LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Manohar H   21 March 2022

Service bond

Hi Sir / Madam, 

I was working in a newly formed Public Sector Bank which had stipulated a Sefvice Bond of 3 lakhs for 3 years. I worked there for 2 years and 7 months and resigned due to personal reasons. I requested the bank to waive service bond as there was only 5 months of short service but they did not consider my request. Kindly advise me if there is any legal remedy for me to recover the service bond.


 3 Replies

G.L.N. Prasad (Retired employee.)     21 March 2022

If the employee has to receive more than Rs.1 lakhs terminal benefits he must be worried.  If the loss is not substantial  (Terminal benefits to be received from the employer is only PF self contribution) you can ignore and no bank to my knowledge proceeded for such recovery.  If the terminal benefits are substantial then you have to issue a legal notice and fight it out through court.  Everything depends on facts and your personal reasons.  In several cases, the employees take PSU jobs, and after gaining experience shift to private sector banks for better emoluments and some private banks are even paying such amounts to PSU directly as emoluments in private banks are like packages linked to performance every year

Dr J C Vashista (Advocate)     22 March 2022

You are bound by the terms and conditions agreed, if not waived.

P. Venu (Advocate)     17 April 2022

To my knowledge, such bonds are not enforceable only if -

(1) The employment agreement or bond, per se, must have been entered into 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.
(2) The employment bond will not be enforceable if it is either one sided, unconscionable or unreasonable.
(3) The amount of damages claimed from the employee for breach of the post training clause must be proportionate to the amount of money invested by the employer in training the employee concerned. More pertinently such bonds are applicable only if the employer has spent money on the personal grooming and enhancement of the employees but not just a training that helps employees perform better.
(4) Courts have generally held that employees' rights to livelihood must prevail over employers' interests notwithstanding a pre-existing agreement between the two. Therefore, any coercive act like retaining the original educational certificates should be avoided by the employers incase of bond breach by the employees.
(5) Non-Compete clause post termination of employment must be reasonable in terms of period of restrictive time and geography.

 For detailed information please visit

Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Topics

View More

Start a New Discussion Unreplied Threads

Post a Suggestion for LCI Team
Post a Legal Query