Navigating Employment Bonds: When's the Best Time to Secure a 2-Year Agreement?

I would be pleased if you could clarify the following aspects for me.

1. We follow the procedure of a 2-year agreement (bond) for employees, consisting of a 2-month training period, a 6-month probation period, followed by employment confirmation. I request clarification on when we should execute this agreement: on the first day of training, after training and the commencement of the probation period, or after employment confirmation?

If we execute it on the first day of training, it will result in only 16 months of employment as 2 months are allocated for training and the subsequent months for the probation period within the stipulated 6 months.

If we decide to execute it after the completion of the training period, we face the issue of candidates leaving the organization after acquiring the necessary skills.

If we opt to execute it upon employment confirmation (after the probation period), we encounter difficulties as employees may refuse to accept and sign the bond.

Kindly clarify the above and I would be very thankful if someone could provide a few guidelines to make the 2-year agreement procedure clearer.

Regards,
Raj.

What type of training you are imparting is very important. What your employees do during the training period is also crucial. See, these types of bonds do not have legal identity in India, and these agreements do not stand valid when they go to court.

Now, coming to your query, please make the agreement from the date of joining only.

If the 2-year bond is in place, then an employee must complete 2 years in your company because he/she is legally bound. You can do one thing: take original certificates or you can take a cheque equivalent to three months of the employee's salary when he/she joins. Put a condition before them that in case they break the bond, the company will deposit the cheque. I know a bond is not legal, but it's a legal document in which you have indicated a few things; make it franking so no one can deny this. It's not because we are pushing the candidate to stay, but it's a major problem in every company (mostly in the IT sector) that employees leave after learning everything, even though the company takes care of everything.

Dear Sneha,

I appreciate your efforts to help Raj retain the manpower that leaves after training, but we must adhere to the laws of the land. The suggestions you have provided are not legal. Taking someone's original certificate or cheque with dishonest intentions is a criminal offense under Section 403 of the Indian Penal Code, punishable by up to 2 years of imprisonment. Therefore, we should not resort to illegal practices.

In my view, after receiving training, individuals should be compensated at their market value. However, we often do not pay them their worth, leading them to leave the company. In our previous company, we hired many graduate engineers on stipends, and almost all of them left even after completing six months. They learned the techniques and secured positions with our competitors at higher salaries, so it is imperative that we pay them their market value.

Hello Raj, if there is a two-year bond in place, employees are legally obligated to complete two years with the company. One approach could be to retain original certificates or obtain a cheque equivalent to three months' salary of the employee upon joining. A condition could be set that in case of bond breach, the company will cash the cheque. While bonds may not be legally enforceable, when formalized properly, they serve as a legal document with specified terms. By making it official, compliance becomes non-negotiable.

This is not about forcing candidates to stay but addressing a common issue in many companies, particularly in IT, where employees depart after acquiring skills, despite the company's investments in their development.

Kind regards

Might be you're right, but one thing I definitely would like to say... Dishonest intention! Not at all; it sounds like we are exploiting employees. Rather, it's just a mutual agreement between the company and the employee. In this, there is no pressure on the employee to sign it. If not, then why would he/she sign it? It's clear that both should have to complete their commitment. If an employee does not fulfill their commitment, how can he/she expect the company to understand their situation?

And one very pathetic truth is that even if you provide a salary as per the market rate and various welfare facilities, he/she will still go.

The basic premise of this agreement or bond is that there is a problem of attrition which an employer is trying to address. Try to take the right message from what Mr. Malik has said.

Many times we wrongly presume that:

1. A king can't commit a mistake.
2. That a poor job applicant is at the receiving end, he is really needy, and the employer is obliging him by offering a job.
3. So the employer is free to play any trick, whether illegal or unethical.
4. That mostly job seekers are idiots, lack minimum IQ, so they should not or won't decipher the employer's dirty motives.

Good employers who want to achieve in life never forget that they also need a good employee to sustain their business as much as a prospective employee needs a job. If this employer succeeds in motivating this employee to stay with him in this journey of growth for both of them, both parties gain. This can be achieved by the right selection, right salary/wages, the right work environment, mutual respect and adjustment with each other, honest performance appraisals, coaching, and counseling, etc.

A non-confident, oversmart(?) employer tries to play oversmart tricks rather than addressing real issues like bonds. When it fails, they resort to taking documents, and if that fails, asking for an advance cheque. This all becomes a vicious cycle. In this process, the real cause of the problem is never addressed while employees keep leaving as they understand this malicious game, leading to a more grave problem.

I am not ruling out a situation where a business is not big and can't sustain highly paid employees. In this situation too, one needs to first redefine the kind of employee they want to recruit and the expectations from him. You cannot then have the best of employees by paying peanuts because if you pay peanuts, you will only get monkeys. Then it's the employer's choice whether they want to chain this monkey in the neck or leg with bonds, etc., or invest in his skills and create the right motivation to stay.