Employment Bonds in India: How to Handle a Company Demanding a Bond Payment?

Hi, I am working in a private company named Smartplay India Pvt. Ltd. for 1 year and 3 months. I joined as a fresher in this company. Initially, the company did not provide me with any information about the employment agreement. After a few months, the company introduced a bond letter requiring a commitment to work for a minimum of 2 years, or else a bond amount of 3 lakh needs to be submitted to the company.

The current company I am working for is a service-based company. Now, I am looking to transition to a product company. I have already submitted my resignation, but the company is insisting on the bond amount. The situation is quite critical, and I would appreciate a prompt response.

Regards,
Santosh

Bonds are valid only if formal training is provided to the employee, and if that wasn't the case (assuming you can prove so), you need not worry. Secondly, did you sign the agreement of 2 years with a 3 lakh penalty when the same was presented to you after a few months of your employment? Probably if the bond was backdated, then it might create a problem. You need to mention these things to receive a proper response.

Regards,
Hiral

Thank you for the reply. I tried to attach the document here, but it is not getting uploaded. The company didn't provide any formal training. I joined the company in July 2011, and they gave me a bond letter later for 2 months. After receiving it, I took a few days. Later, I signed it in November 2011 with the date on the bond as the date of joining - 22-07-2011 (as mentioned in the bond). If you think everything is fine, I can send you the bond letter to your personal email.

Regards,
Santosh K.M.

Just check the file extension. Valid file extensions are bmp, csv, doc, docx, gif, jpe, jpeg, jpg, pages, pdf, png, pps, ppt, pptx, psd, rar, rtf, txt, xls, zip, zipx. Sending to my personal ID is not an issue, but if you try attaching here, you can receive proper responses from other members too. My email address is [Email Removed For Privacy Reasons].

From the details mentioned by you, it seems that you are obligated to complete the tenure in the company regardless, as the bond was backdated and mutually agreed upon and signed.

Regards,
Hiral

The date of signing was 11-11-2011 under the sign, but the bond starting date was 22 July 2011. The company didn't inform me while joining. Is this a fault on the company's side, right?

Regards,
Santosh K.M.

Bonds are valid in India. A bond is created with the view of benefiting both parties. The type of bond you are mentioning is primarily for retention purposes.

Purpose of Bonds in IT Companies

In most IT companies, bonds are signed because fresh candidates are exposed to significant software platforms, and extensive training is provided to help them reach a minimum standard. This training not only prepares candidates to work on software but also increases their market value, making them attractive to other software companies once trained. The benefit to the company is that, after providing training, they want to ensure that freshers do not leave immediately. Hence, bonds are created, and they are valid. Training sessions are recorded in this case.

It seems your case is not similar to the above, hence you can always challenge the company.

Regards

Yes, Santosh, that's the company's fault. If you have a copy of the bond, you can very well prove so. But my point was that you signed the bond in November while knowing that the date was misleading. You should not have done that.

Regards,
Hiral

Regarding the training being given to you, please note that it may not be difficult for any unscrupulous company to "show/prove" that training was given—in which case, the onus to prove that training wasn't given falls on you. However, irrespective of whether you were given any training or not, the very fact that the bond was effective from a backdate would make it legally untenable. I suggest waiting for the legal members to respond.

It would be good if you could try to attach the bond again—bearing in mind the inputs given by Hiral in this regard.

Regards,
TS

I agree with you; it is a retention policy of the company. Yes, the Company can also suggest that instead of training, we can put you on a real project. I was selected for the real project a few days after joining, but before signing the bond, I was forced to sign the bond in the middle of the project.

Now, from home, I am able to upload the Agreement. (I tried doing the same in the office, but the upload was blocked.)

Also, I have heard that for the agreement, the stamp paper amount should be Rs.100/-. Is it true? In my case, the stamp paper used is Rs.2/- (page no.1 in the attachment).

I also consulted a lawyer, and he mentioned that "stamp papers should be Rs.100/- for agreements, and now the agreement with the company is done on the stamp paper of Rs.2/-, making it INVALID."

Previously, a person joined our company, signed the bond, and left after 20 days. Upon leaving, she questioned the bond as it should have been on Rs.100/- stamp paper. However, she did not pay any amount to the company, and everything was smoothly sorted out. I also spoke to this person, and she shared the same information as the lawyer.

In my case, I need to collect the Experience letter from the company to join a new company. I am in a dilemma about how to proceed now since I believe the Agreement is INVALID.

Regards,
Santosh K.M.

Kindly find the attached file that can help you understand employment bond laws in India.

Regards,
Sourabh Verma

The agreement is binding on you. You may have signed the agreement on a later date, but the date on which the agreement became enforceable is your date of joining, which is mentioned in the agreement.

However, I do not find any signature of the company representative on the document, whereas you should be in possession of the copy duly signed by the company representative. I also find that the document is not signed by any surety as mentioned in the agreement. Does the company copy have the sign of the surety?

Does your appointment/offer letter mention any bond?

If the answer to question 2, i.e., does the company have the agreement copy signed by both the parties, i.e., you and the company representative, is NO, then the agreement stands to be null and void. However, if the company representative mentioned in the agreement is still in service, the company can get the agreement signed by him.

If there is no mention of bond in your appointment letter/offer letter and there is no sign of surety on the bond copy of the company, then you can very well take a stand that the bond was forced upon you, and there were threats of termination of services if you did not sign the bond.

The information that the "company had not informed you about the bond at the time of recruitment or joining" cannot be substantiated, as it will be only verbal communication, and the company will take a stand that the information was given.

Hope this helps in making a decision.

Regards,
Preetam Deshpande

Currently, the company has a copy of the bond signed by me and my dad (as surety). I have seen the bond letter which the company currently possesses. Until now, no one from the company has signed it, which should have been done, right?

When the company offered me the position, they sent me the offer letter (including CTC). In one place, they mentioned the employee agreement. However, this was not communicated to me verbally or through email during my joining or on the day of joining.

It is true that "after I joined, after a few days, the bond was forced upon me, and there were threats of termination of services if I did not sign the bond."

Regards,
Santosh K.M.