Understanding Bond Agreements: What’s a Fair Duration and Penalty for New Joiners?

Hi all, I need some clarification on the following points. The management has recently planned to implement the bond agreement for new joiners.

Bond Agreement Duration

What should be the minimum and maximum period for the bond?

Penalty for Early Termination

What should be the penalty if an employee leaves in between? Is the recovery of 3 months' salary too much, or is it reasonable? Please help me out with this.

Regards, SAlex.

First of all, please consult an advocate regarding the terms and conditions of the Bond Agreement. Most of the bond terms and conditions are not valid in Indian Judiciary. The ideal period would be around 18 months. These days, most organizations are talking about 24-36 months. This will create a sense of panic in the minds of new joiners, which might drive away real talent. I think you can convince them for 18 months.

One more thing, instead of using the term "Bond Agreement," you can consider using a different phrase like "Training Agreement."

Regarding the Recovery Amount

One cannot simply ask for two or three months' salary. Try to calculate:
- The amount spent on training the new joiner.
- The amount that would be required to recruit and train a new person if the existing person leaves the job.

Based on these calculations, you can arrive at a particular figure. You should be in a position to defend that figure. I hope this information is useful for you.

Regards,
Alex

You can include liquidated damages for the training amount.