October 3, 2009

breaking bond - between employee and employer - BOND BREAKING

I often hear from begninners / freshers working in a Software company, asking what would happen if I break the bond.  In most of the cases the employee receives an offer letter to join a new employer and they would like to know, if they could exit the current company withouth informing the HR.  Posting below some information collected by me.

Bond is an agreement between the employee/trainee and the company whereby certain burden either monetary or otherwise is casted upon the employee.  The companies are investing a huge amount of money on training the employees, and having some experience if the concerned employee absconds, it costs great loss to the company. The cases where the company is investing money on training of the employees, it is advisable to get signed a bond with the concerned employee but at the same time that should not be for longer period of time.

Though Section 27 of 1872 in Indian Contract Act, provides that any agreement in restraint of trade is void.
But at the same time constitution of India guarantees that the every man is entitled to exercise any lawful trade as and when he chooses.

My friends story

My friend is an "absconder" himself.  He joined a company and they promised to give me an oh-so-fascinating profile...but it turned out to be just a damp squib BPO kinda job. there was a bond that he had have to payback all training costs plus three months salary if he leaves within 1 year. He decided to switch and the employer chased him around for weeks threatening legal action etc etc. and nothing happened eventually.

The truth is: whether a company goes after you or not depends on how much it costs them in terms of time and effort. If a senior manager takes off and there is lot of client work and confidential info at stake, they`ll chase him till the end. If its a fresher or a junior, it`s just not worth the time and effort and legal expenses.

Another thing is the legal nature of the bond. A bond signed on a company letterhead in which the company is dictating one-way policies to the employee can easily be taken to court and proved to be unfair, unreasonable and even fabricated! however, some companies have plugged this loophole by preparing stamp-paper bonds, which leave very little room for escape. so it depends on the nature of the bond document as well.   Oe should consult a lawer or a knowledgeble person to find out the exact implications of breaking the bond before signing it.

http://en.allexperts.com/q/Indian-Law-1798/  This site give you some of the queries raised at different scenarios and queries answered by advocates regarding law.

http://www.judis.nic.in/  - Judicial information system.  With this site you can track cases that are filed in the Indian courts.  This site is just an information and not related to this subject.

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