Facing a 3.6-Year Bond: Can I Leave My Job Without Paying the Penalty?

Hi, I am working with a service-based software company (which is also a member of NASSCOM), and I signed a bond for 3.6 years. They also provided me with training for 6 months, and now I have completed 1 year of service. However, I am not satisfied with the work culture and wish to leave the company. If I decide to resign, I am required to pay 2 lakhs for breaking the bond. I am unsure of how to proceed without making this payment. Additionally, I am concerned about the possibility of being blacklisted by NASSCOM if I leave without fulfilling the bond agreement. What potential consequences might I face in the future? Your guidance on this matter would be greatly appreciated.

This kind of bond/agreement to hold an employee is illegal in India. As per the Supreme Court, an employer cannot withhold its employee from taking leave and joining another company for their professional betterment. However, the company can recover the amount actually spent on the employee for training.

Validity of Employment Bonds and Consequences

Ritesh, don't mislead people. The bond is indeed valid. It is for the completion of a specific and reasonable period of service (3 years after completing 6 months of training) and includes a clause to repay the cost of training as liquidated damages. There are enough cases decided by the courts in favor of companies.

Further, what the candidate wants to do is defraud the company by walking off, joining another company, and not paying the liquidated damages. Also, he wants us to tell him how to stop the company from blacklisting him on the NASSCOM skill registry, which is designed to prevent him from doing just this.

The company has paid him a salary for 6 months for him to learn! Moreover, they have spent a significant amount on training during those 6 months. Now that he has learned at the company's expense and is employable, he wants to go somewhere else where he will be counted as having experience and get paid higher.

Dear Banerjee,

In which law is it written that the employer can hold an employee to serve their employment by way of training and executing a bound, despite that if you have any case law or relevant section which suggests that holding an employee is valid, please provide the same.

Thank you.