Company is james BOND

The employment agreement with my company had quite a similar clause as mentioned by Rohit. I resigned after 11 months and had to pay around 2 lakhs as damages for not honoring the agreement. As the amount was quite substantial, I tried to take legal consultation in this regard.

What was suggested by most was that this money is basically for obtaining the experience letter. The company won't push for this amount and won't be taking any legal action. The employee is at a disadvantage by not getting the experience letter without paying the bond amount. The experience letter is required in most organizations and all institutions of higher education. Thus it does not matter whether you going to join some organisation or going for higher studies, this letter is required. Thus in the end I had no option to pay this amount as I had to submit that letter during the time of my admission.

Some other friends who left the organisation within 3 months of joining did not pay the bond as they could portray themselves as freshers at that point of time. But after around one year this was not a valid option for me. As per a lawyer I could have gone to court but there was no way I could get a quick decision from a legal body. Thus my paying the bond amount was more out of necessity rather than legal compulsion.

In the IT industry, almost all the companies use employment agreements to lower down attrition. But what we should look into is if it actually lowers down the attrition. From what I've observed it is more of a attrition delayer. If an employee is planning to resign after an year, he may delay it by another year due to the employment agreement. But after two years I feel that after two years the kind o expertise gained by the employee is an advantage for the firm. Letting go of such an expertise and investing in another fresher does not seem to be a viable option. Then why do these companies pose such strict rules in terms of employment.

Another thing worth noting is that these employment contracts are there mostly in organizations with high employee base and these organizations are generally known for paying less than the industry standards. Companies like Google or Cisco don’t have any such contract. Does that mean that they are not worried about attrition? On the contrary a study in this respect found that these companies invest much more in their employees than the organisations we were talking about formerly. And to save this investment they have moulded their employment practices such that they have a low attrition rate. One may say that companies like Google can afford to do such things as it is a highly successful company. But then what about companies like Genesis, Xansas, and Ernst & Young. These companies also refrain from an employment bond. Thus use of the employment bond is a much debated issue with no consensus about it even within the industry.