Facing a Service Bond Dilemma with PSU: Can I Transition to a New Job Without Legal Trouble?

Service Bond and Employment Transition Queries

I joined a PSU bank in July 2015 with a 3-year service bond of 3 lakh. However, in January 2016, I got selected for a central government job without informing either the PSU or the central government about my job. My questions are:

1. Is a service bond of that significant amount valid under Indian law? I heard that a service bond without any technical training is null and void.

2. I resigned from the PSU in March 2016, but my resignation has not been accepted yet. In this situation, can I join my new job? If I join, what legal consequences might I face?

3. If there are any court judgments on this matter, please provide them.

4. What should I do to avoid paying the bond because 3 lakh is a substantial amount?

5. As I concealed my previous job details from my new employer and joined without paying the bond, could the PSU send any notice to my new job? If yes, what consequences might I face? Is there a chance I could lose my job?

6. I have discussed this with many lawyers; some said the bond is illegal, and there is no need to be afraid, while others say I have to pay the bond. I am confused. Please guide me.

I hope this helps. Let me know if you need further assistance.

Regards

Any kind of bond stopping an employee from joining another company for their betterment is illegal. The system of bonded labor is against the law. The company can recover the amount they have spent on any special training through a lawsuit. However, you can consult a lawyer with a copy of your bond for better advice.

Please check www.labourlawhub.com for more information on Indian labor laws.

Actually, sir, I consulted with 8 lawyers, but every one has a different view, and I am confused about which one I have to believe. Can I join my new government job without acceptance of my resignation?

Resignation and Bond Enforcement Concerns

There are two questions involved. One is your resignation from the PSU, and the second is enforcing the bond.

For joining government service, it is not necessary to produce any document regarding the acceptance of the resignation from the previous employment and relieving from there (unless it is a case of technical resignation). The question is how your letter of resignation has been worded. Anyhow, it is my considered opinion that the resignation could be deemed to have been accepted unless there is a written communication rejecting the resignation.

As for the bond, it cannot be enforced unilaterally. Being a contract, especially one involving the confiscation of property, it could be enforced only according to the due process of law.

Signing a Bond: A Strategic Precaution

Signing a bond by an employee is a strategic precaution. The company needs to ascertain and obtain a written commitment or assurance from the employee that the time, money, and training costs invested can be converted into ROI for future assignments. For example, if a candidate undergoing training is unwilling to undergo technology training, the employer will likely not make efforts to train them as the ROI would not be realized.

Legal Implications and Recent Judgments

In employment matters, recent judgments have generally favored employers, allowing them to recover costs such as training expenses, logistics, and salaries. Another significant issue is the time lost in legal proceedings. Court processes can be lengthy, involving appeals and leading to the wastage of productive time and resources.

Considerations for Employees

If you are confident that your employer has invested in developing your skills for future roles, it may have professional, legal, moral, and personal implications for you. However, having specific clauses from your bond would provide more clarity and confidence for further discussion.

Regards,

RDS Yadav
Director - Future Institute of Management and Technology
Labour Law Adviser
[Email Removed For Privacy Reasons]

Understanding PSU Bonds and Their Implications

PSU bonds are very tightly and strongly worded, and they have clear documentation of why you need to pay the bond money. When you are shifting from a PSU to the Central government, you have to submit a NOC. In case you are not required to provide any documents of previous employment and you join using this loophole, just pray that the PSU does not get to know your whereabouts. If they find out and inform the Central government, you will be in double trouble. Firstly, for not providing the NOC, and secondly for jumping the bond. This will result in suspension first and then termination, and you will be barred from taking up any government job.

Pay up and leave to keep your record clean. If you fight legally, you could possibly get restored in the job after about 30 odd years! The legal system in India is not friendly to litigants, and you will suffer, as it happened to an IIM B professor recently who got his job back after 33 years. If you were joining the private sector, then your job would not be in danger.