Feeling Stuck in a Job Due to a Service Bond? Can I Quit Despite the Contract?

Dear All, Two months before I joined a company, I signed a service bond as well as an indemnity bond for two years. However, after joining, I have found that the working environment and work culture are not employee-friendly. I am considering quitting, but I am concerned as I have signed a bond. Is it possible for me to resign or quit under these circumstances? Please help me as I am worried about this issue.

Waiting for a response.

As per law, "bonded labour" is illegal. However, if you have signed a service agreement (commonly termed as a bond) to serve in the company for 2 years, then you need to check the following:

- Did the company provide any kind of specialized knowledge/training to you for which you had to sign the bond? If yes, then the bond is valid.
- Did the company invest a significant amount of money in providing any specialized knowledge/training to you? If yes, then the bond is valid.
- Did the company incur costs to send you abroad to transition a business/process to India? If yes, then the bond is valid.

Even if the bond is valid, you can still resign, pay the penalty for breaking the bond, and get relieved. If the company did not incur significant costs or provide any specialized skills or add significant value to your knowledge/skills and simply got the bond signed to curtail their attrition/business impact, then the bond is not legally enforceable.

Hope this helps.

Regards,
Ritesh Shah

As per fundamental rights, corporate governance, and labor law, you are not bound to work in any organization, even if you have signed a bond or any consent. You have mentioned that the environment is not good for work. In this concern, you can file a suit against the company culture, behavior, and the threat of the signed bond. The company will have to pay compensation as well as your FnF without any deduction.

Regards,

I am surprised most members are giving advice without thinking, with answers that may put the poster in a problem. Please think carefully before giving misleading replies.

Details Required for Accurate Advice

Vineet, first, as Ritesh Shah says, you need to give us details of the bond and the circumstances. If you do not give full information, then you will get half-baked answers which will lead you on the wrong path.

Questions to Consider

1. What is the wording of the bond?
2. Have they provided you with any training?
3. If so, what is the cost of the training?
4. What is the exit clause in the agreement? How much is the amount payable?
5. What have you been doing in the last 2 months, and what is your designation?

The reply as to whether you are legally allowed to leave without completing your tenure and whether the company can successfully file a legal case against you in court will depend on that. Whether the company will or will not file a case, I or anyone in the forum will not be able to say. It depends on how important you are, what attitude they have towards people not completing the bond, and whether they wish to make an example of you.

Deciding Whether to Stay or Leave

First, do you want to work there, or do you not want to work there? The solutions depend on that. Second, you have to provide more information about your organization, setup, department, how it works, etc., and details of yourself, experience, etc.

Hi Vineet, first of all, there have been many discussions on this site regarding similar situations. Please use the search tab to gain a better understanding by reading through those. As Saswata mentioned, did your company invest directly or indirectly in you? Bonded labor is not legal in India unless the company has made an investment in the employee.

Secondly, are you a fresher, or do you have any experience in the field you are working in? Generally, people who leave a company after two months do not include that company's details on their CV or disclose it to the next employer. In most cases, the employee absconds. Let us know more details so that we can shed some light on the situation.

Legal Rights Regarding Employment Bonds in India

As per the Indian Statute, the bonded labor system was abolished long ago, and no bond can force any person to work against their wishes.

As per Section 27 of the Contract Act, 1872, any agreement in restraint of trade or profession is void. Therefore, any terms and conditions of an agreement that directly or indirectly compel an employee to serve an employer or restrict them from joining a competitor or another employer are not valid under the law.

An employee, by signing a contract of employment, does not sign a bond of slavery. Therefore, the employee always has the right to resign from employment, even if they have agreed to serve the employer for a specific time period.

However, if any clause is inserted for the recovery of costs for training the employee abroad, or any costs invested in specific training, it may be recovered from the employee. The Supreme Court has also given judgments favoring the collection of the actual expenses accrued, irrespective of the agreed amount (Sicpa India Limited v Shri Manas Pratim Deb).

Nobody can hold you if you are willing to join another company, provided proper notice is given as per the company policy, standing order, or agreement.

As per Section 368 of the Indian Penal Code, if any person or institution holds back any document or uses any legal document or threatens any legal suits or actions, thus forcing a person to perform any act against their wishes or which is illegal or wrong as per the statute of the law of the land, it is not permissible.

The Supreme Court of India has clearly stated that no employee can be forcefully employed against their will just because they have signed a contract with the employer. The court has also stated that the employer cannot hold back any personal documents of the employees as they are earned by the employees, and the company has no claim to the same.

Regards