Saturday, March 13, 2010

The issues related to a employment bond

First of all I am forced to think of the purpose served by the employment bond. Why the bond is in place ? Why is it always pro employer ? What are the reasons behind executing the employment bond ? When we see from the barbash’s employment relationship framework defined , organization is influenced by the cost discipline , and definitely in order to derive leverage on the costs involved , companies try to retain the employees and maximize the value obtained from them in return to the costs seen. As u can see , the organization even claims employees as the assets of the organization ,but in reality they are seen and treated as the “profit generating liability” . As such liabilities are expected to return in the form of profits , the bonds are projected as the psychological barrier for the employees to remain with the same organization .When we see it from the economics perspective ( supply and demand ) , it indirectly restricts the demand when there is a good supply and evidently good demand is there. The demand is always downward sloping with the price paid for the quantity decreases when the quantity increases. In the context of labor supply and employment dynamics , when there is a abundant quantity of labor available , the price exchanged is less for the labor and more bargaining power for the employer. When the availability of labor becomes less , more price is exchanged to get that labor which directly follows from the law of supply and demand. So keeping employment bond will create conditions in turn restricts the movement of labor , can cash on the talent . When we see it from the restrictive covenants perspective , the bonds are really a “virtual” covenant preventing the employee from competing . the” freedom of mobility “as enshrined in our constitution of section 27 of Indian contract act where an employee cannot be restrained to work , So I am really pondering as to whether this spirit of bond will stand in the way of employee trying to seek the best opportunity available. So just pondering to see in the pepsi coco cola case where the pepsi complained abt the poaching , if the pepsi in turn placed a bond on these employees and in turn appealed to the court abt the bond , what would have been the outcome ? will the court again say abt the freedom of mobility as the reason or favour the bond and verdict of thumbs up for pepsi. There are lot of situations where the conditions overlap over one another and may differ from case to case and the applicability of bond shall be a question to reason out.

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