Dear All,
One of my friends is working in an IT company. Recently, he appeared for an interview at a new company and was selected. However, he was asked to sign a bond for a period of 1.5 years. According to the bond, if he leaves the job before 1.5 years, he will have to pay 1.5 lakh rupees. The package offered is good, and he does not want to lose this opportunity.
If he decides to leave the job before the stipulated period, would he be legally bound to pay the money to the company?
Please advise.
Fahim Khan
From India, Delhi
Acknowledge(0)
Amend(0)
7One of my friends is working in an IT company. Recently, he appeared for an interview at a new company and was selected. However, he was asked to sign a bond for a period of 1.5 years. According to the bond, if he leaves the job before 1.5 years, he will have to pay 1.5 lakh rupees. The package offered is good, and he does not want to lose this opportunity.
If he decides to leave the job before the stipulated period, would he be legally bound to pay the money to the company?
Please advise.
Fahim Khan
From India, Delhi
Acknowledge(0)Amend(0)
Bonds, binding employees to an employer for a period of time, are not legal in India, so most companies do not call them bonds. Agreements, on the other hand, are legal and binding on two or more parties who sign it. For this reason, most companies make employees sign an agreement to serve them for a period of time. To reinforce the legality of the document, the agreement will normally state that the employee will receive some form of training during the employment tenure, with the company spending a specified amount towards it. As a result, the employee agrees to serve the company for a specified period post the training, etc.
In the past, courts have held that bonds in any form are illegal. They have also deemed agreements that do not specify the cost of training and the period required for the company to recover this cost as invalid.
Despite the above, courts typically favor employees in employer-employee disputes. However, employers, with their financial and influential power, may be able to exert some level of pressure on an employee who breaches the terms of an agreement.
It is advisable for your friend to carefully consider the reason for which the agreement is being required. If it is related to a foreign assignment or training abroad, he/she may be able to consider signing it and paying Rs. 1.5 lakhs even if deciding to leave the job thereafter. Many companies have new employees sign agreements primarily for deterrence purposes and do not necessarily pursue violations rigorously.
From India, Mumbai
Acknowledge(0)Amend(0)
In the past, courts have held that bonds in any form are illegal. They have also deemed agreements that do not specify the cost of training and the period required for the company to recover this cost as invalid.
Despite the above, courts typically favor employees in employer-employee disputes. However, employers, with their financial and influential power, may be able to exert some level of pressure on an employee who breaches the terms of an agreement.
It is advisable for your friend to carefully consider the reason for which the agreement is being required. If it is related to a foreign assignment or training abroad, he/she may be able to consider signing it and paying Rs. 1.5 lakhs even if deciding to leave the job thereafter. Many companies have new employees sign agreements primarily for deterrence purposes and do not necessarily pursue violations rigorously.
From India, Mumbai
Acknowledge(0)Amend(0)
be careful, go through the company’s background properly, ask to existing employees and finally see all the conditions of the agreement carefully.
From India, Delhi
Acknowledge(0)Amend(0)
From India, Delhi
Acknowledge(0)Amend(0)
Hi, I recently received a notice for having broken a bond which I signed on a Rs 20 stamp paper for overseas training which bound me to the company for 18 months after training. I had a lot of personal problems and tried working it out with the company, and it didn't work out. Subsequently, I left, resigning through email, which they did not accept. After some months, they sent me a termination notice for absconding from work. I had no choice given my circumstances. This bond now asks me to pay the amount of 2.5 lakhs. I have other friends/colleagues who left the company for better opportunities, breaking the bond, and have asked me to ignore it. I do not agree. Could you suggest what I should do? Also, I need a good advocate's name and contact whom I can contact for advice. I have to reply before 22nd September. Could anyone please help me? Or should I speak to the advocate who sent me the notice first? Please advise.
Sarita
From India, Mumbai
Acknowledge(0)Amend(0)
Sarita
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Fahim,
As told by Mr. Raj, for any agreement to be legally viable, there has to be binding from both sides. If the agreement states binding conditions from the employer's side as well, then this agreement is legally valid in courts.
Although in the absence of the employer's binding conditions, making it invalid, as mentioned, employers can use this to harass employees.
Thank you,
Preeti
From India, Pune
Acknowledge(0)Amend(0)
As told by Mr. Raj, for any agreement to be legally viable, there has to be binding from both sides. If the agreement states binding conditions from the employer's side as well, then this agreement is legally valid in courts.
Although in the absence of the employer's binding conditions, making it invalid, as mentioned, employers can use this to harass employees.
Thank you,
Preeti
From India, Pune
Acknowledge(0)Amend(0)
Hi to all HR professionals,
Which company is deducting security money from employees in every month's salary without a bond in place? If an employee quits the company, the company will forfeit the security money from the employee's account, and the remaining amount will be borne by the company.
From India, New Delhi
Acknowledge(0)Amend(0)
Which company is deducting security money from employees in every month's salary without a bond in place? If an employee quits the company, the company will forfeit the security money from the employee's account, and the remaining amount will be borne by the company.
From India, New Delhi
Acknowledge(0)Amend(0)
Singing a bond may not be a bad idea if you are looking for a stable job with good opportunities. A bond is basically signed when the company itself is strong enough to provide you with work as well as a salary long enough for the bond period itself. In the current situation, when there are many job cuts going on, specifically in the IT field, a bond may offer a sense of security and stability provided by the company.
The company may sometimes ask for a payable amount only if you leave the job before the expiry of the bond period, as it may show your irresponsibility towards your current employer. So, if you want a stable job in the current environment, it's good to sign a bond. Otherwise, if you are prepared for a risk, stay out of it.
From India, Thana
Acknowledge(0)Amend(0)
The company may sometimes ask for a payable amount only if you leave the job before the expiry of the bond period, as it may show your irresponsibility towards your current employer. So, if you want a stable job in the current environment, it's good to sign a bond. Otherwise, if you are prepared for a risk, stay out of it.
From India, Thana
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Legal Clarification on Negative Covenants in Employment Agreements.pdf