Bound by the "BOND"

Employee bonds are becoming the order of the day especially for employees who join at a junior level and particularly when a lot of training and development is required in order to make them “useful” to the company. Well, then are these kind of bonds justified? The answer to that is not that simple. Before seeing whether they are justified or not, let’s see whether they’re actually enforceable in India or not. The main reason why companies use such kind of bonds is to prevent entry level employees from learning newer technology etc. and then moving on to some other organization. But frankly speaking and as pointed out by Sudeep, big companies do not use these bonds. It is probably because it is sometimes the end of the road for the employee who wants to move on to a bigger organization but has reached the likes of Microsoft or Google where the road sadly but truly, ends. This concept makes sense for industries like Aviation and Medicine where there are really huge training costs involved. I remember a friend of mine joining Air India as a pilot who had to sign a bond of 5 years to stay with the organization or payment of a sum of Rs. 20 Lacs in case he decides to leave earlier. The stakes are high in this case and also that word of mouth might spoil his reputation as a professional among other airlines. But in the ever so large and volatile IT industry, where these bonds are so casually used, enforcing them becomes a pain for the organization. The main reason behind this is the additional legal charges that the company will have to incur apart from the investment of time and legal manpower. Despite this, how does an employee exactly get away without paying the bond amount? Well many times the new employer agrees to pay this sum. And other times what an employee does who is already aware of the loophole stated above, is that he simply collects the salary of the current month, puts in his resignation letter and leaves the company. He very well knows that in India the pursuit for the bond amount ends at a few e-mails and phone calls. However there is a catch to this. The employee is not given his full and final settlement amount and the relieving letters that some reputed organizations ask for at the time of joining. But then again there is always some or the other way out of this pickle.

So is this justified i.e. the concept of making new employees sign bonds? Well I think it certainly is. Although quite a few of entry level employees (mind you the bond concept does not work for senior level employees) break these bonds, the majority do not do so as they are not sure of the outcome. So this tool is effective to an extent in order to retain the talent that an organization develops by investing time and money on its training. The issue here is that an employee is never actually allowed to read the bond before he signs it. So in essence the employee doesn’t really have a choice before he signs it.

But whatever practices an organization may adopt, it is effectively to protect its interests. Finding new talent, investing in them and then letting them go with their new acquired knowledge is not exactly a way in which a capitalistic economy may prosper.