Is Breaking a 2-Year Job Bond Risky? Seeking Advice on Legal and Financial Implications

Recently, I joined a company called Bebo Technologies in Chandigarh. During joining, I signed a 2-year bond on stamped paper. The next day, I asked my HR to provide me with a photocopy of the bond, but she refused. I want to know if the bond holds any importance if I break it, as it states that the person has to pay either 6 months' salary or 1 lakh rupees, whichever is higher. I am given 10,000 Rs per month, which is very low, and the work they assign is quite a lot. The company is also an active NASSCOM member. I want to ask if breaking the bond will put me in a risky situation. Please reply as soon as possible.

If you are a fresher and a company has taken you on as a trainee and has invested in your training, then the management has every right to take legal action against you.

Dear Members, please refrain from using your company's name on the blog. Let's be professional. Answering your question:

1. Yes, you can request a copy of the bond you signed. Provide a written letter addressed to the GM/MD/HR.
2. If you pay the money you agreed to when signing the bond, there should be no issues. However, if you abscond from the company, they may blacklist you, which could affect your career.

"Why do employees agree to such bonds is a wonder. What if the company terminates during the bond service period? Are they going to pay you for the entire balance service?"

Regards,
Ukmitra

Considerations Before Breaking a Bond

Look before you leap. Having leapt, it is no use complaining that you are caught in deep waters. At least now, be discreet in making proper decisions. Either you complete the two-year bond period or be willing to pay the bond amount, which you did not mention. If you break it, you not only render yourself liable for the bond amount, which is enforceable in court. You can ask for a copy of the bond for your records.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

I have a question regarding this. A few have given answers stating that the bond is not legal. In that case, I would like to know one thing: there are bonds in big companies like TATA and Infosys. Does this mean that they are running any illegal policy?

Understanding Bonded Labor and Legal Exits

Let us familiarize ourselves with one concept: all forms of 'bonded' labor are illegal. It is technically not a bond; it's a financial recovery agreement between you and the employer to extract the training fees and investment made. You are playing your part by staying in the company.

In a situation where you are unwell or meet with an accident that makes you mentally or physically unfit to take up the job, do you think the bond will hold any value? This is a common case with BPO employees, where many do not adjust to night shifts. The point is, if you have adequate grounds, you can legally exit the organization.

I assume you are physically or mentally unwell to do your job. The best approach is to get hold of a lawyer, attach medical certificates, and send your organization an exit notice. Most companies do not have a legal department and don't want to get into legal hassle as it damages reputation (also, it's very expensive, as corporate lawyers charge a lot).

I really don't understand the concept of holding people back—do you really want a team full of people who hate their jobs and spread bad vibes in the company? Not me. What if they stop performing? In this case, will you still pay them for wasting time and making errors?

Legal Implications of Breaking an Employment Bond

Whether that's legal or not is a separate question, but your affirmation itself proves that you've signed the agreement when you were mentally and physically fit, which means that the company reserves the right to claim damages if you go against the agreement.

At this juncture of your career, do you think it would be logical to get into legal fights? It would not only affect the company's reputation—which you are least concerned about—but will also hamper your career to a great extent. The best way is to stick to the agreement and complete your prefixed tenure or be ready to pay the penalty.

Seek Professional Guidance

Remember—ideally, you must seek guidance from a labor consultant or lawyer before signing and agreeing to such bonds. There are ways to get out of it but not without cost (monetary or otherwise).

Regards,
Hiral

Hi Amit, During my HR days, I was informed by our professors that service agreements are legally not binding to the employee. The Labor Act has clearly mentioned that employers cannot exploit employees with service agreements and can't recover the cost of the bond. However, note that this is for untrained/unskilled laborers. For employees who are given training, they are liable to pay the cost of training that the company has incurred on you, as they would not have your service which would give them leverage on it. So, in case you are breaking the bond, you are liable to pay the training cost. The details need to be smartly drawn. Regards, Ankita

Hi Sneha,

It is very correct that any form of bonded labor is illegal in India. Signing a service contract/agreement doesn't give any organization a bad impression. One needs to understand the fact that the only reason companies make you sign such a bond is so that employees should take the work seriously. It is to reduce the attrition rate only for the sake of money issues.

I have known a few people personally who have taken up employment in a firm only because the firm was giving training in an area, which otherwise would have cost them a lot. Here, instead, they were getting paid to learn. After the training period, these people left the job. Since the firm was a smaller one, they had not gone into the service agreement thing. But imagine a reputed organization that employs and trains thousands of employees annually, and they leave the company without generating revenues for them.

There are many companies (one of which you mentioned) that do make employees sign service contracts but do not recover the amount when they resign and relieve them happily. They do not make a fuss about the legal liability of the bond. They might be asking for a training cost which is meager compared to the bond amount quoted. Also, they charge based on the amount they've already recovered from the employee in their job. So if you are leaving this organization after the company recovers the cost of training you, it won't charge you a penny.

Hope it cleared your doubt.

Regards,
Ankita

Have you received any training against that bond? If not, you need not worry. I am answering Sneha's question. Tata, Infosys, or any other big giants do provide training against those bonds.

Clarification on Bond Types

1. Do not confuse yourself between the Bonded Labour System, which is illegal in India, and the valid contract bond, which is executed validly in lieu of any training provided to the employee by the employer.

2. The purpose of this contract bond is to recover the cost of such training, which the employer incurred on the training of an employee, as the same is an investment from the employer to generate revenue, which he is validly and legally entitled to.

I am mentioning this link; please read the experience of Rekha Bhanu on page 6 of the thread and decide for yourself. https://www.citehr.com/423676-legali...anisation.html

Regards,