Hi All!
I'm confused with these issues:
How true is it that a written bond holds legal value in India? What is its purpose? Is it just to ensure minimum commitment from the employee? On what basis is the period of the bond determined? I work for an HR Placement firm. Will this bond be of any use to us? Please share your opinions.
Thanks,
Vasudha
From India, Madras
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I'm confused with these issues:
How true is it that a written bond holds legal value in India? What is its purpose? Is it just to ensure minimum commitment from the employee? On what basis is the period of the bond determined? I work for an HR Placement firm. Will this bond be of any use to us? Please share your opinions.
Thanks,
Vasudha
From India, Madras
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Hi,
The bond you are referring to is the "employment bond". It is a contract made in addition to the terms and conditions of employment between the employer and employee under conditions when the employer either offers special training to the employee by investing/spending a substantial amount of money to enhance the employee's competence per se and utility to the company, or defrays special expenses in deputation abroad, etc.
The employer will have done something that he does not normally do for any regular employee. Therefore, the employer feels (and probably is) justified to get appropriate contributions by way of value addition from the employee and insists, therefore, that the employee serve the company and does not leave employment for a defined period (within which the employer feels the money invested would have been recovered adequately).
There cannot be any arithmetically accurate formula to decide the period for which the employee may not leave employment and the value of the bond he may be required to sign. It should be reasonable and be seen by the courts as such if there be any litigation in the matter. However, the amount has a basis on the lower side (equivalent to the money actually spent by the employer to enhance the employee's competence and utility to the company) and this amount will be built up higher depending on the perceptions of the employer of the value that may be lost instead of gained if the employee leaves employment mid-way!
The experience tells that:
1) It is uneconomical (cost-wise) to enforce the bond. (Lawyers may end up earning more than the bond value!!!)
2) It is time-consuming.
3) It is at best a psychological deterrent.
Even so, if this has to be done, then please remember that the bond should be balanced. Both parties must enjoy even rights/obligations. (This the lawyers would advise well.) And it is sometimes necessary to make an example so that others become aware of the consequences.
Whether a bond would be useful for a placement company is a matter I refrain from commenting on, but many employers demand that the employees must give them some definite period of performance!
I trust you have seen adequate facets of the issue!
Regards,
Samvedan
September 6, 2006
From India, Pune
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321The bond you are referring to is the "employment bond". It is a contract made in addition to the terms and conditions of employment between the employer and employee under conditions when the employer either offers special training to the employee by investing/spending a substantial amount of money to enhance the employee's competence per se and utility to the company, or defrays special expenses in deputation abroad, etc.
The employer will have done something that he does not normally do for any regular employee. Therefore, the employer feels (and probably is) justified to get appropriate contributions by way of value addition from the employee and insists, therefore, that the employee serve the company and does not leave employment for a defined period (within which the employer feels the money invested would have been recovered adequately).
There cannot be any arithmetically accurate formula to decide the period for which the employee may not leave employment and the value of the bond he may be required to sign. It should be reasonable and be seen by the courts as such if there be any litigation in the matter. However, the amount has a basis on the lower side (equivalent to the money actually spent by the employer to enhance the employee's competence and utility to the company) and this amount will be built up higher depending on the perceptions of the employer of the value that may be lost instead of gained if the employee leaves employment mid-way!
The experience tells that:
1) It is uneconomical (cost-wise) to enforce the bond. (Lawyers may end up earning more than the bond value!!!)
2) It is time-consuming.
3) It is at best a psychological deterrent.
Even so, if this has to be done, then please remember that the bond should be balanced. Both parties must enjoy even rights/obligations. (This the lawyers would advise well.) And it is sometimes necessary to make an example so that others become aware of the consequences.
Whether a bond would be useful for a placement company is a matter I refrain from commenting on, but many employers demand that the employees must give them some definite period of performance!
I trust you have seen adequate facets of the issue!
Regards,
Samvedan
September 6, 2006
From India, Pune
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Bond of Employment.doc
Bond in employment.pdf