Can You Quit During Probation if You Signed a One-Year Bond? Let's Discuss the Risks and Realities

Employee Leaving During Probation with a Bond

Can an employee leave the job during the probation period without any notice if he/she has signed a bond for one year with the company?

In most cases, when an employee signs a bond with a company for a specific duration, such as one year, it is a legally binding agreement. The terms of the bond usually outline the conditions under which the bond can be broken or terminated. It is important for both the employer and the employee to understand the implications of breaking the bond before taking any action.

No, unless valid grounds can be established, an employee cannot quit before one year.

No, unless valid grounds can be established, an employee cannot quit before one year.

Validity of a Service Agreement Without Stamp Paper

If an employee signs an appointment letter in which a service agreement point stipulates a one-year bond of Rs 50,000, will it be valid without a stamp paper agreement? In this scenario, if an employee leaves the job without any written notice, what rights will the company have?

As per my knowledge, the notice period needs to be served. What is the notice period mentioned, 1 month or more than that? The bond is of INR 50,000 and is against a 1-year service. Generally, if someone wishes to leave a company without serving the notice period (without a bond also), then he/she must show a valid reason (I mean such reasons due to which it is not possible at all to continue with service). Sometimes, in that case, the employee needs to buy the notice period from the company to avoid "Absconding," and this is the actual procedure as per LAW.

In your case, since you have signed a bond, the company can claim "Compensation" by legal means which they would suffer if you don't serve the notice period.

Suggestions for Leaving the Company

I would suggest, if your main objective is to leave:

1. Sit with HRD and have a negotiation.
2. State a valid reason for which you can't continue with the service.
3. Try to convince them to buy the notice period or pay INR 50,000 before returning.
4. An important point to consider is if anyone proves that he/she is medically unfit to continue with the service for a long period or the nature of the job is negatively impacting health, then on medical grounds, the company has to accept unconditional resignation (hardly matters if a bond is signed or not signed). No organization can force anyone to work and take risks with life, which can be considered as "provocation in death."

Thanks and Regards,

Sovik Bhattacharjee

MBA - HR & Finance

MD, S.S ENTERPRISE

As mentioned, it is advisable for Naveen to try to buy out the notice period or pay INR 50,000 before returning from the HRD (Human Resource Department). This is because it hardly matters whether a bond is signed on stamp paper or the letterhead of the company; the value remains valid up to a certain extent under the law.

Alternative Legal Procedure

However, an alternative legal procedure exists as well. According to our Constitution, no one can be forced to work under a bonded labor system in India. In this case, you would also need to send a "Resignation Letter" through legal methods such as via postal services and then make the payment of INR 50,000 through a cheque or DD. This ensures there is hard evidence that you have paid the amount. Even under this scenario, the company cannot demand compensation exceeding INR 50,000 as they have already factored in this loss if you leave without serving the notice period within one year, hence the arrangement of such bonds.

Negotiation as a Tool

From experience, the best tool in such situations is negotiation. Companies are aware that they cannot force an employee to work, and doing so would lead to decreased productivity and various associated issues like poor morale, grievances, and misbehavior. Consequently, they would not only face these challenges but may also lose more employees.

Thanks & Regards,

Sovik Bhattacharjee

MBA- HR & Finance

MD- S.S ENTERPRISE

In such situations, you need to follow what is mentioned and agreed upon in the employment/appointment letter. If it is stated that you don't have to serve a notice period if you leave during the probation period, then you can proceed accordingly. Otherwise, you should adhere to whatever terms were agreed upon in the bond.

There are two aspects to your question. One is leaving a job during probation, and the second is leaving the job before the completion of the bond period of one year or payment of Rs. 50,000/- in lieu of the same.

Leaving During the Probation Period

Leaving during the probation period is governed by a condition in your appointment letter regarding leaving/termination of your service and the notice period required for the same. In your case, with a one-year bond, it has to be determined what this bond is against. For example, is it against the investment in your training, etc., done by the company? For an agreement to hold up in the court of law, the organization has to prove that they have spent an equal or greater amount on you (please don't consider salary in it as it is payment for the work you have done for the organization) and intend to recover the cost if you leave before the stipulated time.

If this is not the case, please proceed with resigning and leaving the organization as per the conditions of your appointment letter during the probation period. Ensure that the resignation is submitted legally, with proof of submission. However, if the organization has invested in you, it would be unethical, immoral, and unprofessional to leave them prematurely. If you still wish to leave, discuss with HR to reach the best resolution and depart amicably without causing legal issues in the future.

Best of luck.

Thanks and Regards

Experience with Employment Bonds and Retention Strategies

I would like to share a similar situation that I faced recently, dealing with a Civil Engineer. I had a bond of 3 years with him, valued at INR 700,000, with a notice period of 3 months. The reason was that this person had 25 years of experience and had worked in companies like SIMPLEX, HCC, etc. His monthly salary was INR 98,000. Though he was hired by one of my clients, the client sought my opinion because we were supposed to complete the project within 6 months from the LDE of that engineer, which would be difficult without his presence.

When I asked the GM of my client, who hired this person, his reply was that it was the Corporate HR Head. So, we decided to have a phone conference with him. The Corporate HR Head was initially not interested in speaking with me due to the age difference; he was about 55 years old, and I am 26. This was my first high-value project, and prior to this, I had only IT/ITES experience, not in the construction/Building material/Real Estate Industry. Finally, as per the GM's order, he was forced to go for a teleconference.

Reasons Behind Employment Bonds

When I asked him about the reason behind such a bond/agreement, his reply was:
1. Retention - as senior engineers with such experience are hard to get.
2. Minimizing risk associated with quick resignation.

I questioned whether it is practically possible to retain someone with an employment bond because if a person decides to leave, we can't stop him as per law. If we try to do that, he could file a petition in court, claiming he got a better offer. Legally, an employment bond is made to minimize risk associated with business as there is a cost and business loss involved if he leaves suddenly. The bond has a value that signifies "The loss the business is going to suffer due to his sudden leave/resignation within 3 years." This is true for all employment bonds. So, the company can't charge more than INR 700,000 or 3 months' salary of the notice period, whichever is maximum. If a person is ready to pay the bond value, how can you stop him? Yes, you can go to court and sue him, but ultimately, you need to face the magistrate's anger because the person is ready to compensate for your loss, and you have made such an agreement calculating the loss for the time period of 3 years. Only a government agency can take action and compel an employee to work if there is an emergency affecting the public's essential requirements and national security.

Then the Corporate HR Head said, this is not correct, in anger. I replied politely, "You are absolutely correct, but whenever there is a conflict between morale and law, we have to go by law. Else we would end up paying compensation." Secondly, I told him, if he does not want to work and doesn't want to pay, then also you can retain him, but what will be the use? He will not be satisfied and may have a grudge. He may never use his talent or potential to the maximum extent, resulting in poor performance and associated problems. What would you do then? It's very difficult to prove by law that a person is not giving his best intentionally. You can take measures, like cutting incentives, but the actual problem will never be solved. He can cause delays in the project, and we have to be like a viewer.

Later, my client's lawyers, rather the legal firm, also confirmed the same. Post that, we went for a negotiation. I simply said to him, "Give us 1 month's time so that we can find someone of equal potential, and in the meantime, kindly hand over all project details to your immediate junior, make him understand and share details with him on how to complete the project within the time." Later, on his LDE, that engineer thanked me as he resigned because his daughter is suffering from blood cancer and he needs to relocate. I only said, "I understand your feeling as a father and would surely do business with you in the future. But, kindly share your phone number with us so that if we face any problem with the project, we can consult with you, and it's a request." He agreed. Fortunately, this project is over, and on Nov 27, I am moving to the North-east, just to close it officially.

Lessons Learned in HR Management

I am not very good with figures, KPI, HR Policies, but I always had a passion to become an HR. Practically, I am fortunate as I got an opportunity to interact with some good HR leaders of MNCs. But I have learned one lesson: in order to manage business successfully, we must understand the psychology of employees and consider the human factor with importance first, be it employees or dealing with clients or vendors. I can count stars in the sky and sands on earth, so I can get my work done from anyone with their free consent by understanding their psychology. This is business.

Regards