Employee Security Deposits: Is It Legal for Companies to Hold Your Documents or Money?

Employee Security Deposits: Legal and Ethical Considerations

Can any private company ask an employee to deposit their original educational documents or money as security, requiring the employee to serve the company for 2-3 years? Please guide.

This is an infringement on personal rights and puts the company in a bad light. Though there is no specific law that says it is wrong, as per general principles, this is not the right thing to do. Instead, the company should focus on a retention culture by addressing how employees are treated in the workplace.

This is retaining employees by force. But the blade cuts both ways. There are many employees who run away to another company for even a slight hike in pay, leaving the original company in sudden difficulty. It is not an illegal practice if, as per a voluntary agreement, the employee gives his original certificates to the company. But my personal take is that such acts violate section 23 of the Contract Act.

The employer cannot take original certificates from the employees. It comes under Bonded Labour and violation of Article 19 of the Constitution of India. You can make a service agreement with the employees up to the level of trainees, which will substantiate legally as the company has invested the amount in the course of training.

Thanks & Regards,
V R RAO PULIPAKA

I agree with Rao Pulipaka. Below is just an extract of the statement on bonded labor, which was abolished by the Indian Constitution long ago but is still illegally practiced in India. Even well-educated individuals are not aware of the facts when signing contracts with a new company.

Bonded labor, characterized by a long-term relationship between employer and employee, is usually solidified through a loan and is intricately embedded in India’s socio-economic culture—a culture that is a product of class relations, colonial history, and persistent poverty among many citizens. Also known as debt bondage, bonded labor is a specific form of forced labor in which compulsion into servitude is derived from debt. Categorized and examined in scholarly literature as a type of forced labor, bonded labor entails constraints on the conditions and duration of work by an individual. Most forced labor practices are bonded labor.

Contracts Deny an Individual the Basic Right

Contracts deny an individual the basic right to choose his or her employer or to negotiate the terms of his or her contract.

Let me tell you, a CONTRACT is nothing but BONDED.

Yes, private companies mostly ask for original educational documents, but just for verification purposes. These days, mostly private companies are doing this for security reasons. They can deduct a small amount from salaries but cannot retain the original educational documents.

But that is unlawful and shows the company's inability to retain their employees on good terms. This is absolutely blackmailing and luring employees under the guise of providing employment. That in itself proves the company is not performing well, and forcibly retaining employees demonstrates incompetence in the market.

Management Training Needs

The management requires proper training in retaining employees. If they cannot take care of operations, retain employees amicably, or show a willingness to learn, then they do not deserve the positions they hold. They should consider stepping down and finding a job in another company where they may experience similar treatment, at least to understand how an employee feels.

What can an employee do in such situations where the employer demands money in lieu of returning your certificates? Can anyone guide me, please?

Sincere thanks in advance for your valuable advice.