Do employment bonds help?

I was unable to understand the reasoning at first as to why are employment bonds created when I joined a company? What was the rationale beyond making these bonds? How far are these employment bonds successful?

I started by taking the policies of those companies as negative which had a bond because i believed the only reason why a company engages in such policies is that it is unable to retain key employees. This always raised a doubt in me against these companies and I believed there is something wrong with the companies rather than the employees.

What companies do is that they make the same bonds for all the employees that join the company. Rather I believe that bonds should be customized according to the specialization of the employee. If the employee is of key importance to a particular project, the bond should exist only for the term the project is run. Sharing the same type of contract for all the Graduate Engineer Trainees of Management Trainees is not justifiable. Why cant companies create a culture so that the employers create an unwritten “love bond” and the employees just don’t want to leave the company?

Bonds are also justifiable in a case where the employee acts in a way that is detrimental to the organization. Some employees join organizations, train themselves at the company’s cost and then leave the organization. For example, A. M. Naik, Chairman and Managing Director of Larsen & Toubro also went on media quoting that most of the fresher’s train themselves in the company and then leave the company due to which the company wasted a lot of money. Till that time, the company didn’t believe in contracts. The same year, when the next batch of Graduate trainees joined, a bond of 2 years was signed with the company, the failure of which the employee has to pay an amount of Rs. 2 lakhs. This 2 year period included 1 year of training by L&T. Generally, an employment bond is to avoid attrition and is justified if the training involves a large amount of expenditure by the company.

The case in which no training is given to the employee: What happens in case a company terminates someone without cause in the bond period? Will the company pay the same amount to the employee? The contract doesn’t write anything in the case the company terminates the employee without cause. The bond should be binding by both parties if signed and a similar amount should be paid by the company is case the company terminates the employee during the period but without cause.

But do these companies have time to fight for Rs. 2 lakhs in case the employees leave in these 2 years? They generally don’t. What companies generally do is deny giving a relieving letter and an experience certificate to the employee. The employee if in dire need of these certificates and relieving letter (in case of joining an education university or the next employer who asks for it) agrees to pay the bond money. There have been cases in many Indian companies where the companies do not mind if the employee leaves without paying the money. But, still it totally depends on the company if they can bear the cost and have the time to file a case against the employee.

Employment bonds do not work mostly in India and does not fulfill the objective of a company of retaining the employees. The only way company can do this is to create a relationship bond rather than an employment bond.

Ideally, both employer and employee have to respect each other’s interest at every point of time. But this is not the case most of the time. Therefore as someone has quoted that "An Honest man's word is as good as a bond" does not hold.