An employment bond is yet another type of agreement to restrict the movement of trainees to other organisations offering better remuneration and benefits. To safeguard its own interest and reap the benefits of the investment it has made on each of the employees, starting from recruitment cost to training and grooming them, the company makes its trainees sign an agreement with various employment clauses like compulsory stay with the company for certain period or pay a penalty of certain amount. It also, to certain extent, prevents the solicitation of employees by other competitors.
In the context of Indian companies, especially IT companies, these bonds have become norm of the day. Almost all the companies make their trainees sign this bond within a day or two of joining the organisation. Obviously, at that point of time the bargaining power of the employees is very limited, and without any questions, they have to choose between the option of signing the bond or losing the job. Such a bond is out and out for the benefits of the employer.
In my views, it is not unfair on the part of a company to put some restriction on its employees after investing a considerable amount on grooming the employee and make him/her suitable for the work. If no such bond exists, the employee can leave the organisation and join its competitor for a higher pay. In such situation, not only the company will have to bear the cost of training the employee without any ROI, also it will need to train new workforce to replace the employee.
But most of the Indian IT companies, though they have an employment bond in place, do not strictly follow it. Companies like Infosys, which restrict its employees to stay in the company for 1 year or else pay Rs 1 lakh, hardly ever follow up any defaulters. It might be because as per the Indian Contract Act contracts entered between two parties if is one sided then such contract would be null and void. Most of the Bonds are one sided.
Bonds might be one way of getting the ROI on an employee, but it is certainly not the best way. Improving the work culture, raising the standard of jobs, providing adequate compensation etc can be other ways of retaining employees after training. This will not create any negative feeling towards the organisation, rather will boost the employee morale, and improve their performance, which in turn will benefit the organisation.
In the context of Indian companies, especially IT companies, these bonds have become norm of the day. Almost all the companies make their trainees sign this bond within a day or two of joining the organisation. Obviously, at that point of time the bargaining power of the employees is very limited, and without any questions, they have to choose between the option of signing the bond or losing the job. Such a bond is out and out for the benefits of the employer.
In my views, it is not unfair on the part of a company to put some restriction on its employees after investing a considerable amount on grooming the employee and make him/her suitable for the work. If no such bond exists, the employee can leave the organisation and join its competitor for a higher pay. In such situation, not only the company will have to bear the cost of training the employee without any ROI, also it will need to train new workforce to replace the employee.
But most of the Indian IT companies, though they have an employment bond in place, do not strictly follow it. Companies like Infosys, which restrict its employees to stay in the company for 1 year or else pay Rs 1 lakh, hardly ever follow up any defaulters. It might be because as per the Indian Contract Act contracts entered between two parties if is one sided then such contract would be null and void. Most of the Bonds are one sided.
Bonds might be one way of getting the ROI on an employee, but it is certainly not the best way. Improving the work culture, raising the standard of jobs, providing adequate compensation etc can be other ways of retaining employees after training. This will not create any negative feeling towards the organisation, rather will boost the employee morale, and improve their performance, which in turn will benefit the organisation.
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