Stuck in a Bond: Can I Join a New Job Without Paying the Penalty? Need Advice!

Hi All, I am in a troubled situation and I need some help. I cleared IBPS PO-IV and got allotted to the Bank of India. Currently, I am working at Infosys and have mentioned the same in the form. I have this bond service of one year, and I am in the probation period. The bond money may amount to ₹1.6 lakhs. My financial condition doesn't allow me to pay the sum and leave the company. Also, I won't be able to abscond as I need a relieving letter or service certificate to show the bank while joining. Is it possible to get a relieving letter or service certificate without paying the bond money? In case it's not possible, will a termination certificate help me during my joining at the bank? I mean, will the bank accept the termination certificate? Or is it possible to get a relieving/service certificate along with a termination letter? I know it's confusing; even I am confused and don't know what to do. Kindly help me out. Thank you.

Understanding Bond Recovery and Legal Provisions

Firstly, it should be made clear that under Section 74 of the Contract Act, only the reasonable expenses incurred by the employer upon imparting training, etc., to the employee can be recovered, and not the amount specified in the bond. The period of service rendered is also considered in quantifying damages to the employer. If possible, discuss with your employer to settle the amount. If nothing materializes, then legally speaking, it can be argued that under Section 34 of the TN Shops and Establishment Act, by which you seem to be governed, or under other State Acts, the employer can only make deductions from wages that are authorized under the Act. The recovery of bond money is not authorized under Section 34 of the said Act.

Notice of Resignation and Legal Steps

Give notice of resignation and serve the notice period as per the Act, depending on the period you worked under the employer, or make a payment in lieu of serving the notice period. Having done that, send a copy of the notice of resignation to the inspector under the said Act and to the labor commissioner to obtain your relieving letter in accordance with the Act's provisions. You cannot be treated as a bonded laborer because even after having paid the notice in lieu money, you cannot be detained. However, one thing is certain: you cannot be dismissed for non-payment of bond money.

Implications for Software Engineers

Since you appear to be working as a software engineer at the ground level, you will be treated as a workman as defined under the Industrial Disputes Act. Thus, the execution of a bond with a workman may arguably be treated as illegal, as under the Act, the employer is required to give only one month's notice to the workman, and similarly, the workman also has to give the same notice without discrimination. Any term or condition contrary to the ID Act, such as a bond period, is illegal. If you have the courage to fight, then only take this course of action; otherwise, follow the first settlement method.

Thanks,

Sushil

Thanks, Sushil, for the reply. Can you clear my other doubt? Does the bank (here Bank of India) accept a termination letter during joining? Will they create hindrance while joining? I am mentioning the termination letter because, in case I don't get a relieving letter from Infosys Limited, I will get myself terminated.

You are contemplating issuing a termination letter, which is something like a discharge simpliciter during probation due to non-suitability. However, your present employer is not going to terminate simpliciter. Nor are your bond terms clear on whether, despite termination, the employer may not insist on bond money. However, look at Section 41 (1) of the Tamil Nadu Shops and Establishment Act. It states that no employer shall dispense with the services of a person employed continuously for a period of not less than 6 months, except for a reasonable cause and without giving such person at least 1 month's notice or wages in lieu of such notice. Having signed a bond, they are not going to give you one month’s salary to dispense with your services.

In the proviso, such notice shall not be necessary where the services of such a person are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an enquiry held for the purpose. Thus, your termination can be for misconduct only. Once it is for misconduct, it will be a stigmatic termination, which may prevent the bank from allowing you to join. It may be a hindrance in joining the bank.

Moreover, in your curriculum, termination by an employer will not be a positive feature for the future. So, it is not going to be a cakewalk without clearing their dues.

Extract of the Tamil Nadu Shops and Establishment Act

"41. Notice of dismissal

1) No employer shall dispense with the services of a person employed continuously for a period of not less than 6 months, except for a reasonable cause and without giving such person at least 1 month's notice or wages in lieu of such notice, provided, however, that such notice shall not be necessary where the services of such person are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an enquiry held for the purpose."

Thanks

Regards,
Sushil

Understanding Employment Bonds and Legal Implications

When you took up employment with Infosys, you were happy and accepted the terms by signing the employment letter, agreeing to stay for a year or alternatively pay the bond amount. Now that you have received another employment offer, the situation is troubling you. Many people, like you, have abandoned their services, prompting most companies to create additional legal documents to protect themselves.

The point is that a relieving and experience letter will not be issued to you unless you satisfy the exit conditions of the organization. While you may find many suggestions, the person who will be affected the most is you, as Infosys is known to take such matters to court. The legal outcome may or may not be in your favor, but the opportunity you have could be lost.

So, you have two options:
1. Either pay the amount or negotiate with the company.
2. Stay with Infosys.

It is most important to read and understand the terms before you sign, and take opinions, because the court will certainly ask why you agreed and signed the employment letter. While the content of the bond/employment letter could be debated extensively, primarily you will be affected.

If you have been terminated, there are even more chances that you will not be accepted in any company. A company can terminate you during your probation period, but you need to read the bond clause to see whether it is applicable to be paid even if terminated.

Regards.

Understanding Employment Bonds and Legal Implications

It is a fair dealing discourse that when you sign an agreement consciously, you should honor that commitment. However, while signing such bonds, a person often acts like a layman who does not know the validity of such documents in the eyes of the law. It often feels like you either sign or leave the offer. The bargaining power of big giant MNCs is so high that a poor employee cannot say no while signing.

The implications of Section 74 of the Contract Act may even be unknown to many experts giving their opinions. In many decided cases, even though liquidated damages in bond agreements run into Rs 3 lakhs, before judicial courts, the employer had to be satisfied with meager amounts assessed to include the training expenditure and flight charges, etc., which comes to thousands only. Is it not that the bond has made you bonded labor?

At this time, if a youngster is able to secure a better job opening, is it worth pricking his conscience falsely? Rather, the employer should introspect on how much they really incurred expenses on training and should transparently lay down slabs on how much a reasonable amount a bonded employee should shell out according to the served period.

Besides, the legal validity of such bonds concerning workmen should be ascertained through legal experts, and only then should they enforce signing bonds. So, in today's era, before directing an employee to sign bonds or asking them to serve an extended notice period beyond what is permissible under the Shops and Establishment Act or ID Act, the employer should verify its validity.

Thanks,

Sushil

Blade cuts both ways.

I have heard of employees managing to receive costly training abroad at the company's expense and then wanting to jump ship. No wonder companies insist on bonds to mitigate losses. Both employees and employers need to demonstrate equitable behavior.