Understanding Employment Bonds in IT: Are They Legal and Fair for Employees?

Types of Employment Bonds

Please provide me with information about the following types of employment bonds:

• Retention Deposit (e.g., if the salary is 10,000 per month, then the company deducts 3,000 per month as a retention deposit).
• Taking Cheque from Employee (e.g., 25,000 Cheque as a retention deposit).
• Taking the original Mark sheet.

Points of Reference

Please explain with reference to the following points:
a) Legal or Not.
b) Employee Point of View.
c) Employer Point of View.

Note: Please provide supporting documents with your personal views if possible.

Regards,
Sneha Nair

Legal Validity of Employment Bonds

All three points lack legal validity. These are formulated by companies under the guise of retention bonuses, but in reality, they are used to harass employees when they are leaving.

Regards

Yes, there are no legal rules for these things. Actually speaking, it's not allowed to take the original mark sheet from the employees. However, recently, this practice has increased in the IT industry, especially in newly set up IT companies.

As we all know, the IT industry has a very high attrition ratio. To reduce that, companies are using this as a tool. Money is something that employees would still think of leaving, but not the original mark sheets and certificates.

Thank you for the reply, but I need more information on the following:

1. Retention Deposit
- For example, if the salary is 10,000 per month, then the company deducts 3,000 per month as a retention deposit.

2. Taking Cheque from Employee
- For example, a 25,000 cheque as a retention deposit.

Can anyone provide supporting documents?

Regards,
Sneha Nair

I'm aware of one company that takes a retention deposit, which deducts a portion of the employee's salary. It's not referred to as a retention bonus, but it actually serves as a deterrent because employees were receiving training and then leaving in the middle of projects. The owner was personally training the employees, which also meant dedicating her business hours to train and groom them. The deducted portion of the salary is paid as soon as the employee completes his/her probation period, and that process is smooth. Employees are informed about this clause during the interview phase, and it is also mentioned in their appointment letter. However, the final decision always rests with them.

Regarding Aditi's mention of employee harassment, I have not heard of any such incidents or negative feelings among employees so far. The company I am referring to is one of the leading architectural firms in my city and has a small team.

Thank you.

I agree with s_shalu. She is absolutely right. The first thing is that there is no legality regarding your issues, but during the time of appointment, if it is clearly mentioned in your appointment letter about any kind of retention bonus, then there is no issue as the company shows transparency about its terms & conditions from day one. So, some of the above views that this tool is only used to harass are totally wrong, as the companies are bound to pay every due at the time of full & finals. However, submitting your original documents should be avoided.

Regards,
Ved Parkash Bawa
A.M P&A
Neolite ZKW Lightings Pvt. Ltd.
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