• Employee bond

Dear Sir/Madam,

Regarding employee Bond.

I have signed one sided bond with my previous employer and paid RS 70,000 for breaking the same.
Original bond amount was 2 lacks and service tenure was at least for 2 years.
I served the company for 1 year and resigned because of my father’s health issue, therefore they have negotiated to pay for RS 70,000. 
I am very sad to inform you that today my father is not with us.
Many times I requested my HR to please refund me money but not getting any reply from their side.
Now I come to know that bonding an employee is not legal in India and one sided service bond is null.
Can you please confirm me shall I go for legal action against my previous employer. Please help me…
You can write me on bhondevaibhav911@gmail.com

Thank You,
Vaibhav Bhonde
Asked 3 years ago in Labour from Pune, Maharashtra
1. Unilateral service bonds are not legal.
2. What does the terms of appointment say?.
3. Do you have the previous employer's demand letter addressed to you to pay Rs.2 Lakhs to the employer.
4. Did you pay Rs.70,000/- to the employer by way of cheque or cash.
5. If there were to be any Technical/Specialized training imparted to you during the course of employment and if you submit resignation before the minimum tenure period, then the employer will have the right to enforce money bond, since the employer would have spent lot of money for the training of the employee. Please let me know, whether you underwent any specialized training in India or abroad.
6.It is the general rule that the employer should not keep an unwilling employee on its roll, except where the employer as well as the employee have mutually agreed and there is a written document for it. 
7.Send a legal notice to the employer, through a lawyer, and inform the employer that you are going to take legal action against the employer if your Rs.70,000/- is not refunded to you immediately.
Shashidhar S. Sastry
Advocate, Bangalore
1633 Answers
107 Consultations

5.0 on 5.0

Condolences first of all.
1) On what basis do you say that the bond is one sided? In fact it is only a popular concept that the employment bond is illegal. As far as the bond satisfies the ingredients of a valid contract under provisions of the Law of Contract(Indian Contract Act, 1872) and is enforceable.

2) Further Employment agreement 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. Since an employment bond needs to be a valid contract, hence, there needs to be an offer made by an employer and acceptance of that offer by an employee.

3) The bond that you signed was for Rs.200,000/-, the term was for 2 years and you resigned from job after one year and settled to pay Rs.70,000/- for release from the bond.The fact is that if the contract is enforceable and you approach the court against the company for getting a refund of the amount paid the court will take into consideration if the company was at a loss as a result of your leaving, in terms of training imparted to you ,etc.

4) The amount you were made to pay seems reasonable proportionate to the time you spent in employment in the company.

5) You also need to consider the cost of litigation and the possibility a complete refund is remotest. Considering the entirety it is not advisable to initiate a legal action.
S J Mathew
Advocate, Mumbai
2240 Answers
110 Consultations

5.0 on 5.0

Have you entered an agreement at the time of making payment of negotiated amount as full and final settlement  for breaking bond and did they issue you a receipt/certificate for the same? If yes, then you need to serve them a legal notice asking for refund as same was paid under pressure and threat.Thereafter you can file suit for recovery if they do not refund after service of legal notice.For clarification you may consult through phone consultation of this site.
S.P. Srivastava
Advocate, New Delhi
703 Answers
13 Consultations

4.7 on 5.0

 1.As adviced earlier send a legal notice to the employer to refund your money
 2. Complain against the employer to Regional Labour Commissioner.
 3. Initiate action in Labour Court.
Shashidhar S. Sastry
Advocate, Bangalore
1633 Answers
107 Consultations

5.0 on 5.0

1. It is not a fact that service bond is not legal in India, if it is executed on legal terms,

2. On the contrary, you shall have to comply with the agreement you have entered in to with your employer,

3. You should have established that keeping the terms of the bond is not possible for the illness of your father since you had to be present beside your father,

4. You can now claim back the said Rs.70,000/- om the ground that you were forced to pay the said amount since your employer, who was in the dominating position, had forced you to pay the said amount.
Krishna Kishore Ganguly
Advocate, Kolkata
18471 Answers
448 Consultations

5.0 on 5.0

1. The said Bond is highly illegal hence not enforceable,

2. The moment the employer has agreed to take Rs.70,000/- and not the bond amount, the said bond has ceased to have any effect on you,

3. The employer has just extorted Rs.60,000/- from you by black mailing,

4. It is also an acceptable ground that the employer has not incurred any expenses for your your training for which they have taken Rs.60,000/- as a compensation,

5. File a complaint case before the local labour commissioner,

6. You can also file a recovery suit against your said employer.
Krishna Kishore Ganguly
Advocate, Kolkata
18471 Answers
448 Consultations

5.0 on 5.0

This refers to your e-mail to me on same issue and my reply. I reproduce the same below
"Dear Vaibhav

Sorry to hear about sad demise of your dear father. May his soul rest in peace.

A bond may be called liquidated damages which are pre-determined damages which a party is entitled to if other party breaks the contract. The party claiming damages on breach of contract is liable to show that it suffered damages. The amount mentioned should not be by way of penalty. 
An employer if he spends money on training of his employees, he expects that that in return a trained employee should serve him for specific period. In case employee does not serve the requisite period the employer suffer damages and can recover up the extent of genuine damages. It is not simply he can recover from the payable amount to the employee by deductions, he has to show and prove that he suffered damages.

In your case it seems that no money was spent on your training and therefore when you quilted the job as per terms of the contract the employer did not suffer any damages and hence he could not recover. 

You have since paid a part amount to him, you have to fight for it to get back , as the employer with all counseling is not going to give it back.

Issue a notice to the employer mentioning the above facts discussed by me and mention that you paid the amount under coercion as he was not giving relieving certificate, demanding the money back. You have to file a civil suit for recovery of amount pleading all facts and point of law.

Good luck.       " 
H. S. Thukral
Advocate, New Delhi
568 Answers
169 Consultations

5.0 on 5.0

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