Is Employment Bond Legal As Per Indian Law

Introduction

Employment bonds are a contractual agreement between an employer and an employee, which binds the employee to work for a certain period of time with the employer. In India, employment bonds are legal and are governed by the Indian Contract Act, 1872. The Act provides for the validity of employment bonds and the rights and obligations of both the employer and the employee. The Act also provides for the remedies available to either party in case of breach of the bond. This article will discuss the legal aspects of employment bonds in India.

Is Employment Bond Legal As Per Indian Law

Yes, employment bonds are legal as per Indian law. The Indian Contract Act, 1872, governs the legality of employment bonds in India. According to the Act, an employer can enter into a contract with an employee to secure the performance of certain duties or obligations. The employer can also impose a penalty in case of breach of the contract. However, the penalty should not be excessive or unreasonable.

Whenever we listen to the word employment bond then it afraid us. There is a lot of misconception regarding employment bonds and it is one of the major barriers for new employees to accept a job offer. In most cases, the companies are using this employment bond as a tool of blackmail. You may be seen that companies ask employment bonds for 2 yrs, 3 yrs like that.  Here we will discuss whether these employment bonds are enforceable by Indian law or not and also know how to challenge an employment bond.

What is an Employment Bond

Employment bond is an agreement between the employee and employer based on some terms conditions, in order to protect the investment of employer on the employee.

Is Employment Bond Legal in India or Not

In most cases employment bonds are not enforceable by the court of law, except in very rare cases where employer succeeds to prove that they incurred some investment in training the employee. But in most of the jobs, employers don’t invest on the employee on any specialized training purposes.

Whenever they invest on the employee on training some special skills or whenever the send employee to abroad for training purpose or in some R&D employee cases only they can claim money from the employee. In remaining cases, it is very difficult for the employer to win a case against the employee.

“As per the section 27 of the Indian Contract Act 1872,  Every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind is to that extent void.”

According to the above section, no agreement has a right to make the employee work forcibly or not allowing them to join in new jobs.

In some cases, employers ask the employees to pay 2 lakhs or 3 lakhs and so on if they break the bond. But until and unless the employer able to prove that the cost is equal to the training cost incurred on employee till then employee is not liable to pay that money.

Can Employer Withhold Original Certificates

In some cases, employers will hold the original certificates of the employees as a part of employment bond, but no court will accept this, holding the certificates of employees is not at all legal in India.

Can We Negotiate Employment Bond

Yes, employees and employers can negotiate a bond and it is the best thing they can do instead of visiting the court. Because whenever they visit a court then they need to pay court charges and it is a time taking process also, so coming to a mutual understanding is always a good idea.

It is always a better practice for employees to give a notice period during resignation, so that employer can recruit and train the new employee and at the same time employer should also need to respect the decision of employee. Because when an employee doesn’t have a willingness to work with a company then he will not be productive for that employer. So it is always better to leave them and employ new employees as a replacement.

Can We Break Bond Without Paying Money

It is somewhat difficult to answer this question, in most cases, employees don’t need to pay such amounts. But if the employer visits a court and succeeds in proving that he invested in special training then the employee has to pay the training cost, but not the exact amount mentioned on the employment bond.

How to Challenge an Employment Bond

When an employees break the bond and resign to the job, then the employer will send a legal notice, then the employee should also need to respond to that legal notice. By taking the help of any professional such as lawyer send a respond notice that the employer hasn’t full fill the terms and conditions mentioned in the agreement.

Now employer has Two options, he may visit the court or just leaving the matter, because the further proceedings lead to court charges and time consumption. In the worst case, if the employer visits court then they have to prove that they have invested some money in training the employee.

If an employer withholds the original certificates of the employees, then the employee can send the notice to the employer by taking the help of any lawyer, still, if the employer doesn’t issue original certificates then the employee can take the help of the court.

Can I Agree for Employment Bond or Not

The answer to this question depends on you, whenever you are attending for an interview and employer ask you to sign the bond, then don’t sign the bond immediately. Take some time at least for 2-3 days ( In most cases employers will agree, otherwise just deny the job offer) and read all the terms and conditions.

If you want to have any changes then ask the employer to make those changes, if they agree then accept it and take a copy, otherwise deny the offer. Even though you accept the job offer but the employer doesn’t fulfill terms and conditions in job agreement then you can break the bond, but be prepared for legal proceedings.

Even employers also need to have a responsibility to tell the employee that why they are taking bond, and what kind of investment they are going to make on the employee. But don’t take advantage of the job necessity of the employee.

Is Employment Bond Legal As Per Indian Law?

Employment bonds are legal in India, provided they are in accordance with the Indian Contract Act, 1872. The Act states that an agreement to serve an employer for a certain period of time, in exchange for a certain amount of money, is a valid contract. The employer is legally bound to pay the employee the amount specified in the bond, if the employee completes the period of service.

However, the employer cannot force the employee to sign the bond. The employee must agree to the terms of the bond voluntarily. The bond must also be reasonable in terms of the amount of money involved and the period of service. If the bond is found to be unreasonable, it may be declared void by a court of law.

The employer must also ensure that the bond does not violate any of the provisions of the Indian Contract Act. For example, the bond cannot contain any clause that would make it illegal for the employee to take up a job with another employer after the period of service is over. Similarly, the bond cannot contain any clause that would make it illegal for the employee to take up a job with another employer during the period of service.

The employer must also ensure that the bond does not violate any of the provisions of the Indian Constitution. For example, the bond cannot contain any clause that would make it illegal for the employee to take up a job with another employer on the basis of caste, religion, sex, or any other prohibited ground.

In conclusion, employment bonds are legal in India, provided they are in accordance with the Indian Contract Act, 1872, and the Indian Constitution. The employer must ensure that the bond is reasonable and does not violate any of the provisions of the Indian Contract Act or the Indian Constitution.

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