Should Employee Bond be Notarized or not?

Hi Everyone,

Is it enough to implement an employee bond on the Company's letterhead, or should it be legally notarized?

Thanks,

Swati Chawla
HR at Zero1 Inc

In order for an employment bond to be enforceable, it has to be executed on stamp paper of appropriate value. Going to a notary will not be useful.

Dear Swati Chawla,

It is always advisable to get the employee bond on stamp papers and notarize the same.

Notary Act India 1952

Sec 8. Functions of notaries.- (1) A notary may do all or any of the following acts by virtue of his office, namely:-

(a) verify, authenticate, certify, or attest the execution of any instrument among other duties. Therefore, notarization does not add value.

If needed, a bond on Rs500 stamp can be executed between the company and employee. Value of stamp can vary from state to state, and a local lawyer can tell you the exact amount to be paid and the value of the stamp paper.

Thank you all for helping me here. I appreciate your responses.

Dear Swati,

Any agreement made between two parties should be stamped and notarized, whether it is a bond, contract, or any other type of agreement.

Thank you.

Dear Swati,

Some companies require trainees, such as Graduate Engineer Trainees (GETs) and Diploma Engineer Trainees (DETs) or Management Trainees, to serve a minimum of 2-3 years with the company, or a specified amount will be recovered from them. A few years ago, an advocate advised me that such bonds do not hold up legally in court. It's merely psychological pressure.

However, if a company invests money in specific training, whether in India or abroad, and both employees and employers agree to it beforehand, such bonds are legally valid. Employees must then serve the company for a specified period, or they will have to compensate the amount invested in their training.

I would appreciate guidance from my seniors if they hold a different opinion.

Regards,
Lakshya

Dear Lakshya,

To say that bonds are unenforceable in courts of law would be too naive and need not be correct always. The service agreement bonds, to be enforceable as a valid contract, have to fulfill the condition of having a reciprocal promise. The employer as well as the employee have to make certain promises to each other. For instance, for all the training costs incurred by the employer, the employee agrees to serve for a minimum period of time to be mentioned, failing which the employee agrees to remit an amount specified in the mutual agreement.

However, in most cases, there will be no reciprocal promise or no account kept of the training costs incurred. So in such cases, it is difficult to prove that the employer has suffered any loss, and consequently, any claim for damages for breach of contract would not be maintainable in courts of law. Let me also add that there are certain resource persons/agencies available who are specialized in recovering bond money using not so fair means.