Reg:- employee bond
Appikatla Tata rao
(Querist) 11 October 2015
This query is : Resolved
Dear sir,
When i was joining in a bank, as an jr.officer , i have signed on a bond of 3 yrs . As a middle class guy getting job itself is a tough thing .. So knowingly i signed on it .. I dont have another option..
Recently i have resigned my job. Because i didnt like the working culture in that organization. And due to some health problems i resigned after 12 months service . I didnt served my 3 months notice period also..
2 days back bank people send acceptance of my resignation (in written) and they told me to pay 2,20,000/- as bond breaking fee .. Then only they will give my certificates back ..
Now ..i am unemployed .. I applied for few jobs but they are asking my certificates immediately ..
For getting tose certificates i need to pay 2 lakh odd amount to my previous employer..
Now ..i am in a situation tht i am unable to fulfill my day to day expenses.. For me , paying 2 lakh odd amount is a very big thing.
So plz suggest me.. Is there any other toute for this ?
Whether court will accept my suggestion ??
How to proceed to challnege my employer .??
Please give me reply ..
My contact number :- 9177564302
Thanking you sir ..
Anirudh
(Expert) 11 October 2015
1. Why did you not take back the original certificates from your employer. It ought to have been submitted at the time of joining only for the limited purpose of verification and not for permanent retention during your employment. You have lost a precious opportunity here.
2. Now, have you got any written communication from them that they will not hand over your original certificates, unless you make payment of Rs. 2.2 lakhs?
3.In the alternative, have you sent any written communication to them requesting for return of the original certificates?
4. It is not clear whether it is a PSU Bank or a private Bank.
5. If it is a PSU Bank and if you have any such communication in your possession, then you can approach the High Court by way of writ and ask for the release of the Certificates.
6. In case if is a private bank, then you have to file a Suit for recovery of the Certificates.
Needless to say, you have to approach a lawyer in your locality, discuss the matter and take things forward.
Appikatla Tata rao
(Querist) 11 October 2015
Thank you anirudh..
1.Yes.. Its a private sector bank.
2.Yes.. They ask me to pay 2.2 laks as bond breaking fee ( 1lakh for bond breaking + 1 lakh for not serving notice period +20,000 for training fees)
3. Yes they have acknowledgement.. That they have my original certificates
Can you please suggest me any telugu lawyers to file a case?
Whether court will accept my case?
Whether court will decrease tht amount?? 2.2 lakhs??
Plese suggest me..
Thank u..
Appikatla Tata rao
(Querist) 11 October 2015
Sir .. I have few more doubts ... Please reply me
P. Venu
(Expert) 11 October 2015
The certificates are your personal property. If not their action amounts to extortion. The Bank need to initiate separate proceedings to realise Bond Money or whatever other amount is due from you.
Rajendra K Goyal
(Expert) 12 October 2015
Send registered notice / legal notice for return of your certificates.
Legal path may or may not provide you immediate relief as there are no. of delay tactics adopted during proceedings.
However, if no action is taken on your notice, consult local lawyer.
Ms.Usha Kapoor
(Expert) 24 August 2016
dEARCLIENT,
iF THE BOND CONTAINS ONLY REASONABLE AMOOUNT ANSD NOT EXORBITANT AMOPUNT WHILW LEAVING THE ORGANIZATION AND FOR A REASONABLE PERIOD ONLY THE BOND EMPLOYER HAD TAKEN FROM YOU IS VALID. iF NOT YOU NEED TO approach a labor tribunal which MAYorder some reasonable amount not 2 lakhs to pay for breaching the bond. Th employer cannot unilaterally get executed onerous bonds for an unreasonable period from you according to settled law. If the terms of the bond is reasonable only you are bound o pay.First issue a LEGAL NOTICE too your employer and then approach A LABOR COURT OR TRIBUNAL REGRADING THe ONEROUS BOND IMPOSED ON YOU BY THE EMPLOYER. certainly YOU'D GET RELIEF.Labor court directs your employer to collect only reasonable amount of the bond from you and handover your original certificates to you.
Ms.Usha Kapoor
(Expert) 24 August 2016
Dear Client,
Also look at the following useful information regarding Legality of bonds between employer and employee.
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Home / All / Are employment bonds legal in India?
Post Views: 10,323
Are employment bonds legal in India?
Posted by: Amartya Bag in All, General, Labour Law December 2, 2014 0
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This article is written by Saurabh Mishra, a student of HNLU.
Introduction
The competition in the corporate world has increased manifold. The business houses are incurring expenditure on imparting training to their employees with the aim of improving quality of the goods and services of the company. However, we have witnessed a number of instances where the employees after honing the skills and increasing the knowledge of the industry leave the employer. The increased attrition rate has forced the employers to obtain an employment bond from their employees who are found suitable for training and skill development. The employment bonds are agreements between employee and employer where it contains the terms and conditions of employment. The employment bond contains a clause which requires the employee to serve the employer compulsorily for a specific period of time or else refund the amount specified as bond value.
There is a need to discuss the need and enforceability of employee bonds under the Indian law.
Employment Bond
Employment bonds are employment agreements with negative covenant. Under the Indian Law, the employment agreements with negative covenants is valid and legally enforceable if the parties agree with their free consent i.e. without fraud, coercion, undue influence, mistake and misrepresentation. The Indian courts have held that in the event of a breach of contract by the employee, the employer shall be entitled to recover damages only if a considerable amount of expenditure was borne by the employer. Indian law mandates the employment bonds to be “reasonable” in order to be valid. The term reasonable remains undefined anywhere in the Indian law and therefore the courts have given meaning to “reasonable” depending upon the facts and circumstances of the cases. The proposition which has emerged till now is that conditions stipulated in the contract should be necessary to protect the interest of the employer and compensate the loss caused by breach of contract. Additionally, the penalty or compulsory employment period stipulated should not exorbitant.
How to Challenge the enforceability of Employment Bond?
The validity of Employment bonds can be challenged on the basis of Section27 of the Indian Contract Act. Section 27 of the Indian Contract Act, 1872 prohibits any agreement in restraint of trade and profession. Any agreement in trade and profession according to Section 27 is void.
As per the mandate of Section 27, any terms and conditions of an agreement which directly or indirectly compels the employee to serve the employer or puts a restriction on them joining the competitor or other employer is not valid under the Indian law, The employee has right to resign from the employment even if he has agreed in the employment bond to serve the employer for a specific period of time.[1]
For an employment bond to be valid under Indian law, it has to be proved that it is necessary for the freedom of trade. In the case where the employer is able to prove that the employee is joining the competitor to disclose the trade secret then the court may issue an injunction order restricting the employee from joining the competitor. If an agreement is challenged on the grounds of violating the provision relating to restraint of trade, the onus is on the party supporting the contract to show that restraint is reasonably necessary to protect his interests.[2]
Following are the requirements of a valid employment bond agreement.
The agreement must be signed by the parties with free consent.
The conditions stipulated must be reasonable and:
The conditions imposed on the employee must be proved to be necessary to safeguard the interest of the employer.
The employment bond is to be executed on a stamp paper of appropriate value in order to be valid and enforceable.
Remedies Available to Employer and Employee
If an employment bond is breached, the employer might be entitled to compensation. The compensation awarded should be reasonable to compensate the loss and should not exceed the penalty, if any stipulated in the contract. The court computes the reasonable compensation amount by computing the actual loss incurred by the employer having regard to all facts and 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; the courts shall determine the reasonable amount of compensation to be paid. One interesting question arises, whether the employers are entitled to seek for reinstatement of their employee or obtain restraining order against the employee from joining any competitor or another employer? The Supreme Court while dealing with a similar situation has held that specific performance action cannot be sought for breach of contract of personal service or bond[3] and therefore employer shall not be entitled for reinstatement of their employees as relief in the event of breach of bond. We have witnessed the trend that courts are not willing to grant an injunction against the employees restricting their employment with another employer unless it is necessary for the protection of proprietary interests or trade secrets of the employer.
The court considers the actual expenses incurred by the employer, the period of service by the employee, the conditions stipulated in the contract to determine the loss incurred by the employer to arrive at reasonable compensation amount. In the case of Sicpa India Limited v. Shri Manas Pratim Deb, The plaintiff had incurred expenses of Rs. 67, 595 while imparting training to the defendant in respect of which an employment bond was executed for which the defendant had agreed to serve the plaintiff for a period of three years or to make a payment of Rs. 200,000. After serving for two years, the employee left the company. The court determined reasonable amount as Rs. 22, 532. The court took into consideration the total expenses incurred by the employer and employee’s period of service while deciding the amount
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