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Ashwin -g-   21 April 2022

Validity of employment bonds

I am a final year BTech student and while looking for fresher jobs, almost every company in the core engineering sector has an employment bond. The packages are typically 4 lakhs per annum with a bond of 2 or 3 years and a bond amount of 2 or 4 lakhs. This does not seem like a "reasonable" agreement and seems extremely exploitative to have a bond comparable to the annual salary. 

This is further aggravated by the fact that the whole industry has now shifted to this model leaving little choice for freshers. From the employee's perspective, once they join, even if it's a non-enforceable contract, they have to adhere to it, or else risk having a negative impact on their future career if they choose to take some legal action, assuming they can afford to do so.

This seems to go against the fundamental human rights against exploitation and the right to freedom that I have read about. Despite this, even PSUs have such bonds with unreasonable terms.

My question is, how can this situation be legally challenged in court? How can we challenge these exploitative labor contracts all at once without having to challenge them individually on a case-by-case basis? Have there been any landmark judgments regarding this?


 2 Replies

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

That is an offer from the employer according to his terms, if it is acceptable you may take up the job, not acceptable you may not take such an offer.

If there are no conditions, every employee takes up a job, gets on-hand experience, and switches on for better pastures, and the employer has to hunt for another substitute, and the affair may become expensive and their production plans may get upset.  This is the actual problem with the employer's side.

Those who join, and wish to jump later after getting a good offer, may challenge that order of the employer through court to get back their salaries/benefits.


1 Like

M V Gupta (Advocate)     21 April 2022

Shri GLN Prasad has explained the ratio for insisting on an employment bond, which is absolutely correct. The supreme court in The Association of Medical superintendents VS Union of India and others(decision dt.19-08-2019) has held that such bonds cannot be regarded as one in restraint of trade. (See Indian employment bonds) 

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