Hi, I am working in a pharma company for the last 16 years in the IT department. Now, our company is going to implement a new ERP system. Our HR manager advises all IT department staff to sign a bond for 5 years if we want to get trained for the new ERP system. He is saying that the cost of training is about Rs. 1 lakh per person, and the company will be paying the same for us.
Now, the matter is, if we sign this bond, we will become puppets of our company. They can reduce our annual salary increment and other perks (the same has happened in the past with other employees). On the other hand, if we refuse to get trained on the new ERP system, we will become non-utilized staff for the company.
Kindly advise on what we can do in this situation.
Regards,
Mathur
From India, Lucknow
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Now, the matter is, if we sign this bond, we will become puppets of our company. They can reduce our annual salary increment and other perks (the same has happened in the past with other employees). On the other hand, if we refuse to get trained on the new ERP system, we will become non-utilized staff for the company.
Kindly advise on what we can do in this situation.
Regards,
Mathur
From India, Lucknow
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Dear Mr. Mathur,
The system of taking employment bonds from employees has been held as illegal by the Apex Court of India in several judgments. Employers are forbidden from obtaining bonds from employees as the contract of employment has to be based on the essence of equity, justice, and fair play. Both the employer and employee have equal rights to enter into the contract and also to terminate the same in terms of agreement.
Employees cannot be made bonded labor.
Dev
From India, Pune
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38The system of taking employment bonds from employees has been held as illegal by the Apex Court of India in several judgments. Employers are forbidden from obtaining bonds from employees as the contract of employment has to be based on the essence of equity, justice, and fair play. Both the employer and employee have equal rights to enter into the contract and also to terminate the same in terms of agreement.
Employees cannot be made bonded labor.
Dev
From India, Pune
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Dear Mathur,
This is the usual practice followed by some companies during the implementation of ERP. You have not mentioned the amount for which your company is going to sign a bond. Is it the same for all employees in the IT department, or does the amount vary? What is your existing role in your department, and what is your basic qualification? If you would like, please clarify the above for me to provide suitable guidance.
Vinay
vinay62@rediffmail.com
From India, Delhi
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This is the usual practice followed by some companies during the implementation of ERP. You have not mentioned the amount for which your company is going to sign a bond. Is it the same for all employees in the IT department, or does the amount vary? What is your existing role in your department, and what is your basic qualification? If you would like, please clarify the above for me to provide suitable guidance.
Vinay
vinay62@rediffmail.com
From India, Delhi
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Dear Mr. Mathur,
Having worked with the company for 16 long years and been a committed employee of the company, I find your statement of becoming a puppet ridiculous.
Whenever there is new technology being introduced in the company and the company incurs training costs, they do not wish the trained employees to leave the company as soon as they get trained. So, some companies ask for a bond for a set period.
In this case, your HR Manager has asked you to sign a bond of 5 years for getting updated and trained. In my view, being a committed employee, you should take the opportunity to serve the company.
Otherwise, if you enter the bond, also ask the HR Manager about the exit criteria in the following cases:
a) if you find the training is not good and you wish to come out of the bond
b) if the training has not met the organizational requirements and you wish to come out of the bond
c) if the training is half done and you are not satisfied
d) if you wish to quit the company within these five years
e) what benefits you would receive after getting trained
If you receive satisfactory answers from the HR Manager on the above, you may consider going ahead with signing. This is my view only.
From India, Hyderabad
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Having worked with the company for 16 long years and been a committed employee of the company, I find your statement of becoming a puppet ridiculous.
Whenever there is new technology being introduced in the company and the company incurs training costs, they do not wish the trained employees to leave the company as soon as they get trained. So, some companies ask for a bond for a set period.
In this case, your HR Manager has asked you to sign a bond of 5 years for getting updated and trained. In my view, being a committed employee, you should take the opportunity to serve the company.
Otherwise, if you enter the bond, also ask the HR Manager about the exit criteria in the following cases:
a) if you find the training is not good and you wish to come out of the bond
b) if the training has not met the organizational requirements and you wish to come out of the bond
c) if the training is half done and you are not satisfied
d) if you wish to quit the company within these five years
e) what benefits you would receive after getting trained
If you receive satisfactory answers from the HR Manager on the above, you may consider going ahead with signing. This is my view only.
From India, Hyderabad
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Hello Mathur,
What's the ERP being implemented?
For the Training costs to be ~1.0 Lac, it needs to be a very reputed one. There are umpteen number of ERPs all over the place.
If it's something like SAP, Oracle, etc., then this would add value to your overall profile--which would be good for you in the long term.
@Dev--Bonds are legal if the company can prove that training was imparted to the employee--since they need to recover their training costs. This topic was discussed many times in this forum.
@ J Kumar--I am not sure if discussing the points you mentioned with HR is advisable--there's every chance that they would view Mathur differently, even though his intent is different. While the points you mentioned are, no doubt, relevant, I would suggest Mathur get the replies discreetly than directly discussing with HR.
Please also respond to the queries raised by Vinay--more clear suggestions can emanate with such info.
You mentioning about 'past experience of reducing increments & perks' does indicate that you need to be cautious.
All the best.
Regards,
TS
From India, Hyderabad
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What's the ERP being implemented?
For the Training costs to be ~1.0 Lac, it needs to be a very reputed one. There are umpteen number of ERPs all over the place.
If it's something like SAP, Oracle, etc., then this would add value to your overall profile--which would be good for you in the long term.
@Dev--Bonds are legal if the company can prove that training was imparted to the employee--since they need to recover their training costs. This topic was discussed many times in this forum.
@ J Kumar--I am not sure if discussing the points you mentioned with HR is advisable--there's every chance that they would view Mathur differently, even though his intent is different. While the points you mentioned are, no doubt, relevant, I would suggest Mathur get the replies discreetly than directly discussing with HR.
Please also respond to the queries raised by Vinay--more clear suggestions can emanate with such info.
You mentioning about 'past experience of reducing increments & perks' does indicate that you need to be cautious.
All the best.
Regards,
TS
From India, Hyderabad
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Even government departments ask employees to sign bonds while enrolling them in various training programs. It is not an illegal practice since the training provided to an individual is not intended for use elsewhere. Employers are well within their rights to have employees sign a bond with clearly defined exit options.
From India, Delhi
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From India, Delhi
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The basic idea of signing the bond is like this. The company is spending a large amount of money for imparting a new technology, an advanced method for its employees. After learning the technique and also undergoing extensive training, suppose the employee decides to leave the company and utilize his knowledge somewhere else... can you imagine the situation. The company has to again identify some more people and again go through the same process, which will entail in loss of knowledge, loss of money, and so on.
Before jumping to a conclusion, we should look at both sides first. Similarly, employees are sent abroad for training with principals or technology partners. There also a bond is executed so that the money spent on acquiring knowledge for the employee is utilized in the same organization for a given number of years.
It is morality and ethics that are involved and not a bonded labor kind of control. Hope my learned HR friends will agree to this logic.
From India, Bengaluru
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Before jumping to a conclusion, we should look at both sides first. Similarly, employees are sent abroad for training with principals or technology partners. There also a bond is executed so that the money spent on acquiring knowledge for the employee is utilized in the same organization for a given number of years.
It is morality and ethics that are involved and not a bonded labor kind of control. Hope my learned HR friends will agree to this logic.
From India, Bengaluru
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I generally take the employer's side, but in this case, I don't agree with what they are trying to do.
Today ERP is a common feature, not something great and exclusive.
The company is training the employees not because they want to upgrade their skills, but because they can't get their work done without it. They are not doing the employee a favor. What the employee will gain will be a side effect of the exercise of implementing the employee.
The company is to training you to implement an ERP, but just on how to make entries and take reports. That's all. This knowledge is not of any use except in doing his work which he was doing before the ERP was put into effect. In another company, he will probably get a preference or a slightly higher pay only because he has worked in the SAP environment and not because of any training.
Rs. 100,000 would be the cost of the training of you were getting in-depth training that would enable you to work for SAP implementation, which is definitely not what you are getting.
In any case, a bond of 5 years makes no sense, it is too long. A year or so, I would accept a justified.
As you already know how the company would be treating you after you sign the bond (less increments etc since they know you can't leave) it makes no sense to sign it. You probably need to search for a new job.
Incidentally, ERP like SAP are easy to use once you understand which screen does what and how it is accessed. In SAP, you need to know the T-code for your functions. And probably how to generate different reports and access and analyze the data by changing the layouts. Does not take more than a week's time to familiarize yourself with the system.
From India, Mumbai
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Today ERP is a common feature, not something great and exclusive.
The company is training the employees not because they want to upgrade their skills, but because they can't get their work done without it. They are not doing the employee a favor. What the employee will gain will be a side effect of the exercise of implementing the employee.
The company is to training you to implement an ERP, but just on how to make entries and take reports. That's all. This knowledge is not of any use except in doing his work which he was doing before the ERP was put into effect. In another company, he will probably get a preference or a slightly higher pay only because he has worked in the SAP environment and not because of any training.
Rs. 100,000 would be the cost of the training of you were getting in-depth training that would enable you to work for SAP implementation, which is definitely not what you are getting.
In any case, a bond of 5 years makes no sense, it is too long. A year or so, I would accept a justified.
As you already know how the company would be treating you after you sign the bond (less increments etc since they know you can't leave) it makes no sense to sign it. You probably need to search for a new job.
Incidentally, ERP like SAP are easy to use once you understand which screen does what and how it is accessed. In SAP, you need to know the T-code for your functions. And probably how to generate different reports and access and analyze the data by changing the layouts. Does not take more than a week's time to familiarize yourself with the system.
From India, Mumbai
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Incidentally, one of our clients had the same problem 5 years ago. They wanted to retain the employees who would be trained in SAP. They asked people to sign bonds. Most of them refused.
To sweeten the deal and to assure the employees that they would benefit from staying on, they implemented a fixed KRA (Key Result Area) defined for each person and a guaranteed bonus if they worked for at least 4 years from the start of the training period. That made a lot of sense to people and they signed, as there were definitely benefits on the table.
From India, Mumbai
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To sweeten the deal and to assure the employees that they would benefit from staying on, they implemented a fixed KRA (Key Result Area) defined for each person and a guaranteed bonus if they worked for at least 4 years from the start of the training period. That made a lot of sense to people and they signed, as there were definitely benefits on the table.
From India, Mumbai
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There is no need for signing a bond because it is the company's requirement to train the employees in their respective modules related to their job profiles. Training will be provided to employees based on the requirements of the module. As you belong to the IT department, the company wants you to be involved in SAP implementation and administration. Therefore, training will be of importance as it costs the company to organize the training. First, go through the overall details of the training and, based on its importance in the current market conditions, make a decision. Definitely discuss the bond in detail with HR.
From United States, Edison
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