Service bond
ars
(Querist) 27 April 2012
This query is : Resolved
Dear Experts,
1.Is it legal to ask to sign for the service bond, from the proposed employee?
2. the clause read as " if the employee leave before the service period of 36 months, he shall reimburse the employer with the prevailing CTC of one full year? is it right.
3. if answer to above Q. is NO then how to tackle the employer and what is the way out?
ajay sethi
(Expert) 27 April 2012
employers spend money in training the employee . in such a case if employee is called upon to execute service bond there is no such illegality .
it is upto employee to refuse service bond . if however he has signed the bond then the employee is bound by terms and conditions of bond .
in present case employee is liable to pay CTC of one full year . in the event employee leaves before the service period then employer may try to invoke the bond .
company has deep pockets and can afford litigation . how ever for employee it becomes an expensive proposition . in such a case the meployee can take the plea that terms of bond are unreasonable and arbitrary
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.
Again as per the Indian Contract Act no contract can be enforced on any person if the contract which is being so enforced causes any harm to the person on whom its is enforced and if performed would violate principles of natural justices
ajay sethi
(Expert) 27 April 2012
In Toshnial Brothers (Pvt.) Ltd. v. E. Eswarprasad & Ors., 1997 LLR 500 decided by the Madras High Court. In this case, an employee who was engaged as Sale Engineer committed a breach of the undertaking when he left the services of the plaintiff after serving for 14 months only as against the contracted period of three years. When the case reached the High Court, the High Court of Madras held that in such a case, it becomes unnecessary for the employer to prove separately any post-breach damages. On the other hand, it would suffice to substantiate the fact that the concerned employee was the beneficiary of special favour or concession or training at the cost and expense wholly or in part of the employer and there had been a beach of the undertaking by the beneficiary of the same. In such cases, the breach would per se constitute the required legal injury resulting to the employer, out of the breach or violation by the employees. The High Court, also clarified that while awarding damages as stipulated, the statutory exception for mitigating the quantum of damages will have no bearing.
Shonee Kapoor
(Expert) 27 April 2012
I endorse the views of Ld. Sethi.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
prabhakar singh
(Expert) 29 April 2012
1.Is it legal to ask to sign for the service bond, from the proposed employee?
Answer:YES
2. the clause read as " if the employee leave before the service period of 36 months, he shall reimburse the employer with the prevailing CTC of one full year? is it right.
Answer:YES
3. does not arise for me.
A restriction is legal so long it is reasonable.In cases of dispute about reasonableness only court can resolve the issue or an arbitrator if agreed between for any dispute resolution.
You may carefully go with section 27 of CONTRACT ACT.
