Is It Legal to Keep Employees' Original Documents? Seeking Clarity on HR Practices

I have joined a new company where I am supposed to handle HR activities. Our company is a marketing firm with around 18-20 employees, facing a retention problem. While preparing a format for the appointment letter, the employer has asked to collect all original documents from employees and retain them for at least one year with the company, along with a notice period of two months. Is the practice of keeping original documents legal? I have checked various discussions—some claim it is legal, while others say it is not. Please guide me. If it is legal, kindly provide me with the receipt format for original documents.

Regards

Serious Issue of Document Withholding

This is a very serious issue, and I have personally seen family members affected by this. The company withheld documents to create problems with moving to another job.

Withholding documents, of course, CANNOT, under any circumstances, be legal—unless you are a government organization with the authority to do something like this to enact security or other enforcements on employees. This is essentially holding employees to ransom with no way out—even in service bonds, there are termination clauses where the employee can pay their way out. This is possibly a criminal offense if it can be proven in a court of law. Please allow some senior members to comment on this. However, as with service bonds, this possibly falls within the same ambit.

Discussion on the Legality of Bonds

Now, there was an interesting discussion about the legality of bonds: https://www.citehr.com/162292-legal-...on-policy.html. Some said that it was theoretically possible to hold people to ransom for some bond they signed. Ankita, a senior member, suggested this in this post: https://www.citehr.com/433978-legal-...ml#post2014674.

I would suggest that your employer looks for possible reasons why employees are leaving rather than trying to create abusive practices. I hope some of our senior members will be able to shed more light on this issue.

Thank you for your advice. However, a number of companies do practice it in return for a receipt. Is there any law to prove that it's illegal? I am sure my boss is not keen on doing anything illegal. All I have to do is show solid proof to stop this policy from being implemented.

Verification of Original Documents

Remember, taking original documents for verification purposes, after giving a formal receipt, may not constitute bad practice provided the originals are returned within 7-10 days. However, withholding original documents with the intent of denying employees an exit option is a serious matter that can put an employer in trouble.

Your claim that a number of companies do this and offer a receipt in return is not a valid argument. You may not be aware that they return the original documents within a week. CHR, the Super Moderator, has guided you adequately. It may be in your best interest to follow his advice.

Regards

I worked for 30 years in government organizations. I am not aware of any case where original documents were taken into custody. If you return the documents as and when the employee demands it, it is okay. Otherwise, it is illegal as it affects individual freedom and it will be misused to hold the employee in ransom.

Regards,
[Phone Number Removed For Privacy Reasons]

Illegal Practice of Withholding Employee Certificates

It is obviously illegal to artificially bond employees by withholding certificates. Asian Heart Institute faced a lot of flak from nurses for this practice, and they finally withdrew it. In a PIL, somewhere in July 2011, the Delhi High Court came down heavily on the practice of withholding certificates and bonding nurses. Subsequently, even the Indian Nursing Council specifically banned this practice.

As a professional, you may help your organization find out reasons for attrition and address them rather than help them create taller artificial and illegal walls! In any case, they will not work. If they do, you will be saddled with an unwilling workforce!

You can Google the High Court judgment. I was unable to paste the link.

Cheers

I thought CHR's response and further advice from other members on this topic have been brilliant.

Addressing Attrition Issues

Amrita, if your employer is serious about addressing attrition, they should commission an independent audit of the company's policies and HR environment. The very idea that holding original papers is a method to deal with attrition is illustrative of bullying. Today's employees quickly sense negativity at the senior management level and tend to leave. It is quite probable that people are leaving due to a poor work environment, lack of security, low compensation, or a combination of these factors.

Legal Implications of Withholding Documents

It is clear that withholding original papers is illegal, creating an "artificial bond." By resorting to this practice, you will likely drive away high-potential human resources, as no competent individual would choose to join such circumstances. Your employer must focus on the mid- and long-term outlook and develop a strategy to enhance employee retention in a positive work environment.

Ensuring Compliance with HR Policies

I hasten to add that in case such policies are thrust upon you, make sure you have a clear written instruction from your employer in this regard before executing it. Do not even draft a policy like this without a written instruction—by email or memo. You don't want to get caught in a courtroom battle between an employee and your company where your employer would simply state that HR is responsible for the policy.

Regards

You can take the certificates from employees for verification purposes only, and the same should be returned to the employee within a week's time. If the employer wants to withhold the certificates, it is illegal.

Regards,
Sivakumar

It's illegal to retain your employees' original certificates. (Literally, you are locking your employee with a heavy chain and preventing them from moving anywhere). This is worse than slavery because if they manage to escape from that particular environment, they can be free. However, by holding the original certificates, the employer is curbing the rights of the employee. If I am not mistaken, this is an offense that comes with a penalty from the court, along with imprisonment based on the case filed.

I clearly understand your situation, as I faced a similar situation in the early days of my career as an HR professional. It was my CEO who insisted on this practice, and the system was already in place when I joined the company. I told them clearly that I would never hand over my original certificates beyond 7 working days with them. At the time of hiring me, they were okay with that only for me. But when I had to hire people, they told me that I should collect the originals. Initially, I explained the consequences, but my CEO was not ready to listen. Finally, I said I would collect all the originals on his behalf, and he would have to sign a document stating that the listed documents would be kept in safe custody by the company and that he would take full responsibility for the original documents. After a few days, he agreed, and we did not have to collect originals. I ensured that all the originals collected earlier were returned to the concerned employees later.

As an HR professional, you need to uphold ethics and ensure nothing unethical happens when you are part of the system.

Optional Ways to Retain Sales Personnel

Use half-yearly or annual bonuses, variable pay, or commission on sales. This will work well in retaining candidates.

Regards.

Legal Position on Retaining Employee Documents

Here is the legal position regarding keeping the original documents of employees. It is totally illegal and falls under the category of the Bonded Labour System, which is illegal in India and punishable with a jail term or fine, or both. Please understand that to retrieve those documents from an employer, the employee needs to lodge an FIR with the police. After which, the police will arrest the CEO or the person in charge for keeping the documents of an employee unlawfully (unlawful confinement). Even if the employer gets bail, they will have to face charges which, if proved, may land them in jail.

My opinion to you would be to discontinue this practice without wasting any further time and return all the documents to all the employees.

I am surprised that some employers give a receipt against the documents so unlawfully detained. It is like a kidnapper giving you a receipt for keeping you unlawfully detained.

Regards

Dear Friends,

The Practice of Withholding Documents in the IT Industry

This practice of withholding documents during the initial bond period is quite common in the IT industry. Many companies that recruit freshers and then train them hold their documents unless they complete two years of service. It may seem harsh and may cause lots of problems for the employee, but just think honestly, a fresh graduate with a BE degree does not have much knowledge of work, and the company that employs him/her as a fresher has to train the person. I have come across a few companies where they impart real classroom training for 6 months, and that too without any work; then, in the next 6 months, they provide on-the-job training where productivity is just negligible. During this period, they provide a stipend of Rs. 20,000 per month, accommodation, along with free lunch, and some other benefits.

Once the training is finished, they pay the full market salary to the employee. However, the employee has to work for at least one/two years, and during this period, the company holds the certificates in their custody. An employee can leave at will but has to pay the training cost to the company, which is mentioned in the offer letter itself. After two years, the employee can get his papers back but still has to serve the notice period in case of resignation or buy out the notice period.

Legal and Moral Considerations

Dear friends, you can't call this an illegal act as everything is done as per the contract that was offered to the employee with an option to accept or refuse. Once a person accepts the terms and conditions, he has to follow them. The companies that hold documents are holding them legally and as per the contract where both parties are signatories, and proper consideration is mentioned. The documents are being kept as security.

The practice of holding original certificates is even used by most professional colleges. I remember that long back, people employed by private banks and companies had to provide some cash security. So, when the law does not prohibit the bond period, how will it object to holding documents? If the Government of India can recover bond period salary/expenditure from Aam Aadmi Party President Mr. Arvind Kejriwal, which law can stop the same action of companies against an ordinary individual?

So legally, I am sure there is no problem, although on moral grounds, it may be something unwanted. But again, dear, everyone has the right to protect their interests. So if your company wishes to hold documents, ask them to get a proper offer letter drafted clearly mentioning all the terms and conditions applicable to new employees, and then they can hold the documents legally.

Regards.

Dear Navneet,

If an employer provides training to an employee to enhance their skill level, they may ask the employee to sign a bond to serve a specific period, which would be legal and enforceable. If the employee does not wish to fulfill the bond period, they have to reimburse the training costs to the employer, and if they fail to do so, the amount can be recovered through legal means. However, detaining an employee's documents and coercing them to serve the bond period is illegal. An employer cannot compel any employee to serve them, although the employer is entitled to receive the bond amount.

Whether one agrees or not, keeping someone's documents with the intention of making them work for you falls under forced labor, which is illegal and punishable by law. There are legal ways to handle such situations, and resorting to illegal methods should be avoided.

Also, for your information, Mr. Kejriwal returned a loan he had taken from the government, not the bond amount. Every individual has their legal rights, which are as important as those of any VIP.

Thank you.

Discussion on Employee Document Retention Practices

What Navneet has written sounds convincing, but let his contention be debated by legal experts so that others can benefit from the outcome of this discussion.

I, as an individual, can appreciate that IT companies spend a lot of funds on training freshers with a view to utilizing trained people for the company's business. If, after training, someone suddenly quits by breaking the agreement, the company has no means to trace the individual and recover the cost of training. Withholding the original certificates can at least ensure that an employee does not abscond. His/her certificates shall be returned immediately as the dues are settled as per the employment contract. To legal experts, this argument may not be convincing, but would they have some solution to offer to the affected companies who may be facing such problems repeatedly?

Surely, their solution cannot be to file an FIR, engage an advocate, and carry on with the legal battle. Such an approach may sound one-sided, that is employee-focused. How does the law protect the interests of the employer?

I have provided the solution in the post above yours. Everybody has rights; employers also have the right to have a bond signed if they have spent a considerable amount on an employee's training, and to enforce it against the employee if he does not honor the bond.

Hi Amrita, Which documents are you talking about? Educational qualification certificates? Birth/marriage certificates? Passport? Property documents? Driving license? Aadhar cards?

The employer companies DO NOT have any authority to withhold any of these documents, even by giving back written receipts. Actually, companies do not have the authority to give written receipts for these documents.

Examples:

• The educational qualification certificates/passports can be taken by some country consulates for visa validation purposes only, based on power given to them by the foreign ministry.

• The driving license can be taken by an RTO officer, by the power given to him by RTO rules.

• The passports can be taken by police authorities by power given to them by the law enforcement department.

• The property documents can be taken by other financial institutes against a loan (mortgage only!), by the power given by RBI rules.

• Certificates issued by municipal corporations like birth certificates are given in multiple copies & you can ask for the original to be kept with the company forever; but this will not solve your problems.. ☺

• Identity documents like Aadhar cards/PAN Cards/Ration cards cannot be withheld by any organization, for whatsoever reason.

Which of these powers does your company exercise?

It is not only against the laws but also a very bad practice towards good human resource management. Please do not fall for such temptations in the rush of improving retention.

I am sure you will come up with better reasoning for poor retention; & subsequently better plans to resolve it properly.

Best Regards, Amod.

I think I am not an expert in tracing an absconded employee. But as far as the solution on how to enforce the bond is concerned, I may tell you, and believe me, there are no shortcuts to that. Keeping the documents of an employee is not an option. I may tell you this by virtue of my day-to-day practice of Labor Laws itself.

Steps to Enforce a Bond Against an Absconded Employee

In case you want to enforce the bond against any employee who has absconded, first, you have to send a demand letter to him at the address available with the management, asking him to report to duty and honor the bond. If he does not respond, you may seek help from an advocate to file a recovery suit against such an employee. Do not worry about the expenses incurred on the lawyer, as you may recover them from the opposing party. However, if you resort to illegal means, that would not only weaken your position but also land you in legal trouble. We cannot advise anybody to engage in any illegal acts.

Please feel free to revert in case of any specific doubt.

Regards

Please note, Mr. Tyagi, that in my earlier comments, I had expressed that holding the documents is illegal. Therefore, there are no issues on this subject as it requires legal compliance. My concern was the management of an absconding employee, and you have provided your views, which are respected. Thank you.

Holding original certificates is a very bad practice, unethical, and unprofessional. It is void ab initio.

If an employer provides training to an employee to enhance their skill level, they may ask the employee to sign a bond to serve for a certain period, which would be legal and enforceable. If the employee does not wish to serve the bond period, they have to pay for the training costs to the employer. If they fail to pay, the amount can be recovered through the court. However, detaining the employee's documents and compelling them to serve the bond period is illegal. An employer cannot force an employee to serve them, although they are entitled to receive the bond amount.

Whether you like it or not, withholding someone's documents with the intention of making them work for you constitutes forced labor, which is illegal and punishable by law. There are legal ways to handle such situations, and we should not resort to illegal practices.

Also, for your information, Mr. Kejriwal returned a loan he took from the government, not the bond amount. Every individual has legal rights that are as important as those of any VIP.

Industry Practices and Legal Considerations

Mr. Tyagi, it appears that you are an advocate by profession, but it is not clear if you have actual industry experience and at what levels. Holding educational qualification certificates as security is a well-accepted practice prevalent in the Indian industry for many years. I would like to inform you that this practice is generally followed for freshers and employees who have just started their careers. In any case, this forum is for expressing opinions, and there was no need to use harsh words like "half knowledge." I believe being an advocate, you understand the validity and enforceability of contracts. So, please understand that there is no law in India that prohibits an employer from entering into conditional employment contracts. Can you mention a law that prohibits an employer from seeking any form of surety or security from an employee? I doubt you can find any such law; try to look for any Supreme Court rulings or Privy Council rulings on this subject. I am confident there are none, which is why the practice of holding certificates is followed by some top Indian IT companies. I cannot disclose their names on record as it would be against the law, but if you do some research, you will find many such examples.

Please review the information and educate yourself. If you find anything positive, please share it in this forum so that more people can benefit. However, please refrain from replying to any comments by name.

Best wishes.

Things can get a little out of hand when such important matters are discussed. I am sure he didn't mean to offend you and sees you as a well-respected professional. I am editing the line which seems a bit provoking.

Finding Relevant Cases

Okay, let's try to find any relevant cases related to such issues. I couldn't really find anything online, and I wonder if any employer was ever taken to court over such an issue.

Employer's Rights and Withholding Documents

I think it's a valid argument for the employers who withhold documents because they provide training. Let me explain the incident where I have seen this happen. This was at a fairly well-known CA firm. The person who was affected was a star performer during her internship. She got selected to join EY, and the previous employer held her hostage for 2 months. She had no pending projects and had even received commendation for her previous work.

Now, these individuals who come in for internships or as freshers are usually somewhat trained (which is why the employer chose them) but require process knowledge. Perhaps in some cases, the employer has to train a complete novice to a level of competence to work for them. I highly doubt anyone is doing that.

Understanding the Perspective of Freshers

I think this somewhat boils down to the understanding of what goes on in the minds of these freshers. Many times they realize the job is not exactly their calling, or they get a better offer.

The question is - is the employer within his rights to hold back documents and enslave the employee against his or her will to make them work just because they feel they have earned the right from the money they spent on the process training?

The question your boss has asked you to hold documents for 1 year + notice period has two aspects: one is legal, and the other is ethical. Many of our friends have given opinions, and many of them say it's illegal. Here's what I feel: some may think all unethical/immoral things are illegal, but that's not the case. Holding documents in various circumstances has legal validity and can't be challenged in any court of law. I am sure that's why no one has challenged it in any Indian Superior Court (High Court or Supreme Court).

Legal and Ethical Aspects of Holding Documents

The other aspect, as said by our Super Moderator (CHR), is, "The question is - is the employer within his rights to hold back documents and enslave the employee against his/her will to make them work just because they feel they have earned the right from the money they spent on the process training?"

You can say the Law has nothing to say against the holding of documents, but one thing is there: why did this practice of holding documents start? Let me give you an example. An IT company recruits freshers (B.Tech / B.E) from hundreds of colleges, with NCR having over 150 engineering colleges. Those with degrees have some basic IT/CS knowledge but are not equipped to perform or provide any output. Companies have to train them in real terms, and most provide 6 months to 1 year of training to groom these graduates into real engineers. Rough estimates suggest it costs at least Rs. 3 to 5 lakh to train a person properly. Once a person is an expert, their worth is 5 to 7 lakh per annum, but here they are receiving around Rs. 3.5 lakh per annum. Imagine if the company lets them go, as many may wish, there will be a net loss of 3 to 5 lakh per employee for the employer. So, is this moral or immoral?

In the case of Amrita, I don't believe her company is providing any such training to employees, and their only intention seems to be to hold employees. So, we can term their actions as immoral, but still, the law won't help any of those employees if the contract/offer letter is drafted properly; you can't take the company to court.

I would also like to mention that even though holding documents may be unethical or immoral, it is not illegal in India, the US, or Europe, let alone in the Middle East, China, or Russia.

With best wishes.

Dear NavneetSarin,

Analyzing Employee Training Costs and Retention Strategies

Let's look at your calculations first: In your view, a company spends 3-5 lakhs on an employee for training. Also, it pays the same employee 3-5 lakhs as remuneration. Does that mean the gross profit earned by the company from the services of that employee in the first whole year is zero?

Does it mean that the company provides a year full of dedicated training, and even the on-job training is not worth a rupee?

Also, after the training year, if the employee is worth 5-7 lakhs, why does the company not raise him to that level then?

The answer is, the company does not spend even 1 lakh on training when you compensate it with the profits earned by the employee in that year. These factors are considered when deriving the "training curve" for the new employees. How many organizations even bother to calculate the realistic training curves for these new employees?

They just want to have a 'win-win' scenario in either case, even if the employee is left with 'lose-lose'. (If the employee leaves, the company gets more money than the training cost. If he does not leave, the company gets a long-term trained employee. While if the employee leaves, he pays a large amount just for the 'experience gained'. If he does not leave, he is losing out on an upgrade in salary in a better place.)

Challenges in Employee Retention

In our country with a large unemployment ratio, I could not understand why companies have to struggle for retention. Are we not choosing the right people as employees, or are we not providing them with a good enough environment to work for us? Or do we just want to take advantage of the large competition for employment and squeeze what we can from them?

A company, if it feels the candidate is not up to the mark, can deny employment but cannot complain about training requirements later. Training is a part of their curriculum, and even experienced new employees have to go through training. The company cannot charge the employee for giving "experience". They can only charge for "formal training".

"Experience" comes as part of the services provided by the employee, and not as part of the employment provided by the employer.

Commitment to Ethical Practices

Just to update you: my organization serves Middle East clients, and even though some of them ask to surrender the passports for employees on deputation, our organization strictly declines it, at times even at the stake of losing business. This is the kind of commitment that drives organizations towards betterment of ethics; where instead of thinking of quitting, employees can proudly say that they are part of the organization and their organization stands for their personal development.

Holding the documents cannot be justified in any scenario. If the document is not provided by the company, it has no right to hold it. The documents provided by government authorities (including educational certificates) cannot be withheld by private companies. Companies cannot trade these documents, hence they do not have the right to write 'receipts' for these documents.

I said in my previous post, and I would like to repeat it: This forum should not be about how to find loopholes or bypasses to the laws, but to share how we can help each other improve our organization's HR ways.

In the race for survival, many company HRs face the dilemma of what's legal, ethical, doable, or preferable to perform better. For this, many people come here (including myself) to seek help with good and genuine intentions. We ought to think about what we provide them as answers!

Best Regards,
Amod.

Discussion on Employment Bonds and Document Retention

This topic is well dealt with; I appreciate one and all. In overseas jobs, such kinds of bonds are implemented, but in India, it's not possible. Once, I happened to work in Dubai where our passport had to be kept with the employer for security purposes, which is illegal, but there was no option. Even though there are laws governing such matters, they are of no use when it comes to an individual employee.

Anyway, I concur with the views of all and thanks for sharing.

Regards

It is not correct to say that no case has been filed in Indian courts against the bond/holding of originals. Cases were filed in Delhi HC, SC, and in Kerala HC. Delhi HC had termed the system of holding originals as bonded labor and ordered the government to frame guidelines on these issues.

Relevant Court Cases

Members may read the judgment in the following cases and form their opinions:
- Shamshad Ali vs Director (Police-Radio) UP Police and Others
- ITC Ltd vs Gagandeep Singh Sodhi and Anr
- High Polymer Labs Pvt Ltd vs RK Mutreja and Anr
- R Babu vs TTK LIG Ltd
- Varghese Mathew

Contact: [Phone Number Removed For Privacy Reasons]

One of our friends has quoted some cases on this thread, and after going through all of them thoroughly, I have observed that none of these cases were regarding the holding of documents. Moreover, the courts had not even granted relief to the employees. Anyway, our question is different. I too feel very much against this practice and many other similar practices. But here the question is the legality of holding documents, and the law is silent on this. I doubt if anyone can obtain help from the law.

With best wishes.

Legal Implications of Retaining Original Documents

Article 19(1)(g) of the Labour Act provides citizens with the right as follows: "All citizens shall have the right to practice any profession, or to carry on any occupation, trade, or business."

This is a fundamental right. However, this right can be restricted by Clause (6) of the article, by making a law in the interest of the general public. "Nothing in Sub-clause (g) of the said clause shall affect the operation of any existing law insofar as it imposes, or prevents the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause."

If the impugned by-law is a reasonable restriction on the exercise of the right conferred by Article 19(1)(g), then it is not invalid. However, no by-law has been made either by the Parliament or any state assemblies empowering employers to impound the originals of employees. The employer is infringing on the employee's right to practice the profession or occupation of their choice with another employer by keeping the original documents.

Original documents are the property of the employee. The burden is on the employer to show the employee the existence of any law, by-law, rules, notifications, etc., allowing them to keep the original documents of the employee while issuing the appointment letter. As there is no such law, the employer cannot succeed.

Furthermore, keeping the original documents by the employer changes the relationship of employer and employee into one of mortgagor and mortgagee, and the original documents become mortgaged property, which is not permissible in service law.

Lawfully, the employer can protect their interest by appropriately framing the clauses in the appointment letter and detailing the damages if their interest is affected (for example, if the employee leaves the job during the lock-in period, they have to pay damages of a certain quantity, a three-month notice or notice pay in lieu of notice, and not taking up any new job within a prescribed period in any other organizations where similar business is going on, etc.).

However, for achieving this end, forcing the employee to surrender originals is not permissible by law. An employee may give the originals to the employer consensually, but it is only valid until they are lawfully employed by the contract. If the contract ceases by resignation or termination, the contract can be challenged by law, and the law does not yet permit holding the employee's property against it.

If an employee chooses to go to the labour commissioner with a complaint 'during' or 'after' employment, the employer will have to provide justification for framing such a clause in the contract.

Furthermore, if any company challenges this dispute by finding such a by-law proving the power of 'employment contract' over 'Article 19(1)(g)', an appeal can be made against the validity of the said sections of the by-law itself, claiming that it is found restricting the fundamental rights. If the applicant contends that the act does not lay down clear guidelines for the exercise of power by the company and so the decision of the company is bound to be discriminatory and arbitrary, against fundamental rights outlined by Article 19(1)(g), the by-law can be declared ultra vires by the court.

Best Regards,
Amod.

Dear Amod Ji,

Generally, I avoid replying directly, but as you have spent lots of time writing to me, I feel I must clarify a few points. Please do not take my message negatively as I just wish to explain the factual position on the practice of holding qualifications. I would also like to mention that I am neither in favor of holding certificates nor do I wish to support companies following such practices. However, sir, when it comes to legal status, I must tell you the reality, which I believe is as follows:

1. Please understand that companies holding certificates are not strictly violating this section as per the law, as they keep the documents in custody according to the terms of the Offer Letter and Contract of Employment duly signed and accepted by the employee.

2. Genuine companies do not impound the certificates of employees, and they always return them within 3 days of either completing the bond period or settling dues if an employee has resigned. You can't take them to court under this section because if a company has refused to return the documents as per the terms of employment, no court will support the errant employee.

3. Employers do not need to do this as these terms, along with the bond period, notice period, exit policy, and other important terms of employment, are clearly mentioned in the Offer Letter. Anyone who disagrees with these terms can decline the job, and similarly, the employer will not issue a Joining Letter to those employees who have reservations about the terms of the Offer Letter or the company's HR policies.

4. I agree with you that once the contract of employment ceases to exist or is completed, the employer does not have the right to hold the certificates. However, an important legal point is that the contract cannot be considered finished just upon the submission of an employee's resignation. Acceptance of the resignation is crucial, and acceptance will only come once the terms of exit are fulfilled as per the Job Contract.

5. Yes, as a citizen of India, everyone has the right to go to court and fight for justice. But, Mr. Amod, you will agree that the court will also instruct the employee to act according to the terms of their contract with the company and settle the accounts.

Dear Sir,

If India is to grow and become a real international economy, there is a need for discipline at all levels. Moreover, our socialist government is bringing a new labor law, and there will be drastic changes in employee rights. We are heading towards a regime of hire and fire. Although there will be safeguards to protect the interests of employees, the terms of employment will become harsher. An employee may not be able to fight a big company.

In my view, although this practice may be immoral, unethical, or harsh, I have not come across any law that can effectively protect an employee, especially one who does not care about the agreement/contract they signed without reading or understanding the terms of the offer and who is breaching the terms of the contract of employment.

Thank you for reading all this. Perhaps all HR forums/chapters should submit a memorandum to parliament to amend the laws to protect employees from this problem.

Best wishes.

Dear Navneet,

I guess you have too much faith in contracts. Just let me tell you that not all contracts are enforceable. Many contracts are void ab initio, meaning null and totally void. All the terms mentioned in the offer letter, even though accepted in its entirety, may not be valid and enforceable. Have you come across any of the below clauses? It is called a Severability Clause.

"This contract is intended to be interpreted in such a manner as to render it enforceable. In the event that any court, arbitration panel, or other competent authority determines that any provision of this contract is not enforceable, such provision may be modified or limited in its effect to the extent necessary to cause it to be enforceable. If any provision cannot be so modified or limited, then such provision shall be severed, and the remainder of this contract shall remain in full force and effect."

This is used to safeguard the interest if any clause is termed void due to its contravention with any law. Also, please go through Section 27 of the Contract Act, which makes such contracts null and void which restricts anybody from practicing any trade or profession. No law can stop any employer from entering into any such contract with any employee, but if entered and challenged in court, it would have no footing against the law. Mr. Navneet, please understand contracts are governed by law and no contracts are above the law. Even if you go through the High Polimer case shared by Mr. Varghese Mathew, the court has granted relief to the employee on this ground itself and dealt with the subject at length. I am attaching the text of the case with the post.

Holding of Documents

Now let's come to the holding of the documents. It is illegal by virtue of many Articles of the Apex Law, which is the Indian Constitution. The Constitution is the Apex Law of the Land, and even any law passed by the government, which comes in contravention of the Constitution, becomes null and void. Please read Article 23, 13, 14, and 21. You will come to know the very intention of the legislature as to how much the law is concerned about the well-being of the common man. Article 23 specifically deals with forced labor. Please read some commentary on Article 23 for better clarity.

When we were studying law, one of our teachers told us a basic rule, which he asked us to always keep in our mind. That is that the statutory rights of a person given by the Constitution are above all and cannot be given away with. Even if the person himself wishes to give them away, they cannot be given away. The motive behind it is that if these rights can be given away, the influential people will enslave the persons and will take away all the rights they have. These things come under the personal rights which cannot be given away under any circumstances.

As far as the working of top-notch IT companies or any famous multinational company is concerned, it is well known that when it comes to slapping hefty fines and decisions against them from courts, they are on top of the list. So it is not a standard that if an IT company or a multinational company is doing it, it is the right thing. I am well aware of the working of many giants as I have represented many of them. Also, on a daily basis, we provide legal opinions to many of them on various HR-related legal issues.

Believe me, most of them are concerned with profits only. As far as this forum is concerned, we are here to provide our input for the betterment of the community and employee welfare.

Further views are invited.

Thank you, Mr. Kamal. I suggest the members read an article by Adv. Dileep Goswami, which is available on CiteHR, on 'Employment Bond/Service Bond in IT Services.' The companies are holding the originals because they know that many other conditions of employment contracts, which they dictate and have signed by employees, will not stand in court. There are Supreme Court decisions against negative covenants and their applicability post-employment. Non-disclosure clauses and confidentiality while in service are legal.

In the following instances, companies can claim damages from employees:

1. The company provides training at its expense before assigning the employee to a job.
2. The company spends on training/scholarships/projects for the employee while in service.

However, immediately putting the employee to work and then requesting a refund for the training costs is not reasonable. For a contract to be enforceable, it should have mutuality, and the parties should be equal in bargaining. In many cases, an unemployed person desperate for a job and a powerful company are not equal. The individual has to agree to all conditions, including surrendering certificates. Attrition should be addressed through HR strategies.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Dear Ms. Amrita,

This is my fifth and last post for this thread. Now the thread is going towards arguments just for the sake of arguments. Some people may make their living based on these arguments, and luckily by law, there are no restrictions on that.

In recent times, the global markets are becoming much more dependent on developing countries such as the Arab countries, India, China, Malaysia, the Philippines, and Latin American countries. India has always been ahead of the curve compared to other countries, not just because of intellectual labor capacity, but mainly because of democratic laws, which give labor the freedom to develop themselves. This has allowed the IT industry from the developed world to merge easily with the Indian work environment.

The other countries have now understood the importance of fair labor practices if they want to keep up in global markets. In the Middle East, laws are changing towards it, and the government urges employees not to surrender passports and to fight for their rights. In China, minimum wage laws are being implemented, and the government's concern about the working conditions of their labor force has increased significantly.

They understand now that we don't need a leash around employees' necks to make them work.

If India is really heading towards a regime of 'Hire & Fire' type of policies (as mentioned in one of the earlier posts), then I am not sure how long our IT industry can survive in competition with these countries.

To answer your original question, I personally would not submit the original documents to the company. Surely, you will find many candidates who are ready to submit the documents now. Also, soon enough, you will come across a few who will contend against it. As long as we have lawyers who would try to find legal loopholes for that, you would be fine.

People may argue about the legality of the practices, but nobody will deny that there are better ways available.

This forum has also provided you with other ways to increase your commitment towards employees. This may seem like extra work for you now, but in turn, it increases employee commitment towards the company as well.

Best of Luck & Very Best Regards,

Amod Bobade

Candidate Document Retention and Bond Issues

On another note, if you come across a candidate who, being a fresher, does not have the amount of money mentioned in the bond and therefore refuses to sign the bond but is willing to leave his original documents (such as a passport, etc.) with the company for the duration of the period, would the company still accept him as an employee?

If yes, how can they justify holding the documents against the training costs?

If no, on what grounds?

Employment Contracts and Legal Concerns

Many terms in most employment contracts are problematic in law. They are just there to scare gullible employees into submission. However, apart from clear cases of people abusing corporate largesse, most cases involve companies thinking they have done a lot for the personnel but have actually earned far more from just having them there.

Companies should wake up to the fact that bonded labor creates an unhappy atmosphere, which is far more counterproductive than letting go of a person who wants to leave. In any case, taking original documents from employees for verification is legal, but holding them for any period or reason after the employee has left, just to restrict further employment opportunities, is immoral, unethical, mala fide, and probably even illegal.

Court Orders and Retaining Original Documents

Maybe it will serve Amrita better if you can provide any specific Court Orders or Verdicts regarding the 'retaining of Originals' issue. Based on her and others' remarks, only something in writing would seem to convince her boss that what's being planned is illegal or at least that it can put him into serious trouble.

Frankly, I get the feeling that what's being mentioned in this thread by the members seems more like 'arguments'—as if this were a Court rather than a knowledge-sharing Forum.

Since you have handled quite a few labor/employee-related cases, I guess it would be much easier for you to take the lead and present very specific Court Verdicts for the benefit of Amrita and all the members of CiteHR. I recollect your efforts in an earlier thread regarding the legality of Employee Bonds in India—the link referred by Sid.

Having said that, I agree with the members who mentioned that Amrita's company/boss should better focus on the 'WHY' part of retention/attrition in the company. I guess the same argument expressed by some members when the Service Bond issue was being discussed in an earlier thread would hold good here too: Focus and heal the disease rather than focusing on the symptoms.

From another perspective, I think the tendency of employers to go for such methods—Bonds, Holding certificates, etc.—only betrays their basic nature: to go for the most convenient path. If they were to really take steps to prevent attrition the right way, in all likelihood, they know that it's they who have to change, but are loath to. It's a sort of 'you carry the burden rather than me' mentality.

Such persons would realize the necessity to change only if they are presented with proof of the consequences of their actions.

Regards,
TS

Final Thoughts on Employee Document Retention

This will be my last post on this topic since views and counter-views, even from legal experts, have led us to the following understanding:

Holding employees' original certificates is a bad HR practice and should not be encouraged by a professionally managed company.

If the employment agreement is violated by the employee, recovery of legitimate training costs can be pursued through legal means. As an internal measure, however, the employer may choose not to issue a Relieving/Experience letter to the defaulting employee (provided such a clause was clearly mentioned in the Appointment letter).

Retention of employees who have undergone training will continue to be a significant challenge for small IT companies, and they must devise their own strategies to prevent the migration of trained individuals to larger companies. Offering competitive salaries only to valuable assets and dismissing non-performers is a viable option. For instance, a company may recruit 30 trainees, providing them with a stipend, but retain only the top ten at market rates. To foster competition among them, it should be explicitly stated well in advance (before they join as trainees) that retention will be based on relative ranking. This approach may address the issue of recovering training costs, considering that over 50% of the training is on-the-job, as noted by some experts.

It may be wasteful, counterproductive, and highly expensive to resort to legal means, particularly for small companies. Instead, why not invest that extra amount to retain the trained individuals as discussed in paragraph 3 above?

Thanks to everyone for all the inputs. I understand this topic may remain open for discussion, but I may refrain from contributing further.

Regards

Legal Implications of Holding Employee Documents

Cases pertaining to the holding of documents generally do not go up to high court levels. Yesterday, I was having a chat with a very senior lawyer who told me about one of his personal experiences regarding this issue. One of his relative's grandsons faced a similar situation. His company signed a bond and also kept his documents with them. He worked for them for about 10-11 months, and during that time, he received an offer to work with a big company overseas. He was willing to pay the bond money, but they were not ready to release him.

His relative contacted the lawyer and suggested lodging an FIR. As soon as the FIR was lodged, he received his relieving letter and documents within a day. If that practice had been legal, the FIR would not have been lodged. Being a criminal case and involving higher authorities, it often gets amicably settled just on the complaint itself.

Thank you.

There is no one authorized legally to take original education certificates from employees. If anyone is asking, tell them straight away that you need an acknowledged copy stating that you have deposited the original documents on the company letterhead for your future reference, along with the appointment letter.

Example Scenario

If, unfortunately, a fire burns down your office, how can you prove that you have deposited the original certificates?

If the organization is still asking for the original certificates, then, my friend, look for a better option because this type of organization deals with unprofessional skills.

Regards.

Educational Certificates and Bonded Labor Laws in India

Educational certificates are the property of the employee. We may call it intellectual property.

Bonded Labor Prohibition in India

Bonded labor is prohibited in India by law, as per Articles 21 and 23 of the Constitution. A specific law to prohibit the practice was legislated in 1976, known as the Bonded Labour System (Abolition) Act. With the commencement of the Act, the following consequences followed:

- Bonded laborers stand freed and discharged from any obligation to render bonded labor.
- All customs, traditions, contracts, agreements, or instruments by virtue of which a person or any member of a family dependent on such person is required to render bonded labor shall be void.
- Every obligation of a bonded laborer to repay any bonded debt shall be deemed to have been extinguished.
- No suit or any other proceeding shall lie in any Civil Court or any other authority for recovery of any bonded debt.
- Every decree or order for recovery of bonded debt not fully satisfied before the commencement of the Act shall be deemed to have been fully satisfied.
- Every attachment for the recovery of bonded debt shall stand vacated.
- Any movable property of a bonded laborer, if seized and removed from his custody, shall be restored to him.
- Any property possession of which was forcibly taken over by the creditor shall be restored to the possession of the person from whom seized.
- Any suit or proceedings for the enforcement of any obligation under the bonded labor system shall stand dismissed.
- Every bonded laborer who has been detained in Civil Prisons shall be released from detention forthwith.
- Any property of a bonded laborer under mortgage, charge, lien, or any other encumbrance, if related to public debt, shall stand freed and discharged from such mortgage.
- Freed bonded laborers shall not be evicted from the homestead land.

"Employment is at will" and cannot be forced. Advise your management positively not to hold on to any originals of any employees. They can opt for any bond or service agreement before the offer is made and at the will of the employee.

Thanks,
Neena

Dear Amrita,

Just in case you have no other alternative than submitting your original certificates, you can always submit the notary attested copies of your certificates. It is as good as the original ones, and you will have an alternative to submitting your original certificate copies. Since notary attested copies are legally considered as good as the original document, nobody can question you on that.

Hope it may help you. Take care.

You seem to have got the situation wrong. Amrita is the HR in the company, not the Joinee.

@Amrita - Many suggestions have emanated from the members. Please respond if any of them 'seem' practical from your perspective—meaning 'would that convince your boss'?

Regards,
TS

Is Withholding Original Documents Permissible?

Due to some integrity issues, some companies are withholding their original documents as a surety. Is it permissible? Could you shed some light on this?

Thanks in advance for your guidance.

Thanks!

Dear Seniors,

After going through all the posts, I happened to have this query.

Concerns About Retaining Original Documents

It was quite debatable to know whether keeping original documents is legal. The legal, moral, and ethical aspects are secondary to me. As an employee, my concern would be: "How will the company ensure the safety of my documents?" If the company wishes to keep my certificates in original for job purposes, how would they guarantee their safety in case of theft, fire, or other calamities? I have spent years studying and earning those certificates and would have to struggle to get duplicates if the company loses them.

Another concern is how the company can assure me that my certificates will not be misused by any employees of the firm. I recently read a case on citehr where HR was found guilty of misusing original passports of some employees.

Contracts and Agreements

Regarding contracts and agreements, correct me if I'm wrong, but as per my knowledge, a one-sided contract is null and void. So, if the company wants me to submit my originals as a security against breaking the bond, shouldn't I seek a guarantee that they won’t terminate my employment during that period?

If the company can terminate my employment for underperformance, shouldn't I also have the right to resign if my expectations are not met? By holding documents, a company may prevent a fresher from absconding, but what happens if an employee is unable to perform despite being trained? Retaining such an employee adds to costs, while terminating wastes the training investment. Shouldn't the responsibility for a wrong hire lie with the management?

I don’t intend to provoke debate or heated discussion; these are just the thoughts that crossed my mind during this discussion. I hope this didn’t hurt anyone’s feelings; that was not my intention.

In addition to the above post, since I am unable to edit it, all I wish to say is if the company is expecting us to perform as employees, we too have some basic expectations. Holding documents in original does not motivate an employee to perform. In such a case, what will happen is out of the obligation of the bond and handing over of certificates, employees may drag the tenure, waiting for you to terminate them. But in this case also, the employee is affected as he has to go out and explain why he was terminated. No company will say that we failed to motivate him to perform; they would simply say he was a poor performer in his BGV.

Discussion on Retaining Original Documents

Please discuss deeply regarding this issue and try to focus on the point that in any unfortunate circumstances (such as fire, theft, or office politics) in the office where these records are kept, if anyone's original certificate is lost, the situation would be more difficult compared to the retention of the employee.

I hope this point could work, and your employer may understand the gravity of the situation.

Regards,
Jitendra Parmar
Human Resources
Dahej, Bharuch

Handling Original Qualification Documents and Secret Bonds

What can be done if the company is taking the original qualification documents, but it is not mentioned in the appointment letter or any letter issued by the company during the appointment? Also, if it is just mentioned that you will have to undergo a secret bond but you have not signed any bond on legal paper. Can an employee be relieved from the company by giving proper notice period? What if the employer still asks to pay two months' salary and hold the original documents with him?

Legality of Retaining Original Documents

It is totally illegal; one cannot keep the original documents due to organizational issues. An employer can check and verify the original documents at the time of appointment but cannot hold the documents.

Regards

Unauthorized custody of employee documents

Yes, my friend, taking over employees' original degree certificates into the custody of your company is not a good practice. It falls under unauthorized captivity of the individual's intellectual property, which is against the law. It can lead to blackmailing cases under the IPC.

However, this is a bad practice that is silently happening worldwide, much like telling lies. I have mentioned earlier that some judiciary cases have favored management, stating that the employer wants the employee to stay in the company for the survival of the business. There is nothing wrong until the concerned employee protests because they want to leave for better opportunities.

I once saw a young man who worked for 40 years in the same shop as a billbook writer without any improvement, forgetting his own future. Therefore, applying humanity and natural justice judiciously, considering the welfare of the company, is an essential HR technique according to the situation.