Life is, but an interpolation of a plethora of opportunities, which we experience during our upward spiral journey. Often, a thought provoking dilemma comes about as to which is more worthy-Leaving ,the current opportunity for another, or leaving the other one for the current. A similar debacle is faced in corporate world, signified by the Employment Bond, often perceived by many as an insidious constraint to mobility of jobs, synonymous with BONDAGE. Before dissecting the various idiosyncrasies of Employment Bond, I think it would be worthwhile to assimilate the meaning and implications of the term “bond”. According to Butterworth’s Encyclopedia of Forms and Precedents, a bond is a deed, whereby one person binds himself to another for the payment of a specified sum of money either immediately or at a fixed future date or whereby several people bind themselves jointly or jointly and severally to one or more persons to the same effect. A bond may also be for payment of penalty or due to damages borne by the employer on behalf of the employee. In other words, it is a form of contract. The concept of bond finds special mention in the Indian Stamp Act, where it is looked upon as a medium through which an employee obliges himself to compensate another, conditional upon the eventuality of a certain act occurring or not occurring, as the case may be. A bond should be signed and executed in the presence of independent witnesses, who may bear acquaintance with the person executing the bond. An Employment Bond in India necceciates to be rummaged against the backdrop of Indian legal, social and its diverse cultural background. As per the Indian Contract Act, any contract which is just one-sided, favoring one side is annulled null and void. The Indian case at hand, well is mostly one sided. Again, provisions in the Act forbid recognizing any such contract which spells harm to one of the parties, and violates the principles of natural justice. The Supreme Court of India has heralded the view that under no circumstances, can an employer can force an employee to work under it against his wishes, just on the pretext of signing a bond. Such a bond is only enforceable in the court of law, if the company can prove that it has incurred substantial amount for the personal enhancement and increasing the skill sets of the employee, over and above the sessions in a formal training.
Yet, in spite of these legal intricacies, Indian corporates invariably engage their employees into bonds of varying facets, structured to suit their needs and limit their liabilities. This is prevalent in many IT companies, but the PSU‘s are also fast catching up, following suit. In the current scenario, where India is experiencing a purple patch in terms of growth, productivity and employment, offshore lures are fast becoming not-the-obvious choice for many employees. Abundant offers are up for grabs here too, with salaries hitting the roof each passing year. Equivalently, employee mindset is facing a radical shift, from the company loyal approach in the days of yore to the present employee satisfaction approach. In order to rein in the often unchartered movement of employees and retain their talent, companies resort to bind them using such bonds. A bond period of 2-3 years has become a norm, while in some cases; companies bind their people for more than 5 years. Violating such contracts would attract a hefty penalty, running into several lakhs of rupees. The terms and conditions of such bonds sometimes seem ludicrous. The employee has to serve a notice period of a couple of months. Then, he is barred from joining another company in the similar line of business, i.e the functional domain he previously has worked on. This only seems gullible form the point of view that some R & D companies or some major cola company would not afford their past employees to reveal trade secrets upon joining their rivals. This might have serious repercussions on their repertoire of specializing on the product category. But then, how would one negate the claim that a person would be given a specialist position only due to previous experience in that domain. Several reasons could be enumerated against the execution of the Employment Bond, within the interests of an employee. The new company which found that the employee fits in rightly to their needs, might want him/her to take charge immediately. But due to the constraint of serving a notice period, he/she is simply unavailable at the moment, which forces the new employer to consider other applications, and his/her candidature is up for a toss. Even if one decides to quit his current job without serving the notice period, there is no surety that he would secure one sooner than later. Upon breaking the codes, the employee is sure to find his back pinned against the wall. The organization can sue him/her for doing so. All relations with the past employer would be squared off. Reentering the organization would become highly improbable after the violation. And if any amount is due to him/her, well, the world is anyways built on hope! Worst, if the new employer comes to know that he/she is on the run, breaching employment bond, chances are that he/she might be barred from employment in the entire industry after that. Not to mention the harassments inflicted upon the family members of the employee, inquiring relentlessly about his/her whereabouts. As we can surmise from above, the cost to benefit ratio upon breaching a contract is so high, that the employee finds to best to reconcile with status-quo and wait his brains out for the bond period to terminate.
All said and done, employees do risk trying to evade paying up huge compensation or making good the high opportunity cost. They try arbitrating the cause with his/her boss. Often, it boils down to the boss taking the final call, which reflects the culture of the organization. Sometimes, companies try to put forth an example to their other staff by settling to a civil recovery of sorts, letting the employee go with/without a minor amount. If no viable solution makes way, employees fight their case in court of law, fighting with all their worth. And finally, vanquished and utterly frustrated, they simply vanish one day, untraceable for as long as possible. I would opine that the best practice would be to loathe breaching the bond, for, at the end of the day, it was the employee who signed the bond, in conscious mind. A settlement with the present employer best seems feasible, avoiding massive fallouts. It would be a compromised case for both employer and employee. But then, none would feel squandered or consumed more than the other. But one can be sure of the fact that Employment Bond in India is here to stay.
Yet, in spite of these legal intricacies, Indian corporates invariably engage their employees into bonds of varying facets, structured to suit their needs and limit their liabilities. This is prevalent in many IT companies, but the PSU‘s are also fast catching up, following suit. In the current scenario, where India is experiencing a purple patch in terms of growth, productivity and employment, offshore lures are fast becoming not-the-obvious choice for many employees. Abundant offers are up for grabs here too, with salaries hitting the roof each passing year. Equivalently, employee mindset is facing a radical shift, from the company loyal approach in the days of yore to the present employee satisfaction approach. In order to rein in the often unchartered movement of employees and retain their talent, companies resort to bind them using such bonds. A bond period of 2-3 years has become a norm, while in some cases; companies bind their people for more than 5 years. Violating such contracts would attract a hefty penalty, running into several lakhs of rupees. The terms and conditions of such bonds sometimes seem ludicrous. The employee has to serve a notice period of a couple of months. Then, he is barred from joining another company in the similar line of business, i.e the functional domain he previously has worked on. This only seems gullible form the point of view that some R & D companies or some major cola company would not afford their past employees to reveal trade secrets upon joining their rivals. This might have serious repercussions on their repertoire of specializing on the product category. But then, how would one negate the claim that a person would be given a specialist position only due to previous experience in that domain. Several reasons could be enumerated against the execution of the Employment Bond, within the interests of an employee. The new company which found that the employee fits in rightly to their needs, might want him/her to take charge immediately. But due to the constraint of serving a notice period, he/she is simply unavailable at the moment, which forces the new employer to consider other applications, and his/her candidature is up for a toss. Even if one decides to quit his current job without serving the notice period, there is no surety that he would secure one sooner than later. Upon breaking the codes, the employee is sure to find his back pinned against the wall. The organization can sue him/her for doing so. All relations with the past employer would be squared off. Reentering the organization would become highly improbable after the violation. And if any amount is due to him/her, well, the world is anyways built on hope! Worst, if the new employer comes to know that he/she is on the run, breaching employment bond, chances are that he/she might be barred from employment in the entire industry after that. Not to mention the harassments inflicted upon the family members of the employee, inquiring relentlessly about his/her whereabouts. As we can surmise from above, the cost to benefit ratio upon breaching a contract is so high, that the employee finds to best to reconcile with status-quo and wait his brains out for the bond period to terminate.
All said and done, employees do risk trying to evade paying up huge compensation or making good the high opportunity cost. They try arbitrating the cause with his/her boss. Often, it boils down to the boss taking the final call, which reflects the culture of the organization. Sometimes, companies try to put forth an example to their other staff by settling to a civil recovery of sorts, letting the employee go with/without a minor amount. If no viable solution makes way, employees fight their case in court of law, fighting with all their worth. And finally, vanquished and utterly frustrated, they simply vanish one day, untraceable for as long as possible. I would opine that the best practice would be to loathe breaching the bond, for, at the end of the day, it was the employee who signed the bond, in conscious mind. A settlement with the present employer best seems feasible, avoiding massive fallouts. It would be a compromised case for both employer and employee. But then, none would feel squandered or consumed more than the other. But one can be sure of the fact that Employment Bond in India is here to stay.
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