Are Employment Bonds Fair? Seeking HR and Legal Insights on Restrictive Practices

Bonds in Service

Why do companies take a bond at all if the courts have ruled against these?

What are the auditors doing? What about the Company Law Ministry and Labour Department?

The bonds are one-sided in that the company can dismiss you, but you cannot quit.

How do they arrive at a figure? Have they got the bond language/terms approved by the Labour Department? This should be made mandatory.

Training is to be given by the employer and this may be prescribed as one month. So, one month's notice is OK. Periodic training is to be given to an employee to update them with new developments; this cannot be held against them because the employee must be equipped to do their job in the company. It is thus the responsibility of the company to provide training or updates.

An employee may be given one week's training and may be asked to sign a bond for 2 or 10 years. Is it valid?

The employer cannot fix an arbitrary amount, and so this must be scrutinized by a Government official. They must certify that they have applied their mind to this issue.

My son signed a bond with a Government unit, and it said 10 years. The amount was initially mentioned as Rs 10 L but later on, as Rs 2 lakhs. He was not given any specialized training but only 1 or 2 days of refresher courses. These are periodically required as per the law. So, this should not be held against the employee. He cannot evade it. So, why put the cost on him?

He went for specialized training and on resumption, the Government unit refused to give him a suitable upgraded job but expected him to continue for 10 years after resumption. They did not spend a single paisa on his training. They sanctioned leave without pay. He gave one month's notice and met senior officials to relieve him. But nothing happened. He quit and joined a new company. After 2 years, he has received a letter for Rs 2 lakhs. Maybe a legal notice may follow.

And why should one get a "no due certificate" or relieving letter from the old employer to join a new office/unit? This is a restrictive practice aimed at restricting an employee's fundamental right to get better jobs and improve their life. How can anyone prevent their right to train for better jobs at their own expense?

This is inhuman, and the courts have to come down heavily against the companies (including Government departments and units). What are the trade unions doing in these companies? Just collecting membership fees and partying.

I would be glad to have views from HR and lawyers with case references.

The query seems to be written in an emotionally desperate situation. However, I suggest that one may analyze the cost of recruitment, training, and maintenance of suitable manpower for any organization. Consider the requirement of common office decorum and service rules, as well as the continuity in the functions and operations of the organization, before asserting the right to employment and assigning blame to various authorities such as the labor department, trade unions, etc.

Please list each issue involved in your message and quantify them from the perspective of their cost to the company for ensuring continuity and smooth functioning of operations. You can investigate the reasons for these issues on your own. However, other members may also provide comments to clarify the issues.

Kind Regards

The issue is one of the few evergreen issues that are haunting both employers and employees alike. This is for the well-known reason that nowadays attrition levels are so high, especially in the IT sector. One should understand the problems faced by these two parties involved. The employer has to worry about the sudden vacuum created by the exit of a trained employee and has to train another one in his/her place or reallocate to manage the situation. The cost and time for training and slippage in the completion of the task/project on hand cannot be ignored. At the same time, an employee has the right to mobility, subject to contractual obligations. Though courts have ruled against enforcing coercive clauses of the agreement, at the same time, compliance with conditions regarding the notice period which have been mutually agreed upon cannot be overlooked. Compensation in lieu of the notice period is the right of the employer under the same conditions as agreed. This is particularly enforced in cases of 'specialized training'. In this context, you might recall the plight of now Delhi CM Mr. Arvind Kejriwal. Our friends should realize that Trade Unions have little to do in these circumstances, and the Labor Department is not a party to the conflict. Courts can see that only natural justice is upheld in any matter that comes before them, and parties are covered under the Law of Contract rather than Fundamental Rights in this specific situation. Mr. Sekar should consider themselves lucky that the compensation has been scaled down to Rs. 2 L; nevertheless, the employer should substantiate the levy of Rs. 2 L. If our friends are serious about obtaining a formal relieving letter, they should be open to mutual discussion and sorting out the issue between themselves to avoid complications and the cost of litigation. This is an opinion based on the limited information provided by the queriest.

Training and Employment Practices

Training imparted is often just an excuse given by companies. They are obligated to train employees; otherwise, they could have their own colleges to ensure a work-ready workforce. If they pay well and provide good facilities, no worker would quit. Kejriwal's case was different because he was on paid leave for two years. The government, including tax authorities, demanded 9 L, which he paid through well-wishers. While a notice period is acceptable, charging for training expenses is not. Companies should not profit by inserting such clauses and compelling the unemployed to sign on the dotted line. Training is an expense item.

This practice of issuing a resignation acceptance letter is a cartel arrangement designed by companies to restrain labor from seeking better opportunities. This stranglehold must be broken.