Is My Employment Bond Still Legal If My Company Is Closing Soon? What Should I Do?

I have signed an employment bond with a company for 3 years, but the company has informed us that the unit will be closed in March, and my bond is valid until December 2013. When I asked them about leaving the company before March, they instructed me to stay until the 31st of March. They mentioned that after the closure of the company, I can move to another company; otherwise, I would have to pay Rs 7 lakh to leave for another company. Is this statement provided by the company legal? Please suggest what I should do.

It is not feasible to secure a job immediately after the 31st of March. I requested the company to allow me at least 6 months to search for a job and proposed leaving four months early, in the last week of November. However, the company did not agree to this.

I have signed a one-sided service bond, and the company has been violating its policies since the beginning of my employment until now.

Yours is indeed a weird situation in this forum. Let's look at the situation from different angles.

1. The company does seem to care (at least to the extent it can) about the employees (as you mentioned)—else they wouldn't have given the advance notice of ~6 months. I have seen companies keeping the 'facade' on until the last minute—that all's well with the company. A recent classic case could be the KFA case currently in the news. However, you do have a point since they seem to be hesitating to release employees earlier—there could be reasons beyond their control.

2. How's your situation different from, let's say, if you were to resign today and have to serve a notice period of 3 months? Wouldn't you tell the prospective employer that your joining time would be 3 months in the interview process itself?

3. How would it serve your purpose now if you wish to focus on the legality or violation of the policy/bond? Coming to the realistic options you have in hand, I suggest you begin trying for new jobs in Nov/Dec/Jan and clearly mention in the interviews that you will be able to join on 1 April 2013. Since you say you were given the notice—I take it that it is a 'written' notice—about the company closure, you can use it to handle any queries about whether you will really join the prospective employer if selected.

And, one more thing. I suggest taking all the appreciation/recommendation letters from your superiors/bosses/company before the company closes down for good. It could be tough to get them later.

All the best.

Regards,
TS

Employment Bond and Company Closure

I have signed an employment bond with a company for 3 years. However, the company has notified us that the unit will be closed in March, and my bond validity is until December 2013. When I asked them about leaving the company before March, they told me to stay until the 31st of March. After the closure of the company, I can move to another company; otherwise, I would have to pay Rs 7 lakh to leave for another company. Is this statement given by the company legal? Please suggest what to do.

Also, it is not possible to secure a job in one day after the 31st of March. At the very least, the company should give me 6 months to search for a job. I have asked the company to allow me to leave four months early, i.e., in the last week of November, but the company did not accept this request.

I have signed a one-sided service bond. The company has also been violating its policies from the start of my joining until now.

General Understanding of Service Bonds

1. Service bonds are not valid in India.
2. If a service bond is broken, the employer can only recover the training costs from the employee.

Addressing Your Questions

1. Since the company unit is closing down soon, the bond should no longer be applicable. If there is no unit operating where you were hired and located, it is unclear how they can retain you.
2. The company likely provided advance notice of the closure so that you all could be well-informed and use the time to search for a new job. You can inform them that you can join from the 1st of April since the company is closing. Considering the timeline, it is reasonable to serve a 45-day notice (as job hunting takes time), which is acceptable. It would be better to search for a job before the unit closes and you are left unemployed.
3. Regarding the recovery of Rs. 7 lakh, as mentioned earlier, they can only recover the amount equivalent to the training costs incurred. They must deduct any recovery amount based on the period you have worked after training. For example, if you received training in the first 6 months of your employment and have worked for the remaining 1.5 years, they should exclude the contribution from the bond amount.

I would recommend not escalating the situation with your company, especially since it is already closing down. Instead, consider supporting them during this challenging time. You are likely to find alternative employment in the meantime.

I hope this information is helpful. Best of luck to you :)