The liberalization policy has worked really well as far as employment opportunities in India are concerned. Umpteen multinationals and corporate giants have made India their work centre, as employment here is cheap, comparatively. Employment bonds are therefore a common term used these days. Companies spend a fortune on training their employees in terms of money and time. Therefore, Employment bonds is an obvious choice because an early exit by an employee leads to financial losses of the employer and gain of another/ competitor firm as well.
Employment Bond – Definition
Employment bond is nothing but an employment contract between an employer and an employee. It is apparently a list down of particular terms and conditions that are applicable to employee and he/she abides by it.
The bond includes a minimum time period the employee needs to work with the firm, violation of which may result in compensation amount to be paid by the employee. Additionally the clause may also restrict the employee from indulging into any other business/part time job while working with that organization.
As per section 27 of Employment Act in India, an employer is not permitted to put any direct or indirect restrictions on the employee to work with the them for a fixed period or to restrict him/her from working with their competitors.
Some of the restrictions that are considered void under the Indian law even if they’re applicable to an employee include joining another company or competitors or forcing the employee to serve a pre-determined period of time.
Employment Bond Requisites
An employment bond is considered to be valid if it has the following –
1. Duly signed by both the parties without any pressure, with or without witness.
2. It needs to be printed on a stamp paper of particular value
3. Confidentially clause is optional
4. The time period and compensation included need to be acceptable.
The reason why companies, organizations and businesses harp upon employment bonds is the benefits and security it brings in to the employers. In case, an employee breaches a contract, the employer can drag him/ her to the court for compensation against time and resources spent on training of that employee.
Having said that, an employment bond, hasn’t been an effective way to retain employees, rather it has shown a negative impact over the years. Hence, positive polices like a mutually beneficial employment contract, reasonable compensation, structured salary package and genuine increment standards for encouraging retention, sounds like a far better idea.