UnBonDeD

Service agreements or bonds tend to serve as road blocks to high flying fresher’s who tend to switch to top gear for changing companies after their training period or also for individuals who return from onsite post knowledge transition on any important assignment .This is a basic step taken by the company which is solely to breakeven on any dollars that was spent on you as an employee of the organization. Keeping in check the attrition rate is the underlying motive.
Basically there are many dimensions of employment contract. 1. Where and employer and an employee enters into a contract that if an employee chose to break this agreement then he is liable to pay the amount agreed on the time of signing the bond. 2. In the second scenario basically the employee has to pay upfront a certain amount of money which may or may not be given back to him depending on the terms and conditions. 3. A third dimension which may be highlighted is that a person can be entitled to a contract not only as a fresher but as an experienced employee also ,while returning from onsite he may be asked to enter into a bond for a certain period of time at a certain bond payment.
Similiarly we can view the service bond agreement in as many ways as we want to but the ultimate and sole objective of the company is to recover the variable cost invested in the employee.
Now the question is How effective is Service bonds or agreements for effectively boosting employee retention?
Let me try to critically analyze the above situation by taking into consideration various situations that I have witnessed and trying to see how the concerned individual dealt with it.
In the first case one of my friends was made to sign a bond where it reflected only one major clause of redress i.e protection against future loss. Now in this bond if the company has incurred any amount of money for imparting training to him then the amount was to be given back to the company before the stipulated period. In fact this period meant specifically the period that was required by the employer to extract the amount spent by the company to train him. Now in this bond if he was able to prove that the company had not incurred any special cost in training him then the bond wont be enforceable. On the other hand, if the company had incurred expenditure on his training then he was bound to give it back by serving with the company for the period stipulated or to refund the amount spent by the company in lump sum when he leaves before the stipulated date. Now for him this acted as a major deterrent when he was contemplating to leave the company post 1.5 years as he saw that there was no real opportunities in this company. Now the service agreement amount that he was supposed to pay was around 3 lakhs, which was validated by the company and based on his financial constraints he decided to stay back.
The second instance which I am going to cite is related to one my seniors at my last organization. In this case he was working in the company for the last 4 years and he returned to India after working for the company for the last 2 years at onsite. His work was based in developing complex business solutions .After getting suitable know-how about the work from onsite he was expected to same kind of work for another 2 years at offshore. Before going to onshore he was made to sign a specific bond where he wasn’t suppose to leave the company for 2 years after coming back from onsite. Now at offshore he was faced with a lot of problems Serious politics had his project and also affected his appraisals very badly. None of the team members in their project had any roles/responsibilities to prove themselves. It was horrible that they were few other people more experienced than him sitting and doing the same monotonous job. Their PMs are not bothered to rotate people or release any of them. Now he got a much better offer from outside .This offer couple with internal problems was compelling to leave the job. Now same as before he was faced with the financial bond of paying back to the company a certain amount. But in this case the situation was tackled differently. He struck a deal with the company so that they will pay the amount due by him to the current organization in the face that he breaks the bond.So in the end he was able to switch over.
In my case I was to suppose a notice period of month which if I am not able to serve then I was to return my 2 month’s salary which was infact very meagre as compared to what other organizations have in place.
Here we clearly see that bonds are just the means for employee retention not the end.
Now if we try to analyze the pros and cons of the service agreement I can conclude the following brief points as to why employees service bond..
Employer perspective:
• As the company provides training for some period, he expects his employee to be with him for some period.
• For some jobs continuity of operations is required, one can’t leave the company in the middle as it effects the efficiency of operations.
Employees Perspective:
As there are no other best options available, it is better for the employee to go with the bond.

Now there can also be another perspective that some companies just want to hold the employees in a grip and want to pay them less salary in the bond period. A thought out strategy for saving huge dollars as salaries make up a huge portion of the salaries of the employees.

These are some of the learnings and insights I have to share.
Kindly correct me if I have gone wrong anywhere…..

Thanks for reading...