BONDS: An analysis

From the instances cited in the original post, it is easy to gather that the general reasons for imposing the bond are:

· To recover cost of training

· As compensation to the organization/employer by the employee for using the data/knowledge generated at work or the insider information for his/her own benefit

· To ensure that the employee once sent abroad for work continues to stay in employment and does not resign because of being given the chance to go abroad

· To ensure that the employee after coming back from a project abroad, continues to stay in employment. This is mainly to ensure that the employee does not make new employment relations abroad at the expense of his/her current employer

Some characteristics of Employment bonds that have been highlighted in the original post are as follows:

· The bonds are flexible in terms of the fact they can be relaxed if the employee wants to take up exercises for personal development such as pursuing higher studies

· The amount of bond levied varies from company to company. Some companies may not levy any bond whereas some companies levy light to heavy bonds

· The bond is levied for a fixed period of time

· The bond is generally decided on category to category basis – it may vary on the basis of training imparted, the post, the background of the employee like qualifications etc., tendency of the employee to leave the job etc.

· Compensation is generally provided after completion of bond period

· Consequence of breaking the bond can be in terms of levying of legal charges or being forced to pay the amount as due for breaking the bond

From the above mentioned information, some general conclusions follow:

· Although there are multiple reasons for levying the employment bonds, as cited above, when analysed for weightage, they are all justified in their reasons. These reasons provide valid grounds for an organization to levy a bond on the employee.

o Considering a few of them, we see that in the case of cost recovery, it makes sense for the employer who has invested a huge amount in training the employee, to restrict his movement in order to reap benefits from this investment. It will be unfair for the employer to incur the costs of training the employee, adding to his skill set and then losing the employee to some other organization without receiving any return from the investment in training.

o Considering the other reason of levying a bond in order to gain compensation for letting the employee use the insider information, it is again justified on the grounds that the employee is benefitting from the knowledge via the organization’s database so the employer should also be benefitted in return. Even if the data has been compiled by the employee himself, it has been done by using the organization’s resources and during the working hours. In either case, the organization can’t allow any employee to join the organization, use its data for free, make profitable investments by using that data and then leave as and when they so wish.

o Considering the bond to contain the employee in the organization when given a project involving travel abroad, the situation itself creates a requirement for a bond. This is so because the organization has given the employee the opportunity to travel abroad and gain experience in a different environment. This would lead to the personal development of the employee. In return, the employer expects the employee to work on the project to further the interests of the organization. If the employee tries to leverage this opportunity to further his own personal interest in terms of leaving the job and continuing to stay abroad to gain access to a better lifestyle or to leaving the current job and seeking other job opportunities abroad, the employer has a clear incentive to ensure that the employee is bound by the bond to return back to the domestic organization rather than taking the company for a ride.

· As like most of the other things in the world, the Employment bonds also have their pros and cons.

o The good things about the bonds are that they provide the necessary safety to the organizations in terms of reaping results on their investments in their most important assets-their employees. In order to make them fair to both the stakeholders in the bond – the organization and the employee, the bonds are made flexible in terms of the stated conditions under which they can be relaxed. They are also somewhat custom made in the sense that they are designed keeping in mind the amount spent on training the employee, his/her qualifications etc. On successful completion of the bond, the employee is compensated for the amount bound by the bond as well. However, in order to ensure adherence to the bond, the consequences for breaking the bond are also stated.

o In terms of its disadvantages, they restrict employee mobility. The employee is bound by the bond and is thus, not at the liberty to change jobs at his will; even in the case he/she receives a more lucrative job offer. The employee is legally bound by the bond to serve the entire period as stated or pay the fine as defined per the bond. The bond which fixes a certain time frame or an amount, sometimes acts as a deterrent for a potential candidate to join the firm as he/she might not want to be come under the purview of the bond. This will result in the organization losing a worthy talent.

Therefore, given the above analysis of the original post, it is clear that the bonds are necessary for the organization to equitably reap its investment in its human resources. However, they can restrict employee mobility and act as deterrents for new talent to join the organization.