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vinodhini (nil)     23 May 2011

Bond/Service agreement for employment

hai to everyone,

I've finished my engineering this year 2011. i got placed in a company during my 3rd year where initially they told 3 years of bond to be signed,but a week before they wanted us to sign  for about 5 years.  Im ready to join in that company itself,but if  suppose later, I got a situation to break the bond/service agreement within this 5years of bonded period,what will be the discrepancies i have to meet?

Kindly help and support me to take a decision....


 11 Replies

Hirdayanath M Kamble (Service)     23 May 2011


in india the bond thing is something we need to understand, legally speaking no corporation can make u sign a bond as it voilates your fundamental right as garunteed under the constitution of india, but taking into consideration a corporation can enter into a bond in the nature of understanding or consent by and between yourself and the company by showing you that they would be incurring heavy cost for your traning which would be eventually compensated by yu working for the said period , other wise i see no reason a corporation should bond someone in . 5 year period is long enoughf and oppourtunity doesnot waits of anyone. kindly go into the reasons as to why they want you to sign the bind, Confidentaily of the documents, your position in the company, of other tranning expenses incurred by the company in yourbehalf and do not forget to readf the bond document before signing, if you yourself are not able to understand the contents , take help of a Advocate.

vinu (nil)     25 May 2011

Thank you sir. Let me read the bond document before signing then.

I have another doubt also,

1.what is the difference between one-sided bond and two sided bond?

2.what will be my legal proceedings if its is one-sided bond / twosided bond and which will be at comfortable in case of me?

Kumar Doab (FIN)     25 May 2011

As pointed out by learned Mr. Hriday, company can file civil suite against you for recovery of money as described in the document.You shall have to be extra careful and shall need expert counsel to contest the heavy claims lodged by the company.

It shall be appropriate to get the document examined by an expert.

You have wisely stated that you shall read before you sign on the dotted line.

radha krishna (vp-hr)     26 May 2011

As a retention policy companies ask form Bond.from Freshers. For experinced/experts Companies pay incentives and many more carrots for retention.

I am now talking of Bond for Freshers:

1. Whatever is the intelligence level/IQ level/topper in the class etc., Fresher is always a Fresher.

2. Fresher need to be moulded first for the comapniy's policies/procedures/culture and then to moulded trained for converting his theory knowledge for the requirment of the unit.

Many times we find that the Freshers (except for very few) takes atleast one year to adjust to the working atmoshpere/culture and then another one year to learn his  work and deliver.. For this reason many Engineers are taken as trainees for one year and then 6 months to one year probation.

Employer invests money as well as time in developing the Fresher. There is nothing wrong that he expect such trainee to deliver atleast for one to two years.

There is story on the other side- Many companies  attract/puch 2-3 years experienced executives which means they are avoiding the extending training to freshers and recruit ready made product who delivers from the day one at the cost of another company. 

Therefore demand for execution of bond is reasonable.Whether it is 3 or 5 years is for the comapny to decide. After three years if the employee's market value is increased, the company has to review the compensation so that bond will be honoured by employee and no fears/doubts.

If the bond says about compensation payable in case of employer terminates the service without any reason it becomes a two way bond.

It makes no difference as far as employee is concerned  when he breaks a bond.

I suggest it is better to decide in the beginning whether to continue for the bond period or not irrespective of the conditions in it. Once signed it is always better to honour it , any how he has given Fresher an opportunity/first stpe to grow in the life.

surya kaliyamoorthi (Assistant Legal Manager)     26 May 2011

I don’t think... company has challenge their own employee based on the bond as the person fail to serve the tenure what mentioned  ... company would have filed a case against the  employee in different issues... like... employee has failed to serve the notice period... or not handed over the work to the  higher authority....

vinu (nil)     26 May 2011

@ radha krishna

Sir, the demand for execution of bond is reasonable and i too accept for it.

But as of now , my view over this is,

I spent about 4 years and did my engineering, ultimately(in case of me) I will work more than 5 years.

Considering my career, What I need in that company is Growth and Recognition moreover good environment.

Here my doubt again:

In case if there is any problem in that company regarding the above said factors, bond might affect me to relieve. 

Why I'm very keen about future problems is ., according to company I'm bonded with them to work for 5 years and keeping this in mind, will there might be any chances to retard my growth? and in such case can I break it up?

Sir,dont think that I'm negative,jus thinking the part if such probability occurs

**And about the compensation,I guess the amount would be 2.75 lacs. And I'm sure i wont be able to pay such amount as  compensation. And also I dont want to miss this company.

Sunil (Manager)     26 May 2011

Correct. There may be high atrition problems with the Company and hence Company is asking bond for 5 long years. Candidate has to check manpower turnover record also. Once signed, he has to honour it.

Change of subject :

I have seen Company asking for bond, candidate deny and still continue work. This is the case with high atrition rate company. Also, Company take bond for period completed to satisfy their auditors. Name of the company is deliberately not given.

What a signed candidate should do when he came to know above ? Should he break the bond ?

surya kaliyamoorthi (Assistant Legal Manager)     26 May 2011

In my previous answer... I am indirectly referring.. If u breach the terms of bond.... you can contest on merits as they take any action against you based on the bond... In my friend circle... I have come across this issue.... 1st one... We sort out the issue by requesting the HR... And another issue.... the management has sought remedy against my friend (Employee...) in different angle though there is a bond between my friend and management....


So I do Agree with my learned Friend  Hirday MK

Sunil (Manager)     26 May 2011

@ Surya & @ Hirday MK

I agree for the training expenses against bond. But Company's policy to tackle atrition remains unanswered. And almost all the cases these are one sided bond. If bond doesn't have any training clause and it is found that bonds are signed by few candidates and others who escapes with guts, still signed candidate has to honour the bond ?

Nitin Kumar Verma (Self Employed)     13 October 2015

I have a question regarding the above secenerio. If an employee who is still under bond is become the victim of unfair behaviour of the manager or any other senior person of the company and unable to continue with the company because of the mental harrassment and HR is not helping the employee. On this ground, does Indian law favours the employee or blindly go by the agreement/bonds conditions?

Kumar Doab (FIN)     14 October 2015

@ Nitin,


This thread is also informative and you can pick up relevant points.


You have repeated query at following thread;


and it is replied.

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