequences now. Maybe that's what they call—learning from mistakes and converting the mistake into experience.

Regards,

TS

Thank you, tajsateesh,

Your words have cheered up my spirit, and I couldn't help but smile at them. Thank you for sharing your life experiences to guide others so they can avoid making wrong career choices. What you have said is a bitter truth that everyone knows, but in times of pain, many refuse to accept it as fact. I am confident in myself and have faith that I will make decisions based on the experiences of others, my inner voice, and not solely on my current sorrows. Yes, I agree with you that suggestions from forum members should only be considered as inputs or advice. Thanks once again.

Hello Anithamb,

I recollect a quote: "The wise learn from others' mistakes, the average person learns from his/her mistakes, while the fool doesn't ever learn."

I have also seen another class of people: they not only do not learn from any mistake but misguide/misdirect others to their path...not sure how to define this category. CiteHR's efforts, I believe, have been to take all members to category-1...but at the end of the day, it's up to the member concerned :-)

Also, I don't think you would have had a chance to pose your query and learn, and neither would those who participated in this thread - including me - would have had a chance to share their experiences/knowledge if CiteHR hadn't existed...right?

So in short - say thanks to CiteHR.

All the best.

Regards,
TS

I'm having the same query. At the time of the interview, I was told that I would be deployed on a particular technology (Database testing); however, when I joined the company, I was asked to do website testing, which is less technical in terms of skill from what was committed to me. My prior experience was of a very technical profile, so this is cheating on their part.

Also, on the offer letter I had signed, they included a term stating that I cannot leave the company before completing 18 months, and if I leave before this period, I will have to pay Rs. 50,000 as a penalty. However, I had not signed any stamped paper agreement with this employer.

So, my question is: Do I have to pay the penalty fee to my previous organization?

Thanks in advance!