Service agreement bond clarification needed
Vijay Kumar Verma
(Querist) 30 May 2014
This query is : Resolved
Dear Sir, I am serving in central govt. The condition for service agreement bond is as following:
“A probationer shall be liable to refund the entire cost of his training and any other payments made to him during the period of training/probation, if he/she wishes to resign from the service within a period of five years from the date of expiry of training/probation or if he/she withdraws from training/probation. A bond of Rs. 1,00,000/- (Rupees One Lakh) to that effect shall be executed by the probationer at the time of appointments”.
Kindly guide me what is the meaning of Rs. 100000 (One Lakh) here. Do I require to pay Rs. One lakh if I resign from the service before serving the required period ? If not, what is the interpretation of it ? Kind help and suggestion is requested to all.
KAMARAJ BHARATHY G
(Expert) 30 May 2014
If you resign your job during the agreement period (i.e. 5 years), you have to pay one lakh
Kumar Doab
(Expert) 30 May 2014
You may find it relevant to note that employees unions succeeded in getting the Bond period Reduced and cost of training inconsistent with period of Bond/
liquidated damages
1. Reduction of service Bond period of DR-JTOs from 5 years to 2 years.
=======================================
Reference: No.250-2/2002-Pers-III dated 14.03.2002 (TTA bond reduction order)
Justification:
• Order quoted under reference stats that the bond period of TTAs may be reduced from 5 years to 2 years, so that the career prospects of the young trainees are not hampered.
• In this regard 3rd report of the Committee on Subordinate Legislation may be referred on basis of which the order quoted in the reference was made. Also refer the 6th report of the committee which is the report mentioning the action taken against the recommendations in the 3rd report.
• With regard to the TTAs, the 3rd report of the committee mentions in para 4.5 that – “The Committee do not find the reasons furnished by the Ministry of Communications in prescribing such a long bond period to be justified as it is felt that by binding the young trainees for 5 years, the advancement in their career would be blocked. Further, the cost of training viz. Rs. 12550/- per trainee is not so high as to prescribe such a long bond period. The Committee, therefore, recommend that the bond period should be reduced from five years to two years so that the career prospects of the young trainees are not hampered.”
• With reference to the above recommendation in para 4.5 of the 3rd report, the 6th report states the reply of the Ministry of Communication & IT that – “On formation of Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL), the Group ‘C’ & ‘D’ employees have been absorbed in these Public Sector Undertakings and have ceased to be Government employees. As such they are not governed by the Department of Telecommunications. Since the PSUs should be framing their own recruitment rules, the recommendations of the Committee have been forwarded by the Ministry to both MTNL/BSNL for incorporating the same in the relevant rules.”
• After receiving the recommendations of the committee and forwarding of MOC&IT, the bond period of TTAs was reduced by BSNL from 5 years to 2 years vide the order quoted in the reference. However, the bond period for the JTOs were fixed at 5 years even though the same logic of hampering of career prospects of young executives applied in their case as well. Further, vide Corporate Office order No.5-6/2009-Pers.IV dated 30.11.2009 BSNL has increased the bond amount from the earlier Rs.85,000 to Rs.2 lacs with interest @ 18% p.a.
Given below is a comparative analysis of the major A-grade PSUs like BSNL with respect to entry criteria for Graduate Engineers:-
S.No. PSU Pay scale Training duration Bond Period Bond Amount Reference
1 BSNL 16,400 14 week induction + 6 week Phase-II (Total= 5 months) 5 years Rs. 2 lakhs + 18% interest p.a. (Rs.3.8 lakhs after 5 years) Annexure-4
2 SAIL 20,600 1 year 2 years Rs.1.2 lakhs
[Rs.5000 per month is deducted from salary upto 2 years (refundable after 2 yrs)] Annexure-5
3 NTPC 24,900 1 year 3 years Rs. 2.5 lakhs Annexure-6
4 BHEL 20,600 in training, 24,900 after 1 yr 1 year 3 years Rs. 2 lakhs Annexure-7
5 PGCIL 24,900 1 years 3 years Rs. 1 lakh Annexure-8
• From the above analysis, it can be clearly seen that though BSNL provides the least duration of training to its GE recruits and places them at the lowest pay scale among all A grade PSUs, yet the Bond Amount for BSNL JTOs and the bond period of 5 years is the highest among the major grade-A PSUs. Add to this the fact that BSNL does not give any substantial perks under cafeteria approach, no PRP has been implemented and the allowances are substantially less than other PSUs. Further, during phase-1 training, the JTOs are only given pay @ 70% of Rs.9850+D.A. So, the argument of high training cost to justify the 5 year bond period cannot be accepted when we compare BSNL to the other similar PSUs.
• Further, the irrational concept of increase in bond amount with time needs to be done away with as the bond should reduce with the amount of time spent in service. As per the present strange rules, if a JTO leaves BSNL just after induction training, he has to pay Rs. 2 lakhs as bond amount. If he leaves just 1 day before completion of 5 years of service, he has to pay Rs. 3.8 lakhs, which is totally illogical.
History of Persuasion:
This association has discussed this issue many times with the various authorities but so for this issue has not been taken up at right platform. Once BSNL has taken up issue of TTA and reduced the bond period on certain justified logic same should have extended to other section of employees without waiting for any persuasion.
www.aigetoachq.org/downloads/Agenda%20Points/10.doc
Dr J C Vashista
(Expert) 31 May 2014
Very well advised by Mr. Kumar Doab, I appreciate and agree, although it is beyond explaining to a layman/queriest.
P. Venu
(Expert) 31 May 2014
The Bond would be enforceable only if the Employer imparts special training.
malipeddi jaggarao
(Expert) 31 May 2014
How much service you have put up in the present organisation. Whether you have received any training during the probation period? In what way the bond is affecting your interest?
Are you contemplating to leave the present organisation?
Come with full facts.
Vijay Kumar Verma
(Querist) 31 May 2014
@ Malipeddi Jaggarao: Thank you Sir. Sir, I am willing to resign from the job. I joined this department knowing the fact that I will be executing a service bond of Rs. 100000 Only, irrespective of whatever amount they are spending over my training. As per the condition it seems that the upper cap of expenditure on training is Rs. One Lakh. I am not liking the work profile and work culture in the department and hence want to switch over to private sector.
Kindly guide.
Vijay Kumar Verma
(Querist) 31 May 2014
Further I would like to inform that earlier also, I had an offer of job in the same department but that time the service conditions were as following:
“A probationer shall be liable to refund the entire cost of his training and any other payments made to him during the period of training/probation, if he/she wishes to resign from the service within a period of five years from the date of expiry of training/probation or if he/she withdraws from training/probation."
i.e no mention of amount Rs. One Lakh. so I did not join the department knowing that this is an infinitely large surety amount. Next year again I got the offer and this time they mentioned the Rs. 100000. So I thought that time the surety amount is Rs. 100000 only. So I joined this department.
Kindly guide keeping this view also.
ajay sethi
(Expert) 31 May 2014
the company can enforce the bond if it has spent money on your training . the terms mentioned by you specifically mention that you shall be liable to refund money spent on your training . bond has been taken from you for said purpose
Vijay Kumar Verma
(Querist) 31 May 2014
@Ajay: Sir what is the implication of Rs. 100000 in that case ?
Please suggest.
Vijay Kumar Verma
(Querist) 31 May 2014
I would also like to mention that my service is a Group 'A' service under central Govt.
Vijay Kumar Verma
(Querist) 31 May 2014
Sir, Did they mention the amount Rs. One Lakh to confuse and misguide the candidates ?
ajay sethi
(Expert) 31 May 2014
the sum of Rs 1 lakh is the amount company can recover from you in case company has spent money on your training .
Vijay Kumar Verma
(Querist) 31 May 2014
Sir it means maximum amount can be recovered only Rs. One Lakh ?
Vijay Kumar Verma
(Querist) 31 May 2014
@Ajay: Sir am I correct that maximum amount that can be recovered is Rs. One Lakh only ?
Vijay Kumar Verma
(Querist) 31 May 2014
@ Malipeddi Jaggarao: Sir, I am in this servce for last one and a half year (1.5 years) and I have been trained by dept. in various fields. But I am willing to switch over to pvt. sector.
malipeddi jaggarao
(Expert) 31 May 2014
You can as well ascertain from your HR Department that this Rs.1 lac is the cap or it has to be paid in addition to the cost of training to be paid.
Leaving Public Sector and joining Private Sector is a real venturing. You should think twice before leap.
Vijay Kumar Verma
(Querist) 31 May 2014
@ Malipeddi Jaggarao: Sir I have talked to my dept. They say that Rs. One lakh has no meaning here. All training cost i.e. approx Rs. 800000 (8 lakh) is reuired to be paid if I resign the job before serving the required period. I am a group A officer in central govt.
Guest
(Expert) 31 May 2014
Mr. Vijay,
In the whole of the long drawn discussion, you have not provided the very essential information, whether you want to resign by withdrawing from training/probation or you have competed the probation/training period and after that only you want to resign.
As per the terms it is quite clear, if you resign during the probation period you will have to pay the entire cost of training including all pay and allowances paid to you during probation/training period, including overhead costs in imparting training to you, i.e., Rs.8 Lakhs, as per the calculation of the HR. You can be made liable to pay Rs.1 Lakh only in the event you resign after competion of probation period, which I think is of two years for Group 'A' Officers of the Central Government.
Vijay Kumar Verma
(Querist) 31 May 2014
Sir, I am on probation as on date. I will complete 2 years in November 2014 (even after 2 years there is no guarantee of probation completion as it is at the discretion of the dept.). I have talked to my dept. but they say if I resign before seven years I need to pay Rs. 8 lakh. no matter your probation is completed or not.
I am a group A officer in central Govt.
Rajendra K Goyal
(Expert) 31 May 2014
The terms and conditions of appointment, training have to be referred, consult a local lawyer dealing in service matters.
In the given facts agree with the advise of expert PS Dhingra ji.
Kumar Doab
(Expert) 31 May 2014
You should have consulted before joining the employment not only 1st time but also 2nd time.
You had not consulted before signing 2nd time also.
By limited understanding from the extracts posted by you:
----In the 1st instance quoted by you (when you did not join) the employer shall determine the entire cost of training(s)………………………… (it is not written as actual cost of training)…………………… + any payments made to Probationer/Trainee
---- In the 2nd instance quoted by you (when you joined) the employer shall determine the entire cost of training(s)……………………………………. (it is not written as actual cost of training)…………… provided during the period(not mentioned)……………………+ all payouts to you + 1Lac ……………………and at the time of joining the candidate shall sign his acceptance………………………………………………to pay these amount(s) if he/she …………………………………..resigns…………………………………..(this does not mention if terminated by employer)………………..
----The period agreed upon is during the probation/training period ( 2 YEARS OR WHATEVER IT IS ) + 5 YEARS FROM THE DATE OF END OF PROBATION/TRAINING PERIOD (whatever it is).
Apparently even if you resign during probation/training period (whatever it is…………………………………..and however long it is………………………………SAY 2 YEARS)…………………………you are made liable to pay entire cost of training(s) and payouts to you…………………….(say Rs.8/Lac)+1Lac……………
The printed version of communique exchanged before each training, corresponding rules should be shared in person, by you, with your lawyer/law firm specializing in such cases and you should give inputs in person.
You should help your lawyer to understand ‘What is this Training’ , ‘What for is this Training’, ‘For whom is this training’, ‘would it add some extra ordinary skills/qualification to employee’, ‘Is it some certified course/certification from some inst’, ‘would this training help you to command better fruits of your labor in future or in future ventures/CTC/annual package/salary/wages…………………………………etc etc………………………………………………if you have decided to contest the contentions of your employer.
Even if for the sake of an argument:
----Would you be able to command additional annual package of Rs.8 Lac+1Lac……………………..than in your present employment ……………………………………on this date………………………after this training?
{If yes why don’t you give it a due thought and agree to pay but you must obtain acceptance of resignation, NOC/NDC, service certificate, relieving letter (with good comments………….avoid without comments and of course adverse comments), assurance for clean reference check/BGV, prompt FnF statement and payment of FnF wages, entire terminal benefits……. etc etc…………………………………..??}
Does your next/prospective employer agree to compensate you for this amount…………………………at once upon joining………………………..without any conditions attached to this payment???
Here again you should seek help from your lawyer/law firm so that any communique that you send before and after………………………signing agreement……………………… is drafted and structured………………………..to suit your interest.
You may find the discussions in other threads as indicative e.g;
http://www.lawyersclubindia.com/forum/3-year-term-in-employment-contract-against-sign-on-amount-103019.asp#.U4mXzkeBmXU
----Assuming that the employee (is not Gp.A officer) is say…………………………..a driver that has been given an Ambassador car to drive then a Fiat then a Sakoda then a Mercedes Benz……………………would it be Training?
Assuming the same person is depute to fly then it would be training?
Assuming that the law states a person can not fly after attaining age of 60Y and is trained to fly by employer at the age of 58 Y and retires at the age of 60Y; would be training, fit enough to tender liquidate damages?
You must provide full information to your lawyer and avoid piece meal information, and all docs on record.
The liquidated damages if inserted should signify: maximum amount that can be claimed!
The court of law may also view it as the max. award that can be granted.
The employer may be asked to establish entire cost of training (as to arrive at actual or reasonable or estimated……………………………..as per pleasure of court of law)……………………………………….
Once the matter is in court of law the decision is pleasure of court of law.
Your lawyer may agree that the Training is not a avenue to earn from training cost imposed on employee…………………………hence actual cost may be arrived at.
The liquidated damages may not have to be paid on just demand; these may need to be established as actual cost, reasonable……………………………..!!!!
If liquidated damages are not inserted………………………………………OR are inserted………………… then the signatories to the contract may agree on an amount on their own……………………….. or court of law may evaluate and finalize the damages.
Apply your skills and arrive at a mutually acceptable amount.
{ You may find the discussions in other threads as indicative e.g;
http://www.lawyersclubindia.com/experts/Payment-of-indemnity-bond-419196.asp#.UiNgTNKAqWM
and a judgment quoted in it…………
Delhi High Court
M/S. Sicpa India Limited vs Shri Manas Pratim Deb
http://www.indiankanoon.org/doc/116592600/?type=print
The court of law awarded Rs.22000/ against a claim of Rs2lacs……………………..
However do not get carried away……………………………your matter may be entirely different ………………………………. let your able lawyer/law firm choose the citations and references if reqd.}
You are pin pointing only an amount.
You are not sharing service rules and regulation, conduct and discipline rules, exit policy etc……………………..
The HR/personnel/Admin/Employer may press options that may perturb you……………………………..e.g. misconduct…………………….and its implications………………………..
The HR personnel may have a job function to extract the amounts, and chase the outgoing employee, process the misconduct if employee is unwilling……………………………………………
The HR personnel shall defend their job and follow the EMPLOYER’S POLICY DRAFTED FOR THEM TO FOLLOW FOR THEIR JOB FUNCTIONS.
It is suggested that you should weigh all pros and cons before you decide (AGAIN) in haste.
Your lawyer/law firm well versed with such matters can indeed help you and defend your interest.
Guest
(Expert) 31 May 2014
There can be some escape routes from bond conditions. So, for that purpose, detailed examination of your service related documents are necessary for appropriate advice. You may, if you like, feel free to contact me in person for detailed discussion by showingrelated documents, if you are at Delhi. Otherwise you can also contact through email by sending complete details and scanned copies of documents at: dcgroup1962@gmail.com
Vijay Kumar Verma
(Querist) 31 May 2014
@Kumar Doab: Sir thanks for replying my query. In the condition it is said that "A bond of Rs. 1,00,000/- (Rupees One Lakh) to that effect shall be executed by the probationer at the time of appointments." By no way it can be interprated that Rs. Lakh is other than the entire amount of training expendeture. As per my knowledge, the service agreement is something that is signed at the time of joining. And it is clearly mention that a probationer shall execute a bond of Rs. One Lakh only.
Guest
(Expert) 31 May 2014
Neither Rs.1,00.000 is in addition to the training cost. Bond conditions of 8 Lakhs and 1 Lakh denote to two different situations, i.e., resignation during the probation period and resignation after completion of probation, respectively. No connection between the two terms.
Kumar Doab
(Expert) 31 May 2014
You are welcome.
It is believed that the contention of HR on amount(s) recoverable from you are not on written record.
You need to spend quality time and analyse each document on record, by your counsel.
Online discussions have its own limitations.
Sufficient has already been discussed in this thread.
Learned senior Expert Mr. Dhingra has offered to help you.
You may approach Mr. Dhingra.
T. Kalaiselvan, Advocate
(Expert) 01 June 2014
Expert Mr. Kumar Doab has perfectly observed the lacuna while you have posted the query initially and later on you started supplying the information on piece meal basis. And as rightly advised by the learned expert that online discussions have it own limitations and also since you have been sufficiently addressed, you may either contact the referred expert for further advise or consult a local lawyer for his on the spot opinion and advise on the issue.
Dr J C Vashista
(Expert) 02 June 2014
I agree with the experts you should seek consultation from a local lawyer for opinion/advise and stop this thread.
