Asatyam:
• A bond of Rs 2,00,000/- for the duration of 2 years or 3 years in the form of a Bank Guarantee issued by SBI executed on the date of joining. The bank guarantee is obtained either through 100% payment at SBI or taking a loan of 2 lakhs from the bank and then the bank issues the guarantee. However the bank charges an interest for that.
• This means the employee is actually paying interest on the amount that he is not even using. The bank guarantee is to be deposited to Satyam and will be returned to the employee after his 2 years in the company is over.
• Bond can be relaxed if the employee is leaving for higher studies. However this is subjected to approval from the legal department. If a person resigns at onsite, the bond is subjected to law of the land.
Chutney Computers:
• The employee cannot leave before one year of joining and if he does so, he has to pay an amount of Rs 1.6 lakhs (which effectively is the cost of the training).
• If the employee is sent abroad, he cannot leave before 18 months, else he is liable for a payment of Rs 2.5 lakhs on termination.
WisdomSys:
• A bond of Rs 1,00,000/- for the duration of 1 year which includes the training period. The training period for the IT background trainees includes 3 months extensive training and for non IT background trainees the training period includes 2 months of general training and then 3 months extensive training.
Pity Group Financial Services:
• Overseas Bond – An agreement needs to be signed before a person goes onsite, specifying that the person have to serve the company one year after he return to India, or else will have to pay Rs 1 lakhs.
• Generally the sales and marketing of products in the financial services market do not attract employment bonds, but the research analysts are required to sign up a bond that they (including their parents and spouse) will not trade in the market for a period of one year from joining. However, if they get some insider information and purchase a particular instrument, they are not allowed to sell the same before a period of one year. Though the specific terms could differ from company to company, a general insight was gathered.
RumDal Steel:
• A bond of the value of Rs.2,00,000/- only is to be executed to remain in service of the company for a period of three years immediately after the successful completion of the training.
• After successful completion of three years of service after training, the trainee shall be paid a loyalty bonus of Rs.1,00,000 over and above his salary and allowances/perquisites, as he may be entitled to.
• In case, the employee wishes to leave the services of the company during the training period, he/she shall be liable to pay the expenses incurred by the company in connection with his/her training. If the employee is leaving within a period of 3 years, then he is liable to pay entire training expenses.
Dalco:
• The bond is in practice only for Graduate Trainee and Management Trainee
• The bond is for a period of 3 years after completion of training (which is for a year). In case of domestic training, the amount is Rs 1 lakhs and in case of foreign training, it is Rs 1.5 lakhs.
• If the employee leaves within one year, he is liable to pay the entire amount, beyond one year, proportionate payment has to be made.
Indian Made Foreign Liquor (IMFL) GROUP
• The bond is only applicable for Graduate trainees, Management Trainees and Diploma Trainees.
• For Management Trainees and Graduate Trainees, the bond requires payment of Rs 100,000 if the employee leaves within 2 years including the training period of 1 year. For Diploma Trainees, the amount is Rs 50000.
• There are also power plant trainees who are basically electrical engineers. Since the company spends more on them and they are very strategic to the company, so their bond requires them to a pay a sum of Rs 1.5 lakh for the same 2 years.
• The trainees have to pay the full bond amount even if they leave one day before the bond expiry. In that way the bond is very rigid.
• In the case of any bond violation the legal department of the company takes over and takes the necessary recourse.
Original POWER GENERATION CORPORATION
• The bond is only for Graduate Trainees (GT’s)
• The one thing which struck us in OPGC was the fact that there have been no recruitment of GT’s after 1993 so the bond laws are in fact very archaic. Though another insight which can be brought into this that the company is running in losses on account of management problems. So it just might be misconception by the management that the low attrition is on account of the bond but there could be other internal reasons.
• The bond is for a period of five years after the stipulated training period of one year. The bond amount is Rs 30000 only.
• The bond amount is very negligible and this was accepted by the HR manager. But as they had no recruitments so they never felt the need to change the law.
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ReplyDeleteBONDING THE EMPLOYEES OR BINDING THE HUMANS!!!
ReplyDeleteAn organisation invests a lot in terms of time and money when it goes for recruitment and selection. Further it invests in the training of the employee to familiarize him/her with the organisation’s structure and to impart certain technical skills which the job demands. For example Infosys spends Rs. 750 crore on training of freshers. Thus if an employee leaves the company in a very short period of time,.. say just after the training then the organisation incurs a loss. Thus the bonds by Chutney computers, wisdom Sys, Pity Group financial services etc. stated in the post are a means for these companies to prevent themselves from incurring losses by early employee attrition by asking for compensation as per the bond. However this is only one side of the coin. If we see from the other way, the bonds are mainly for fresh engineering graduates. This can be attributed to the fact that fresh engineering graduates have a highly uncertain future. Statistics show that 69 percent of the engineering graduates intend to do MBA. This also has a tremendous effect on the amount of competition involved. Hence it so happens that most of the graduates end up taking a job for a year or two along with preparing for higher studies. This is the main reason perhaps for the high amount of early attrition. Although some companies like Satyam provide relaxation for higher studies in their bonds, most of the companies do not. If we see from the employee perspective, as an individual everyone has a right to develop whether personally or technically and also to open their career to more avenues as this in turn also leads to the development of a society as a whole. So I think by restricting this by means of a bond is restricting a human being from his basic rights. This is detrimental to the interests of the employee. Thus in my opinion, a bond is a necessary shield for an organisation but the terms and conditions should be put in such a way that the basic interests of both the parties are upheld.
An Employment bond is like a contract which the employee has to sign at the starting of his employment period or sometimes at a later stage. It usually provides the information about how much notice the company needs when you have to leave and how much you need to pay if you decide to leave before a certain period of time. Different companies have different requirements as we have seen in the above essay. Employees have no option but to sign the bond.
ReplyDeleteWhen we look at the need for employer’s point of view, we see that in booming economic scenario the employment bonds are there to protect the firm from employees who utilize all the resources of the firm and never stick to it long enough for the company to get some returns from them. In India there are many software companies and many more are popping up every day. Employees have a lot of option as jobs are plenty and he sometimes doesn’t think twice before jumping to the next firm. Companies spend a lot of time, money and effort on training employees, Employment bonds are there to protect the interest of the firm from employees who defect.
When we look at the employees point of view, such bonds can be binding and grounding the employee to the current firm against his wish and will. The employee may not have the financial resources to pay the amount in the bond if he has to leave. He will be compelled to work against his wishes. Also, psychologically, the employee might find it that even before joining the firm, the company binding him to them and they do not trust him intentions to serve the firm. In the peculiar case of selling and marketing financial assets, the employee and his family are not allowed to trade in the market for a year. This puts unnecessary restrictions on the employee for the year as he can do the same after the time frame. The employees should be properly communicated as to the need for a particular clause in the bond so that he understands the need for it and is more comfortable joining the firm.