Can My Company Really Change My Service Bond Terms Midway? Seeking Advice on Next Steps

Hi Friends, I am working in a company. At the time of joining, I had a service agreement for 1.5 years with compensation of 1.25 lakhs. However, after working for three months, the company now wants to change the bond to 3 years with 5 lakhs as compensation.

Is it possible for the company to make such a change midway through?

My cost to the company for a year is 3.5 lakhs, but the compensation amount is significantly higher. Is this 5 lakhs acceptable? The reason given by the company for the increased compensation amount is training, but I do not believe that proper training has been provided.

Please advise on what steps I should take next.

Dear Priyadarsini, employment bonds with clauses opposed to public policy, as per sec. 23 of the Indian Contract Act, 1872, would not withstand judicial scrutiny and would be declared null and void by the court. At most, what an employer could demand from an employee for breaching a bond condition related to the minimum length of service would be liquidated damages corresponding to the amount of money and time invested in training the employee for the job only. Therefore, it cannot be an extravagant amount or an unreasonably long period of compulsory tenure post-training based on the employer's whims.

Moreover, once a bond is executed, it cannot be modified during its operation without the consent of both parties for personal convenience.

Hence, you have the legal right to reject such actions by the employer, provided you are willing to withstand any potential retaliatory maneuvers from their side.

As rightly pointed out by the learned member, Mr. Umakanthan, it all depends on whether you are desperate to stay in the same company or would like to move out and try your luck elsewhere for employment. If you are ready to take a chance, refuse to sign the new bond but diplomatically state that the company already has an existing bond in place, and you do not wish to see any changes to it. Wait for a response before rejecting their new bond proposal. If it is reasonable, the employer can proceed, but if not, then not. Ultimately, it comes down to the individual who is affected by such a covenant.

Think twice before sending any email or letter that might backfire later. Either way, move forward with caution, be diplomatic, and try to navigate out of the issue smoothly to avoid confrontation, as it will only leave you more stressed than finding a solution.

Thanks and Regards