Is the bond effective enough??

Bonds are one way to restrict the mobility of employees from one organization to another organization. But how effective it is in restricting employees movement is different question altogether. Because it is usually seen that employees pay the whole bond amount and move to another desired organization. As given in the original posting the bond amount is generally the training expenses incurred by the company, so it is obvious that the company is trying to ensure that employees spent particular time of their career with the organization in return of the resources, time and effort spent by the organization on the employee.

But is this explicit cost covering all the implicit expenses born by the company. It is a question to be asked. Because employees develop a lot of skills, on hand experience while working with the organization and is this cost covering that. And is this bond effective enough to do that. Moreover the organizations can ensure some amount of working time in return of this bond. But what about the commitment of the employees. Can the bond really ensure that? Because it is seen that some employees wait for the bond to expire to move ahead in the career. So there is lot of dynamics involved in the employment relationship and it is really a challenge on part of the organization to incorporate all this in few pages of the bond.

And it is against the very principle of freedom of mobility in a free market place economy as ensured by Indian jurisdiction as discussed in various sessions of our ER course. So no bond can really help the organization in retaining its employees. May be a healthy working environment, a prospective career plan, and other facilities like adequate salary, remunerations help in doing so.

And coming to the employees can they really do something about the bond. As seen in the various features of the bond it is generally for the entry level employees like the graduate engineer trainees and management trainees who can do nothing about the bond in starting of their career. It is just like standard non-negotiable company document which is to be signed and the employees can do the least to avoid that. So bargaining power of the employees is also an issue. May be because a more experienced and qualified person can command such a power in avoiding such a bond.

Bond or Bondage ??

Though i have never had an opportunity to sign a bond till date, i would like to share some of the experiences of people who are suffering bondage after signing a bond. About a month back, when we were returning back to campus from Chennai, we met a group of three girls who were carrying an unusually large amount of baggage and a television ! (For those who are not aware, all the people below poverty line in Tamil Nadu have been given free television sets !!) On further conversation, we found that they belonged to Chennai but were working for a top notch IT firm posted at Bhubaneshwar. For quite a long time, they kept cribbing about the location where they were posted and how life had become miserable for them after coming here. Over the entire conversation, they kept telling that if they did not get a transfer to Chennai, they would put their papers on August 1st this year. Their cribbing included the food, transport, accomodation, weather, entertainment, and nearly every single thing which could be cribbed about. I became rather inquisitive to know, what was holding them back here, Why dont they quit their job and go back home, rather than sitting and cribbing about everything here. There came the reply, they were held back by their BOND. If they quit their job, then they would have to pay a huge amount and their bond(age) ends on 1st August. So, if the company didnt give them a transfer then, they would quit immediately.

This made me think of the Bond's in another direction. The same bonds on the pretext of recovering money spent during training is being used as a tool to keep the employees bound to the company; at least in the short run. On talking to some more people in the industry regarding this, i came across an interesting piece of information. Irevna have found an innovative way to hold back their employees. They don't get money from the employees to hold on to them longer; they give money to the employees under the disguise of Joining Bonus. The people who receive join in bonus have to serve a minimum period of six months, failing which they had to pay up double the join in bonus.

So, are the employees actually signing a Bond, or a Bondage which is keeping them tied to a particular organization ? Comments welcome.

BOND- A NECESSITY…

Bonds have been a very important part of Employment Relations since ever. They become even more important as in today’s economy, companies are hiring specialized labour. So saving and using the using the expertise assumes paramount importance. Various reasons can be sited which can justify the existence of a bond such as-

1. The costs that companies bear makes it imperative to have a bond.
2. For ensuring that the organization has the required skills at disposal whenever it requires.

But from the employee point of view, many organizational bonds may appear to be unjust. Its mostly a way an organization ensures IPR(Intellectual Property Rights) inside the organization. They use it as a way to stop the passage of knowledge to the competitors. But nevertheless, the importance of employment bonds can never be undermined.

Sports and Bond

The wave of IPL fever is fast catching up all of India. It is back with all its glitz and glamour (not to mention the cheerleaders). Keeping this as the base I would like to bring a different angle to the bond issue. There was a time when cricket was game played by gentlemen in an elegant manner. Things have moved on and have moved quite fast; so fast that test matches have been converted into short T20s and the elegant gentlemanly game played for days together is now a fast paced thriller with edge of the seat excitement. But probably the biggest change is the ‘commoditization’ of players. Once upon a time Lisbon, Portugal was considered as the international capital of slave trade. In present scenario, the auctioning of players for the IPL is a disguised form of trading, with the buyers being rich corporate honchos and glitzy bollywood stars and the people being traded are the players who, in contrary to the old times, are happy to be auctioned. In fact players being auctioned for higher money are treated with great respect. There is a contract that keeps these players bound to the team and which effectively makes them slaves to the team. Adding to that, a bond that they sign would restrict them from playing in any other rival league (as explained below).
There was this fiasco between IPL and ICL over players playing in each of the leagues. There was a bond that was mandatory for players of each league to sign which effectively forbids them from playing for the other league. Even players signing the bond for the rebel league (ICL) were dumped by their cricket board. This just goes to show that signing a bond can be career ending move if it is not well thought out. This kind of restriction is not a good sign for players as well as sports as a whole. Thankfully, this edition of IPL has allowed the players from the rival league to be absorbed in the present league. There was again a tussle between ECB (English Cricket Board) and its players for participation in IPL. The ECB has set strict guidelines that any English cricketer having signed the contract with ECB is not eligible to play in the IPL. If any player does not heed to the warning, he would not only face monetary sanction but he might as well be banned from wearing the England jersey ever again. So the only player playing in IPL, Dmitry Mascarenhas did one intelligent thing by not signing the contract from ECB.
Another facet of bond is seen in the field of football. Recently the transfer of Cristiano Ronaldo from Manchester United to Real Madrid caused great furore. Cristiano Ronaldo and Sepp Blatter( FIFA President) went on to say that modern ways of restricting player movement through bonds and contractual obligations is an innovative way of ‘enslaving’ players to the respective teams. The ‘slave’ allegation eventually led to Manchester United giving away their prized possession to Real Madrid. It is also seen that many young players being nurtured by clubs have a release clause on their contract which asks the teams to pay an extra amount just because the player has signed a bond when he was a teenager, hardly knowing the nuances of a contract. So when he grows up, he realizes that he cannot play for the club of his choice just because he signed some paper (bond paper) when he was a kid.
The same analogy exists in the corporate field. When a person joins as a freshman (teenager in a football field), he has hardly any idea about corporate world and unquestioningly signs in every piece of paper that the organization asks him to, only to realize that one year down the line when he contemplates moving out of the company he is bound by the chains of bond which becomes an extra burden for employees who do not come from a well to do family (in a lot of cases, their sole earner). Employers definitely have an obligation of recovering the money that they spend on an employee’s training, and with that sense they are probably right in getting the bond signed. But restricting the movement of employees to the places of their choice does not help the company as an employee might as well become rebellious and become a non performing asset(NPA).
In case there is a situation where the immediate superior of an employee develops some kind of animosity towards him/her. So the superior tries to create an environment where employee can be constructively discharged. Now the employee, given the circumstances wants to leave the organization because of the hostile work environment. But then the issue of bond crops up. So in such case the employee is in a lose-lose situation. This is just one perspective of dark side of bond. A lot of other issues regarding bonds have been extensively discussed by friends here.

u109041

Satya Swaroop Sahoo

Bonds - From a different angle

Bonds, as has already been discussed and debated in a number of previous posts, are an essential tool for the employers to either restrict the employee from leaving the organization before a specific time or extract the amount which it had invested in the development of the employee if he/she chooses to do so.

However, I would like to look at it from a different perspective. In my opinion, in today’s world all that matters is talent and the rest follows. Consider an employee with immense talent, who is not satisfied with his current employer due to monetary/other issues and is looking for other opportunities. He is bound by a contract which prevents him from leaving his current employer or imposes a penalty otherwise. Given the talent he has got, any employer who requires resources in the concerned field would, in today’s competitive environment, be willing to pay the contract breaching amount associated with the employee because it is the talent that matters in the long run. What the employees need to be careful about is other terms and conditions which often go unnoticed until they finally come into contention demanding penalties or even leading to termination. Conditions relating to intellectual property rights fall in the above category. But as we already discussed it in detail in previous forums, so I won’t go any deeper into it. While I was working in the software division of a mutual fund company, my employment contract required that I don’t invest in IPO’s as it believed that I would be competing against the organization by doing so. Further it required me to give details of my demat account and also restricted my trading activities to a maximum of four transactions per month. Non-adherence to these conditions led to penalties and other severe actions. Further, there are policies which restrict the employees from extending the relationships with clients/other employees beyond the work that they do as their obligation towards the organization. Getting engaged into any sort of business activity is prohibited. Even giving gifts to one another might make one liable to penalties and other strict actions. Employment bonds, in strict sense, are just like the tip of an iceberg which is visible to everyone and hence can be manoeuvred with, based on one’s talent but it is the covert conditions which form the rest of the iceberg that one should have cognizance of.

Employment Bond: An edge for the Employer.

These days all the companies ask the new joinees to sign the employment bond at the time of joining. The employees have no way out other than signing the bond. The language stated in the bond may differ, but in all cases they act as obstacles to search for jobs. Some of the typical clauses in a common employment bond are:

a.If one leaves a job, he/she has to give a notice beforehand.

b.One cannot join a company that is into a similar line of business, which in itself is very strange because one will only join a company that he/she has experience of working in.

c.One has to pay to the company a particular sum if he/she is leaving the organization.

Now some of the reasons ,why it becomes difficult to leave a job because of the bond are:

1. The companies, that one goes for an interview , will want the candidate to join office immediately. But if one would say that he/she has to serve a notice period,then they would seldom consider the candidature. This in itself is contradictory because at one hand they will not allow their own employees to leave without notice but on the other hand they would lure employees from other companies to break the bond.

2. Even if one thinks of quitting by giving the notice without a job in hand, there will not be any guarantee that the employee will secure a job after the notice period expires.

After having worked with TCS for 4 years , I have seen that ,on many instances the employee simply leaves without informing the organization. This has its share of problems:

The organization sues the employee in the court for breaching the employee contract. All relations with the employer are broken. Employment with the organization gets closed for ever. One doesn’t even get dues from the organization.

Also in addition to the normal bond which one signs at the time of joining , in TCS one also needed to sign a bond (called MODA) before leaving for an onsite assignment. According to this bond one would have to serve TCS for 6 months after returning to India, else one would have to pay a required sum for breaking the bond.

Thus we can clearly see that resigning from a job is much more difficult than even finding one. One has nothing nothing to lose while finding a job.

BOND: employer vs employee!!

The first thing which we studied in employment relationship was “Employment at will” – the principle which is used to describe the smooth relationship between the employees and the employer. Under this “Employment at will”, employer is free to hire and fire any employee at any time. It also allows the employee to decide whether he wants to continue with the same job or want to leave. It allows them to switch jobs and leave any job at any time. But as time progressed, the term “contract” and “bond” evolved out which converted “employment at will” into a plain deal. As stated by the various bonds, they strike a deal between the employer and employee where employer wants to get the return on the investment (the investment employer made, by training the employee).

Now days, employer just want the employee to stick to their company. There are various reasons. The employing company spends lots of money during the training period, also while working, the employee is given access to many confidential data. So the employer does not want any of it employee to leave as soon as it finishes its training. Also it will again require lots of investment to hire and train new employees, so it’s best to retain the employees. “Employment at will” necessarily does not agree with what companies want and thus to retain the employees it’s necessary to introduce the term “Bond”. Bond is basically the agreement between the employee and the employer which forces the employee to stay in the company and also make sure that if the employee leaves (after training) then he does that by paying some penalty.

Going through the employer’s point of view, I feel it’s necessary to have a contract/deal/bond with the employees so that the company does not have to face the situation of employee shortage (because of employees quitting job as soon as they finish the training). It sounds completely logical as the company should get some returns in return for all the resources it spent in the training of the employees. But when going through the employee point of view, it’s very bad on them. Many employee who are not happy with the company’s policy, can not leave the company just because they can not afford to pay the money as stated in the bond. Even if they wish to go for higher education, they can not leave so easily (if serving under the mentioned bond period). Now a day every company comes with a bond, with different terms and conditions. But how ethical is it to keep your employees in your company against their will?? By signing the bond, the employees enter a deal which clearly is in favour of the employer. The bond indirectly states that it gives right to the employer to fire any of the employees at any time, but under the bond period if the employee leaves, it will make the employee pay for it. Related to what I said, I got reminded of a statement, which was said by many of my friends “love your job, but never love your company, because you may never know, when the company stops loving you!!” and no wonder, after going through the terms and conditions of the bonds, it looks quite logical.