Bond from an employee by an employer

Ganesh (Querist) 17 August 2013 This query is : Resolved
Is it constitutional for an employer to make an employee sign a Bond of service.

In a certain case a person was employed by a company and a bond was signed by the employee to render service for 2 years and if he fails he has to pay the company a certain amount. Is such a bond valid. Now if the employee has to resign what is the remedy available to him. The amount is so large that he is not able to repay.

Kindly suggest.

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Devajyoti Barman (Expert) 17 August 2013
No generic reply can be given whether a service bond is valid or not. It all depends upon the terms and conditions of the bond.

prabhakar singh (Expert) 17 August 2013
Constitutional courts are NOT here to test validity of any AGREEMENT which you call BOND.

They test constitutionality of enactments passed by legislatures.

Agreements are result of consensus between two parties and they are enforceable between parties unless specifically barred by any provision of the Indian Contract Act,1872.

Agreements in ABSOLUTE restraint of any trade,profession or commerce are void and not enforceable but those agreements which impose reasonable restrictions are valid.REASONABLENESS of any contract in case of dispute between parties is a matter of adjudication by courts.

Entering into an agreement between employer
and employee that the later would serve for a period of minimum 02 years as a term of service,and on breach would be liable to pay damages as compensation for loss is not generally held to be void by the courts.

As regards to prefixed quantum of damages in the agreement itself,employer can claim only what he proves as actual damages caused,in case he proves more than prefixed he can not get a decree for more than prefixed.
In case he proves less than prefixed he would get only proved one and not that he has prefixed.

Guest (Expert) 17 August 2013
Constitution deals with policy matters not a generic type of document to deal with details of any law.

Service Bond is a type of a contract agreement. Unless the bond contains some clause or clauses violating any section of law, that cannot be treated as void or invalid. If the employee has entered in to an agreement with the company to serve it for two years and quits his service, law won't come to his rescue. The employer is very much within his rights to claim and recover damages.

If the employee feels some clause to be not in his interest he was free not to sign the agreement and try for some other job. Beating the bush won't help at the later stage.

Rajendra K Goyal (Expert) 17 August 2013
Very well advised by the experts, nothing more to add.

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