In India, employment bonds are considered legal. An agreement enforceable by law is a contract. As per Sec 10 of the Indian Contract Act, 1872, all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration, and with a lawful object.
Free Consent Under the Indian Contract Act, 1872
Section 14 of the Indian Contract Act, 1872, defines free consent. "Free consent" is said to be present when it is not caused by:
1. Coercion, as defined in Section 15, or
2. Undue influence, as defined in Section 16, or
3. Fraud, as defined in Section 17, or
4. Misrepresentation, as defined in Section 18, or
5. Mistake, subject to the provisions of Sections 20, 21, and 22.
Suppose an employee is given an offer letter and accepts it. Once he joins, if the employer asks him to sign a bond for 1 lakh rupees to continue in employment, then the court may view this as undue influence since the employee has resigned from his previous job and has no other option but to agree to the terms and conditions of the employer. So, a lot of these things depend on the facts and circumstances of the case.
An employment agreement is like a standard contract, where the employee can either accept the offer or not. Unless an employee proves that the employment bond is obtained without his free consent, the bond can be enforced provided the terms are reasonable and not contrary to public policy. It is better to come to a mutual understanding with the employer.