I have joined a company where I signed a 2-year agreement on a 100-rupee stamp paper. In the bond, they have stated that if I breach the agreement in less than 2 years, I have to pay 1 lakh rupees, but they can terminate me anytime with 1 month's notice. I have been working for only 3 months. So, I want to ask, a. Is this a one-sided bond? b. Is such a bond legal in India?
Kindly help me.
From India, Kolkata
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Kindly help me.
From India, Kolkata
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Hi,
Bonds are not legal in India. If you have signed the agreement, please check if the employment agreement (bond) has been registered. In case it is registered, then the terms mentioned in the agreement will be legally applicable to you.
- Gia
From India, Pune
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95Bonds are not legal in India. If you have signed the agreement, please check if the employment agreement (bond) has been registered. In case it is registered, then the terms mentioned in the agreement will be legally applicable to you.
- Gia
From India, Pune
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Dear Ankur, As far as my knowledge is concern bond is legal in India as I have seen many organizations who goes on to the court when there is a breach of agreement/bonds.
From India, Delhi
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From India, Delhi
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Dear Ankul,
There is nothing named as a one-sided bond in India. It is only the clause mentioned in it that matters. To learn more about the legality of Employment Bonds, please use the research tab provided in this community, as this topic has been discussed several times.
Thank you.
From India, Bangalore
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There is nothing named as a one-sided bond in India. It is only the clause mentioned in it that matters. To learn more about the legality of Employment Bonds, please use the research tab provided in this community, as this topic has been discussed several times.
Thank you.
From India, Bangalore
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Dear Ankul,
As per the Indian Contract Act, the agreement between you and your employer is lawful. As you mentioned, you signed on a Rs 100/- stamp paper to accept the conditions. In the bond, it is stated that if you breach the agreement in less than 2 years, you have to pay 1 lakh rupees. However, they can terminate your employment at any time with a 1-month notice. This implies that you have accepted the terms offered by the offeror (your company). Therefore, you have committed to serving for 2 years. If you void the contract, you are obligated to pay the 1 lakh, or if the offeror voids the contract, they will provide a 1-month notice.
Regards,
Viswanadh
From India, Hyderabad
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As per the Indian Contract Act, the agreement between you and your employer is lawful. As you mentioned, you signed on a Rs 100/- stamp paper to accept the conditions. In the bond, it is stated that if you breach the agreement in less than 2 years, you have to pay 1 lakh rupees. However, they can terminate your employment at any time with a 1-month notice. This implies that you have accepted the terms offered by the offeror (your company). Therefore, you have committed to serving for 2 years. If you void the contract, you are obligated to pay the 1 lakh, or if the offeror voids the contract, they will provide a 1-month notice.
Regards,
Viswanadh
From India, Hyderabad
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Bonds will be considered valid only if the organization has invested some money in you gaining certain rare skill sets, which you are expected to either transfer to other colleagues in the organization or use those skill sets to exploit commercial value out of it for a justifiable period. However, if the company has just signed a bond stating that they are training you, then it is not valid. Furthermore, if the transfer of skills acquired is transferable within a period less than two years, then the bond is valid only for a lesser period.
In case during the course of the so-called training, the product derived out of the training is commercially exploited by the company, then such bond is invalid. Two cases I would like to quote here are as follows:
Case No. 1
HMT versus Ex-Engineer Trainees of HMT.
In the year 1988-89, when Titan watches launched their products in India, they drew all their technical staff from HMT. Out of these over 45 Engineers who were serving the so-called bond on account of being recruited as Engineer trainees in HMT, joined Titan. It is important to note that HMT is a PSU, and hence their agreements and contracts, apart from systems, are very strong. Consequently, they filed a case against all these 45 employees. Titan helped them engage a good lawyer in Bangalore, as these cases were filed there. The engineers, in their favor, argued that in the guise of training, HMT had used the produce of their training by selling the products for commercial gain, making it not a training. The case reached the Supreme Court, where HMT could not prove that the training given was unique and that the produce used was not exploited commercially. As a result, the Supreme Court struck down the bonds. This decision provided relief to thousands of Engineer Trainees in various organizations, including IT companies.
In the early nineties, the electronic division of NTTF went to court against their trainees. NTTF used to go to villages, identify and admit rural candidates for their Diploma in Electronics course. They charged a fee and also received funding from a Danish charitable trust. NTTF aimed to launch Televisions at that time, so they got the students to sign a bond stating that after their training, they would work in NTTF to produce televisions for a period of two years. To a layperson, this might sound like a good proposition, especially since these rural youth were struggling to make a living. NTTF scouted smart youth from villages who had completed high school, bringing them in for a meager fee further subsidized by the Danish charitable trust. They offered a valid Diploma recognized by the All India Council of Technical Education and guaranteed jobs for two years. In this case, many companies enticed these individuals with higher salaries as soon as they completed the Diploma. NTTF took these individuals to court, where the judgment ruled that they were students who had completed a course. The Danish trust subsidized the course costs to develop Indian youth, NTTF did not invest anything since the non-subsidized part of the course fee was collected as fees. Additionally, the electronic products manufactured during their studies were sold commercially. Consequently, the bond was deemed invalid.
To all my friends who believe a bond is valid simply because it is signed on an INR 100 stamp paper, do not be swayed by the bond or stamp paper. No bond is enforceable in India, except when training is provided for rare skills not easily available. However, even then, the bond period must align with the investment made in the training. Spending USD 1,000 or USD 2,000 on a course and then requesting a two-year bond is not proportionate to the expenditure.
Similarly, hiring a consultant and providing 15 days of training warrants only a 15-day bond period, no more. However, if an organization sends someone to Harvard or Stanford and invests at least 50% of their cost-to-company (CTC) over a two-year period, then the bond would be valid since it incurs substantial costs and provides training abroad. If the same person is sent to Harvard or Stanford for a 2 to 3-week program, the bond is valid only for that equivalent time. The court holds that knowledge gained in two weeks can be transferred within the same period, hence not necessitating a two-year bond. Those trained for two weeks can then train others for the same duration.
Many companies have individuals sign bonds knowing they are unenforceable, serving only as psychological pressure to discourage departure within two years. If they do leave, the companies may resort to legal notices to intimidate them. However, if taken to court, these cases are often dismissed. One example is TCS, which publicly disclosed the names and amounts individuals had to pay for breaching bonds in the United States, yet they have not recovered any funds.
Smart individuals maintain a record of promised training and remind the HR department regularly, at least once a month, of the training commitments outlined in the bond. This documentation serves as evidence. Should they receive training, these individuals write to the HR department stating that the training was basic and does not warrant a two-year bond period, requesting in-depth training as promised. By keeping a record of correspondence and resigning as desired, they are well-prepared to refute bond claims from HR using their documented history.
Do not fret about bonds; bonded labor has been abolished. Keep records of training provided and not provided, regularly reminding the HR department of their obligation to deliver training that justifies a two-year bond period. In an interesting case, a labor court awarded compensation to an employee due to unfulfilled promises of training, wasting two years of the employee's time.
Remember, we live in a free country, and no one can enslave us with bonds. Understand this, and do not be troubled by the bond; it is merely a piece of paper.
From United+States, San+Francisco
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In case during the course of the so-called training, the product derived out of the training is commercially exploited by the company, then such bond is invalid. Two cases I would like to quote here are as follows:
Case No. 1
HMT versus Ex-Engineer Trainees of HMT.
In the year 1988-89, when Titan watches launched their products in India, they drew all their technical staff from HMT. Out of these over 45 Engineers who were serving the so-called bond on account of being recruited as Engineer trainees in HMT, joined Titan. It is important to note that HMT is a PSU, and hence their agreements and contracts, apart from systems, are very strong. Consequently, they filed a case against all these 45 employees. Titan helped them engage a good lawyer in Bangalore, as these cases were filed there. The engineers, in their favor, argued that in the guise of training, HMT had used the produce of their training by selling the products for commercial gain, making it not a training. The case reached the Supreme Court, where HMT could not prove that the training given was unique and that the produce used was not exploited commercially. As a result, the Supreme Court struck down the bonds. This decision provided relief to thousands of Engineer Trainees in various organizations, including IT companies.
In the early nineties, the electronic division of NTTF went to court against their trainees. NTTF used to go to villages, identify and admit rural candidates for their Diploma in Electronics course. They charged a fee and also received funding from a Danish charitable trust. NTTF aimed to launch Televisions at that time, so they got the students to sign a bond stating that after their training, they would work in NTTF to produce televisions for a period of two years. To a layperson, this might sound like a good proposition, especially since these rural youth were struggling to make a living. NTTF scouted smart youth from villages who had completed high school, bringing them in for a meager fee further subsidized by the Danish charitable trust. They offered a valid Diploma recognized by the All India Council of Technical Education and guaranteed jobs for two years. In this case, many companies enticed these individuals with higher salaries as soon as they completed the Diploma. NTTF took these individuals to court, where the judgment ruled that they were students who had completed a course. The Danish trust subsidized the course costs to develop Indian youth, NTTF did not invest anything since the non-subsidized part of the course fee was collected as fees. Additionally, the electronic products manufactured during their studies were sold commercially. Consequently, the bond was deemed invalid.
To all my friends who believe a bond is valid simply because it is signed on an INR 100 stamp paper, do not be swayed by the bond or stamp paper. No bond is enforceable in India, except when training is provided for rare skills not easily available. However, even then, the bond period must align with the investment made in the training. Spending USD 1,000 or USD 2,000 on a course and then requesting a two-year bond is not proportionate to the expenditure.
Similarly, hiring a consultant and providing 15 days of training warrants only a 15-day bond period, no more. However, if an organization sends someone to Harvard or Stanford and invests at least 50% of their cost-to-company (CTC) over a two-year period, then the bond would be valid since it incurs substantial costs and provides training abroad. If the same person is sent to Harvard or Stanford for a 2 to 3-week program, the bond is valid only for that equivalent time. The court holds that knowledge gained in two weeks can be transferred within the same period, hence not necessitating a two-year bond. Those trained for two weeks can then train others for the same duration.
Many companies have individuals sign bonds knowing they are unenforceable, serving only as psychological pressure to discourage departure within two years. If they do leave, the companies may resort to legal notices to intimidate them. However, if taken to court, these cases are often dismissed. One example is TCS, which publicly disclosed the names and amounts individuals had to pay for breaching bonds in the United States, yet they have not recovered any funds.
Smart individuals maintain a record of promised training and remind the HR department regularly, at least once a month, of the training commitments outlined in the bond. This documentation serves as evidence. Should they receive training, these individuals write to the HR department stating that the training was basic and does not warrant a two-year bond period, requesting in-depth training as promised. By keeping a record of correspondence and resigning as desired, they are well-prepared to refute bond claims from HR using their documented history.
Do not fret about bonds; bonded labor has been abolished. Keep records of training provided and not provided, regularly reminding the HR department of their obligation to deliver training that justifies a two-year bond period. In an interesting case, a labor court awarded compensation to an employee due to unfulfilled promises of training, wasting two years of the employee's time.
Remember, we live in a free country, and no one can enslave us with bonds. Understand this, and do not be troubled by the bond; it is merely a piece of paper.
From United+States, San+Francisco
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Thanks for the brief explanation about the bond.Willful and loyal working conditions should be provided in the organizations to retain the talent but not with bonds.
From India, Secunderabad
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From India, Secunderabad
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Dear Anonymous,
May I request you to share the citation or the link for the complete text of the above-narrated case, HMT Vs. Ex Engineer Trainees, Supreme Court verdict? I am in need of this to face a similar situation now.
Regards,
Suresh
From India, Pune
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May I request you to share the citation or the link for the complete text of the above-narrated case, HMT Vs. Ex Engineer Trainees, Supreme Court verdict? I am in need of this to face a similar situation now.
Regards,
Suresh
From India, Pune
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Supreme Court of India.Employmen t & Reinstatement.d ocx
Labour and Employment Laws of India.pdf