Feeling Trapped by a Service Bond: What Happens If I Leave After Misleading Training?

Hi All, I signed a 3-year service bond with the company (Automobile) for which I work as an Assistant Manager. The bond is on a 100 Rs. stamp paper. It involves providing technical training abroad (at the Parent company) in a specific area. However, upon reaching the actual location, I discovered that it's essentially about supplying manpower to the parent company, or one could say it's operator training in disguise. This training is intended for operators, not managers, as individuals from other countries receiving the same training are all operators, information which the company concealed from me. Now, the issue is that I signed the bond for the stated technical training, not for operator training. I informed the company about this discrepancy, but they are pressuring me to finish the training, threatening to jeopardize my career if I don't comply.

Nonetheless, there is only one month remaining for the training to be completed. My question is, if I leave before or after completing the training, what actions can they take against my career?

1. Can they take legal action against me for recovery?

Continued...

1. What is the process for the refund of the bond amount (Rs 5 lakhs) and how long does it take to resolve issues like this?

2. If they don't file the case, what options do they have? For example, not providing me with a relieving letter, etc.

3. The most crucial aspect is how I can navigate this situation without getting involved in any legal processes. In my field of expertise, individuals are acquainted with each other, and such a situation could leave a negative impression on potential employers. Please suggest a way out.

Thank you.

Sub-Service Bond

Since you have served almost the entire bond period with only one month remaining, it is better for you to complete that one month. In that case, you will be discharged from the bond, and thereafter, even if you leave the service, you need not pay the bond amount if it is linked only for the three-year period. Otherwise, they may create problems with relieving you and probably resort to legal action for the recovery of the bond amount for the breach of the bond.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd.
Mumbai
Tel: [Phone Number Removed For Privacy Reasons]

Doubts Regarding Employer-Employee Bond and Document Collection

I have the following doubts:

1. Is the bond between the employer and employee legally accepted?
2. Does the employer have the right to collect original documents (education certificates, passports, etc.) from the employee?

Regards,
Kumar M.

Sub-service Bond

A bond is a contract under Sec. 2(h) of the Indian Contract Act between the employee and the employer and is enforceable under Sec. 74 of the said Act. It stipulates that the employee agrees to render himself liable to pay a certain sum specified in the bond in case of a breach of any obligation under the bond. As far as the retention of educational certificates is concerned, it is advisable to consult an advocate for proper guidance.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd.
Mumbai.

Sub-service Bond

Since the bond does not involve any transaction of sale or purchase of any property or asset or transfer of any property or asset, I do not think it requires any registration except executing it on a stamped paper of appropriate value. However, a civil lawyer will be in a better position to reply.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
[Phone Number Removed For Privacy Reasons]

Dear Sirs, Thank you for the reply. The bond period is 3 years after completion of the training, and the training period itself is 6 months, during which I have completed 5 months of training. Effectively, 3 years and 1 month remain, and I would not like to serve that company for the remaining period.

Concerns Regarding Bond Documents

Additionally, I have some concerns regarding the bond documents I signed, which I believe are seriously flawed:

1. They made me sign a bond originally intended for a different field of expertise. The first and second pages discuss training in those specified fields, not in my field of expertise.
2. The bond is one-way as it only addresses the company's interests, not the executant's.

Regards

Validity of Service Bonds in India

These types of agreements are not valid in India. You can leave the organization, and the employer cannot take any action against you.

Please go through the attachment.

Regards,

These types of bonds are not valid in a court of law. Section 27 of the Indian Contract Act states that "Every agreement by which any one is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void." It means these types of bonds are void. Secondly, holding someone is a criminal offense under the Criminal Procedure Code for holding someone's property with dishonest intention.

Doubts Regarding Employer-Employee Bonds

I have the following doubts:

1. Is a bond between an employer and an employee legally accepted?
2. Does an employer have the right to collect original documents (education certificates, passports, etc.) from an employee?

Regards,
Kumar.M

I am afraid that the issue has been sidelined. What the law states is that there shall not be a restraint of trade, business, etc., under S.27 of the Contract Act, 1872. However, it is with regard to doing business, trade, etc., but not with regard to an agreement for the recovery of the bond amount.

Further, there are also many judgments which state that reasonable restrictions/conditions on employees in terms of their employment are valid. Even government service also contains such service conditions, and if a probationer or trainee leaves the organization within a stipulated time (say one year to five years), the expenditure incurred and salary paid to him would be recovered.

Enforceability of Employment Bonds and Legal Implications

No doubt, a bond is enforceable in law for the recovery of damages set forth therein for any breach of it by the employee. However, if the bond stipulates that the employee cannot join any other employer even after leaving the service of the company, that is violative of Sec.27 of the Contract Act because the scope of carrying business and trade includes one's right to pursue one's career. This was made clear by a plethora of judgments on the subject since it is squarely in conflict with Sec.27 of the Contract Act and Articles (19) and (21) of the Constitution, which means it is unreasonable.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
[Phone Number Removed For Privacy Reasons]

Response to Recovery Concerns

I concur with you on all points. I just wanted to reply to the recovery portion of the question. As far as his joining another company may not be legally restrained by the present employer, I feel his jumping bond would affect him more than benefit him. The querist explained that in his field, everyone knows each other and where he is employed. Hence, I feel that it would be better for him to convince his current employer to release him by reaching an amicable agreement.

Regards,

Thank you for the reply. I have gone through this document; it talks about the contract validity after the termination of the period or services. However, I am still under the said bond period. If I leave the job, what actions can the company take as they have the legal rights to recover the amount spent on the disputed training (as it was simply a manpower supply observed by me)? Please guide me in this direction.

Regards

Thank you for the reply. I have gone through this document, and it discusses the contract's validity after the termination of the period or services. However, I am still under the said bond period. If I leave the job, what actions can the company take as they have the legal rights to recover the amount spent on the disputed training (as it was simply a manpower supply observed by me)? Please guide me in this direction.

Regards,

Thank you for the reply. I have gone through this document, and it talks about the contract validity after the termination of the period of services. However, I am still under the said bond period. If I leave the job, what actions can the company take as they have the legal rights to recover the amount spent on the disputed training (as it was simply a manpower supply observed by me)? Please guide me in this direction.

Regards,

Thank you all.

As you said, they can recover the money, but I can prove that it was done intentionally. Before leaving India, I had different learning targets. When I went to the actual place and protested to the Indian management regarding this cheating, they drastically reduced the target.

The thing is, it's very difficult to persuade them as they won't let me go because:
1. Everybody knows this issue in the company, and it's about their prestige as well.
2. They have qualified manpower, and no one wants to lose that.

So, if they do not agree, what can I do to get rid of that company? I do not want to serve even a single day there.

Regards

Confrontation and Long-term Goals

Confrontation is not always beneficial. Consider your long-term goals. Do you think any other company would hire an employee who has entered into litigation or filed a case against their previous employer? Similarly, would any company hire an employee who has breached a bond or service condition? How can a new employer trust that you won't do the same to them? Can an employer handle a querulous employee?

So, confrontation or litigation is not a good solution. It will tarnish your credibility and prospects of getting new job opportunities. Even if you hide these things, they will constantly haunt you, knowing that one day they may come to light.

Calm Negotiation

Think calmly. It appears that you are set in your decision not to work for the company. However, have a calm discussion with the company's HR management and try to negotiate an honorable exit. If the company's reputation is also at stake, they may consider an amicable settlement.

All the best.

Thank you for the reply. I will try to resolve this matter amicably first, but in case they become adamant on Rs 5 lakhs for relieving me, what actions can the company take and what can I do? As the breach of service terms is from the company's side.

Regards

I am currently under an employment contract with my company. The contract was made on plain paper, without any stamp paper or company letterhead. Now, if I decide to leave the company, can they take any legal action against me? If anyone wants to view this contract, I can send a scanned copy of it.

Waiting for your expert reviews.

Thanks and regards,
Linesh Rane