Trapped by a Training Agreement: How Can I Resign Without Paying a Huge Fee?

I joined X organization a few months back. After accepting the offer, I received an email to sign a paper titled "In-service training and certification bond," which included a clause for payment of a significant amount (15L) as training cost if I leave the organization within 18 months. I called HR and expressed my reluctance to sign any bond. He assured me that "This is just a paper, not a bond (stamp paper) which makes you liable to the company. We won't ask you for any money even if you leave; it is just a formality to get into the project." Trusting his words, I signed it since it was not on bond paper.

I have now resigned, and they are not releasing me, citing that agreement. The HR and everyone have changed their stance and are not assisting me in any way. My notice period is ending soon, and they are threatening me, saying "you won't get any documents from us if you don't pay." Any guidance is highly appreciated.

Understanding the Legal Implications of Signing Agreements

By signing the agreement, be it on any paper, you are legally bound. Even agreements can be oral, as per the Contract Act of 1872. So the argument that it was signed only as a mere formality or unintentionally is not helping you evade the responsibility.

Dear Ram-raja,

I understand your precarious situation now, just because you had signed a bond earlier very ignorantly. Employment bonds or agreements requiring an employee to remain in the service of the organization for a certain period of time after induction, failing which to pay a certain sum of money as compensation to the employer, are valid under Section 74 of the Indian Contract Act, 1872. However, under unreasonable circumstances, an employment bond is not recognized as legal. The employment bond will not be enforceable if it is either one-sided, unconscionable, or unreasonable. This legal position implies, therefore, that the conditions mentioned in the employment bond, including the compulsory employment period and the amount of penalty in case of breach by the employee, shall be reasonable. As the term 'reasonable' is devoid of any statutory definition, it has to be determined only on a case-to-case basis depending on the issues involved and the attendant circumstances in each such case.

Coming to your case, it is pertinent to ascertain how long you have been trained and what was the total cost of training incurred by the employer, including the amount of stipend, if any, paid to determine the reasonableness of the penalty of 15 lakh rupees, as well as the length of service you rendered after the completion of the 18-month training. It is also possible that in the middle of the training, you could have resigned.

Anyone can give an appropriate suggestion only if you are prepared to answer the above queries.