JOB BONDS/CONTRACTS

Dear Debashis,

Introduction of service agreement forcing employees to serve for a minimum period per se is neither illegal nor arbitrary. However, arbitrariness may depend on the particular industry, industry standards, attrition rate and other factual aspects. In my view, 5 years may be on the higher side in view of the desire by the government to bring in labour policies for mobility of manpower.

Further, though the lower courts were propably leaning towards employees previously in enforcing the same or otherwise,  off late there is a perceived shift in favor of employers as the Courts are also appreciating the compulsive factors forcing employers to introduce the same and their have been decisions in favour of employers as well. I have examples and instances of lower Courts deciding in favor of employers in case of Central Government where there is a breach by the employee/prospect employee.

Thirdly, the stamp duty should be appropriate and in these sort of agreements, it has to be on non-judicial stamp paper of value or Rs. 100/ in state of Karnataka. Please find out what is the applicable stamp duty in your lest lest the agreement be infructuous or un-enforceable for want of appropriate stamp duty.

dear Mr. Dhar,

the agreement is not illegal but it is not enforceable in the eyes of law. bond of five years can never be termed as a valid restriction on employment. it amounts to restriction in right to life and like. also contract act itself says that no restriction could be imposed on the right to trade n all except the restriction should be a reasonable one. but here the bond of five years can not be said to be a valid one.

but there may be some different aspect to this matter if you have trained him for any particular job and spent a lot of money on him, then the restriction, on the facts of the case, may be termed as a valid restriction.