Let’s say you are prepared for a job, and finally, you are ready to fulfill a job role, especially in the private sector, but then you come to find out about something called “employee bond.” Well, this is something where you’d have to sign a properly drafted agreement, and that will make you bound not to leave that very company before a certain time period. And just so you know, yes, employee bonds are legal in India, and there is nothing wrong about that when you think about it for a second. Let’s get to the details of it all and understand it in a much better way.
What is an Employment Bond?
Alright, so, an employment bond is kinda like a legally binding document that lays down a formal commitment on the part of an employee to work for an organization for a set duration of time. Get it? If an employee decides to depart prior to this set time, he/she may be liable for payment to or may suffer a penalty from the employer, both of which are caused by the breach of the agreement, and that’s how these bonds actually work.
But why is there a need for this type of agreement in place for employees? Well, let’s understand that by an example, you see, a company spends thousands of dollars training a worker, so, if the new hire decides to quit right after the training, the company would lose money in two ways: by not just losing the amount spent on training but also by failing to gain the expected advantages of the newly acquired skill set. Right? And that’s precisely why employee bonds are a thing, you know, to make sure that your trained employee won’t leave to work with some other company in the same market.
What’s The Legal Framework Governing Employment Bonds in India?
Sure, we all are now on the same page concerning what an employment bond is, but it’s also super important to look into the legality of these bonds in India. Why? Well, when you hear about such agreements, you may think these kinda sound illegal or unfair, right? However, as per the Indian Contract Act of 1872, employee bonds are absolutely legal in India. Such a law is also known to govern the rules of all the types of contracts in India, including employment bonds.
According to the law, for an employment or employee bond to be legally valid, it must meet some preset conditions. Like what? Well, in the first instance, the bond must be fair and just. In other words, the terms of the bond should not be so rigid or unreasonable to the worker, or else, it’ll just be considered exploitation and harassment. Furthermore, the bond should be drawn up by the employer and the employee with mutual consent, so yes, it can not be forced and you have the right to not sign it. This means that the signing of the bond must not be done because the employee was compelled or forced to, NEVER.
