• Contractual workman with PSU, 5 yr, bonded with bank guarantee + service agreement bond; Need relief

Namaskar,

I was hired on "fixed term contract" for "5 years", extendable to another 5 years, at company's discretion.
I was recruited as a workman (labour laws should be applicable) directly by PSU(no contractor in between).
I was made to submit bank guarantee equivalent to an amount, which the PSU had to spend on my training so that they can utilize me for the job. Also deducting same amount as EMI from my salary.
Over and above the bank guarantee, PSU also asked to sign a service agreement and provide surety bond for additional amount of 5 times the amount of bank guarantee already provided for a period of "10 YEARS"

In the contract termination clause, company has kept the right to terminate contract by giving only one month notice, however it mandates me to pay the training amount + surety bond amount which is 5 times the training amount.

Now the conditions in this PSU are highly uncertain, talks of privatization, disinvestment, etc are daily in the news. At the same time I have better prospectus outside this PSU for promising career prospects. But due to the surety bond specially, I am feeling like bonded labour. 

How can I leave rightfully without paying atleast the surety bond amount?
Asked 4 years ago in Labour

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15 Answers

1) it is necessary to peruse the surety bond signed by you to advice

2) if you leave the organisation before expiry of 10 years the company would seek to recover surety bond from you

3) the term of surety bond are arbitrary , one sided

4) at most company can recover the money spent on your training

Ajay Sethi
Advocate, Mumbai
87915 Answers
6207 Consultations

5.0 on 5.0

Although this one way contract with 5 year extendable term. The training expenses are the expenses that company may not receive from you in any case and you got the skill.

You need to work for at least 5 years to get out of this contract else you need to file a writ petition in the High Court but the chances are not good.

Vimlesh Prasad Mishra
Advocate, Lucknow
6848 Answers
23 Consultations

4.9 on 5.0

1) If you have got better opportunity than this you can move it , only you are entitle to pay training amount that also total expenses happen and deducting your share in it. There is one citation case for same you care subject matter of SC.

Ganesh Kadam
Advocate, Pune
12335 Answers
191 Consultations

4.9 on 5.0

Hello sir , kindly share the bond agreement for better understanding of your query ..

Hemant Chaudhary
Advocate, Gurgaon
4619 Answers
67 Consultations

4.9 on 5.0

1. Your only problem is the bank guarantee of the amount which you have not mentioned.

2. You have also not mentioned as to whether they have already deducted EMI to that affect from your salary or not and what is the total amount deducted.

3. If there is the said bank guarantee for a fixed amount, the PSU will recover it by invoking the BG and the bank will recover the said amount from the security provided by you for availing the said BG.

4. Apart from the above, ordinarily you won't have to pay anything since the work contract executed by the PSU with you is highly one sided, hence unacceptable as per law.

5. Moreover, every citizen has the right to earn as per his free wish and can not be treated as a bonded labour.

6. I am not aware of any case where the employer could recover any such bond amount for breaking the bond by the employee by departing earlier that the bond period.

7. However, if the PSU invokes the BG after your departure, you can file a case before the local labour commissioner seeking direction upon the PSU to refund you the said BG amount invoked by the PSU.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

To me this service bond looks very rigid.

But having already agreed to the employment terms, it is not open for you to feign ignorance to the same.

If you're intending to quit, you may represent before the PSU to relax the strict conditions of your service bond.

You've a final Legal recourse before the High Court.

Vibhanshu Srivastava
Advocate, New Delhi
9426 Answers
245 Consultations

5.0 on 5.0

Dear Sir,

You may put a proposal by way of representation to accept your proposal without demand for security bond amount.

If they reject or kept silent for more than 30 days you may approach High Court seeking necessary directions to your employer on the grounds of your future career.

Kishan Dutt Kalaskar
Advocate, Bangalore
6050 Answers
381 Consultations

4.8 on 5.0

Employment agreements with the negative covenant is valid and legally enforceable if the parties agree with their free consent i.e. without force, coercion, undue influence, misrepresentation and mistake. The courts in India have held in its various judgments that in the event of breach of contract by the employee, the employer shall be entitled to recover damages only if a considerable amount of money was spent on providing training or incurred other expenses for the employee.

The term "reasonable" is not defined under the legislation and, therefore, the meaning has to be determined on a case by case basis depending upon the issues involved and circumstances of the case. In general, the conditions stipulated in the contract should justify that it is necessary to safeguard the interest of the employer and to compensate the loss in the event of breach of contract. Further, the penalty or compulsory employment period stipulated in the contract should not be exorbitant to be considered as valid and to be regarded as reasonable.

In order to execute a valid employment bond, the parties have to ensure that the following requisites have been complied: (i) the agreement has to be signed by the parties with free consent; (ii) the conditions stipulated must be reasonable; and (iii) the conditions imposed on the employee must be proved to be necessary to safeguard the interests of the employer. Further, the employment bond stipulating conditions such as to serve the employer compulsorily for a specific time period or penalty for incurring the expenses is in the nature of the indemnity bond and, therefore, such kind of employment bond has to be executed on a stamp paper of appropriate value in order to be valid and enforceable.

Usually, the court determines the reasonable compensation amount by computing the actual loss incurred by the employer having regard to all circumstances of the case. Even if the bond stipulates payment of any penalty amount in the event of breach, it does not mean that the employer shall be entitled to receive the stipulated amount in full as compensation on the occurrence of such default; rather the employer shall be entitled only for reasonable compensation as determined by the court.

Therefore you can initiate legal steps in the event of the employer's demand for payment on the basis of employment bond is unreasonable.

T Kalaiselvan
Advocate, Vellore
78070 Answers
1543 Consultations

5.0 on 5.0

Hi,

You are suggested to prepare and clear the entrance test for your dream job and then apply for the necessary formalities from your present PSU.

Ganesh Singh
Advocate, New Delhi
6646 Answers
16 Consultations

4.5 on 5.0

Hello,

Please share the termination clause of the employment agreement with us for a concrete advise.

regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

The terms are arbitrary and one sided

2) company can terminate your services without any reason and seek to recover training costs from you

3) if you terminate contract you have to pay in addition Rs 50 lakhs which is unfair

Ajay Sethi
Advocate, Mumbai
87915 Answers
6207 Consultations

5.0 on 5.0

Your understanding is not in accordance with the law.

The company may hav any kind of its own rule but when it comes to maintainability or enforceability then the law of land will play pivotal role.

The law of the land had been elaborately discussed in the previous post, in the event of the company initiating any such action, you can very well challenge on the basis of the same rights what you have mentioned to be a cause of concern.

You may await their action to decide proper legal course of action to be taken thereon.

T Kalaiselvan
Advocate, Vellore
78070 Answers
1543 Consultations

5.0 on 5.0

1. Yes, the said contract is highly one sided and can be strongly challenged before the High Court.

2. Any adverse action if taken by the PSU arbitrarily based on the above one sided contract, can be challenged on the ground that it infringes in to the fundamental right of a citizen to to freely choose his place of employment.

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

Hi,

Such clauses are added by employers to retain the employees.

Ganesh Singh
Advocate, New Delhi
6646 Answers
16 Consultations

4.5 on 5.0

If that much amount has been incurred by the company on your training then only you are supposed to pay the same, failing which you are not required to pay any bond amount.

If any case is filed by them then you will have a strong case to fight.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

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