I totally agree to it. Article 19 can not curtail the statutory right of the Employer if he has actually spend the money on training of an employee.
From India, New Delhi
314From India, New Delhi
Hi Lokesh Babu,
Many views are already logged in this discussions, & they talk about legal or moral aspects of the matter. But any such decision is to be taken on "practical" base more than legal or moral thoughts.
As you say, 75000 INR is twice the salary they were paying, & you are changing for "better opportunity", so I guess you will be earning more in the new job. Calculate your preferences, if you want to be stuck in this job for 20 more months with same (with periodic increments) salary or more salary (Again with periodic increments). May be paying 75000 will be more practical.
Also, check with your new employer, if they are hiring you as trainee. If yes, they might not need experience certificate / reliving letter from previous employer. In that case, you can consider not to pay the amount.
If new employer is joining you as experienced person, you can try to ask them to contribute for this 'Fund', so you can join them with experience certificate. If they really need you & the amount is not much, sometimes they pay for it!
Remember, Company can register a case & give a lawyer to play legal terms. They can afford it to make a example. They may already be paying a lawyer for other services.
Do you really want to spend time & efforts to go that way? Would you afford to pay a lawyer than to pay the old employer?
If after all calculations, you still think it is wise not to pay, then think also about not to leave the job for 20 months. It is seen that in such periods the employee moral is very low & productivity is down. But then try to persue your targeted goals in this period. Acquire additional qualifications / gain insight training in the company / give time to family... You might find these 20 months more fruitful than to persue others goals in new company......
Regards,
Amod.
Many views are already logged in this discussions, & they talk about legal or moral aspects of the matter. But any such decision is to be taken on "practical" base more than legal or moral thoughts.
As you say, 75000 INR is twice the salary they were paying, & you are changing for "better opportunity", so I guess you will be earning more in the new job. Calculate your preferences, if you want to be stuck in this job for 20 more months with same (with periodic increments) salary or more salary (Again with periodic increments). May be paying 75000 will be more practical.
Also, check with your new employer, if they are hiring you as trainee. If yes, they might not need experience certificate / reliving letter from previous employer. In that case, you can consider not to pay the amount.
If new employer is joining you as experienced person, you can try to ask them to contribute for this 'Fund', so you can join them with experience certificate. If they really need you & the amount is not much, sometimes they pay for it!
Remember, Company can register a case & give a lawyer to play legal terms. They can afford it to make a example. They may already be paying a lawyer for other services.
Do you really want to spend time & efforts to go that way? Would you afford to pay a lawyer than to pay the old employer?
If after all calculations, you still think it is wise not to pay, then think also about not to leave the job for 20 months. It is seen that in such periods the employee moral is very low & productivity is down. But then try to persue your targeted goals in this period. Acquire additional qualifications / gain insight training in the company / give time to family... You might find these 20 months more fruitful than to persue others goals in new company......
Regards,
Amod.
Excellent & a very different way to look @ the issue Amod.
Let's see what choice Lokesh Babu will prefer/adopt--which we would know ONLY if he responds to the various views expressed so far, on which I would keep my options open :-)
However, pl desist from mixing up the alternatives @ hand [not that one would do it knowingly, but it's quite easy to slip into such a trap, and not realize until it's very late--have seen many such instances]--there would also be some situations [including ones like the one under discussion here] that call for legal option to be exercised & some where the moral option will need to be adopted--each with it's own set of consequences/results. Like the Quote goes: 'In nature, there are no 'rights' or 'wrongs', only consequences'.
The key, I guess, is to adopt the MOST APPROPRIATE solution under a given set of circumstances--AND NOT PASSING the consequences of our actions/choices on to others.
Rgds,
TS
From India, Hyderabad
Let's see what choice Lokesh Babu will prefer/adopt--which we would know ONLY if he responds to the various views expressed so far, on which I would keep my options open :-)
However, pl desist from mixing up the alternatives @ hand [not that one would do it knowingly, but it's quite easy to slip into such a trap, and not realize until it's very late--have seen many such instances]--there would also be some situations [including ones like the one under discussion here] that call for legal option to be exercised & some where the moral option will need to be adopted--each with it's own set of consequences/results. Like the Quote goes: 'In nature, there are no 'rights' or 'wrongs', only consequences'.
The key, I guess, is to adopt the MOST APPROPRIATE solution under a given set of circumstances--AND NOT PASSING the consequences of our actions/choices on to others.
Rgds,
TS
From India, Hyderabad
Dear Lokesh
You have laws of India in your support but the moot question is whether you are willing to fight or not. As far as my knowledge and experience goes as an individual one will compromise but given an opportunity he will advice others to fight.
(1) Any bond executed between an prospective employer and employee , heavily loaded in favour of powerful [ prosepective employer in this case ] can be stuck down by courts if you are willing to challenge and spend time, money and peace of mind .
(2) For a bond or contract where you are not allowed to modify or delete clauses not in your favour is again defective and can be challenged. If all employees have put their signature on similarly worded bond , you have additional point in your favour.
(3) The present practice of drafting a bond for "compensation of amount spend on training " is a loophole devised by some companies. This can also be struck down , if it is signed before you join company as an employee. The companies are eligible for compensation for formal training [ like sponsoring your training at professional institute in India or abroad/sponsoring higher studies/ fully paid leaves for training or professional courses etc '] and not what you have learned ON JOB. You have protection by Indian laws , if your company can not show payment to third party for your training.
Now my advice , even though Indian laws are in your favour, most of us don't have choice other than signing on papers without even a single reading.Since a number of companies indulge in this malpractice, your FIGHT will make these companies LIMP in offering job to you.
Even though it is illegal and unethical , companies who don't have sound HR policies to retain talent uses your vulnerability, as job seeker, for this BOND to retain talent. You have long earning life probably another 35 years. Your company may not survive that long. Go ahead find other job, jump bond without remorse. If payment of bond amount is unavoidable,
pay the bond amount. It is not training for which you are paying but LEARNING from bad experience.
Best of luck and wishes for grand future earnings which will make this payment look very tiny.
From India, Mumbai
You have laws of India in your support but the moot question is whether you are willing to fight or not. As far as my knowledge and experience goes as an individual one will compromise but given an opportunity he will advice others to fight.
(1) Any bond executed between an prospective employer and employee , heavily loaded in favour of powerful [ prosepective employer in this case ] can be stuck down by courts if you are willing to challenge and spend time, money and peace of mind .
(2) For a bond or contract where you are not allowed to modify or delete clauses not in your favour is again defective and can be challenged. If all employees have put their signature on similarly worded bond , you have additional point in your favour.
(3) The present practice of drafting a bond for "compensation of amount spend on training " is a loophole devised by some companies. This can also be struck down , if it is signed before you join company as an employee. The companies are eligible for compensation for formal training [ like sponsoring your training at professional institute in India or abroad/sponsoring higher studies/ fully paid leaves for training or professional courses etc '] and not what you have learned ON JOB. You have protection by Indian laws , if your company can not show payment to third party for your training.
Now my advice , even though Indian laws are in your favour, most of us don't have choice other than signing on papers without even a single reading.Since a number of companies indulge in this malpractice, your FIGHT will make these companies LIMP in offering job to you.
Even though it is illegal and unethical , companies who don't have sound HR policies to retain talent uses your vulnerability, as job seeker, for this BOND to retain talent. You have long earning life probably another 35 years. Your company may not survive that long. Go ahead find other job, jump bond without remorse. If payment of bond amount is unavoidable,
pay the bond amount. It is not training for which you are paying but LEARNING from bad experience.
Best of luck and wishes for grand future earnings which will make this payment look very tiny.
From India, Mumbai
Dear All
Section 27 of the Indian Contract Act. Agreement in restraint of trade void. - Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Exception of this section is that
Exception-1 : Saving of agreement is not to carry on business of which good is sold – One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business.”
In Superintendence Company of india Vs Krishna (1980 AIR 1717) Supreme court held that a contract for restrain for trade is one by which a party restrains his future liability to carry on his trade, business or profession in such manner and with such person has he choose. A contract of such class is prima facie void.
In Pepsi Foods Limited and Others v Bharat Coca-Cola Holdings Pvt. Ltd. and Others (1981-1985 DLT-) delhi high court has held that that freedom of changing employment for improving service conditions is a vital and important right of an employee, which cannot be restricted or curtailed by a Court injunction.
The learned Single Judge of the Delhi High Court in Ambience India Private Limited v Naveen Jain ( 2005 (3) KLT SN 61 ) observed that the law is well settled that all contracts in restraint of trade are void and hit by section 27 of the Contract Act. He also held that prima facie view that the agreement between the parties prohibiting the defendant for two years from taking employment with any present, past or prospective customer of the plaintiff is void and hit by Section 27 of the Indian Contract Act. The court also held that the employment contract between the plaintiff and defendant was determinable in nature and as such the defendant was entitled to determine the same and seek another employment. Everybody has a right to strive for progress in career. The restrictions imposed upon the defendant in the agreement, therefore, were void and unconscionable.
In Star India Private Limited v. Laxmiraj Seetharam Nayek and Another the Bombay The Court observed that if the plaintiff had right to terminate the contract on the ground of misconduct, it cannot be said that the Defendant had absolutely no right to resign from the employment on account of better prospects or other personal reasons. If he finds a better employment with better remuneration and other service conditions, he cannot be tied down under the terms of the service contract. The Court held that any agreement restraining an employee, post-termination, from seeking employment elsewhere.
In R. Babu and Another v. TTK LIG Ltd Chennai,( 2005 LLR 71 (Mad. HC)). has vacated the injunction order issued by the learned Judge whereby an employee after tendering his resignation has joined another Company notwithstanding that he has entered into agreement that after cessation of his employment with the Company, he would not seek any employment in any establishment elsewhere of similar nature for a period of five years. The Court held that an agreement whereby an employee agrees not to join another competitive concern for a specified period after cessation of his employment, will be violate of public policy as stipulated by Indian Contract Act hence it cannot be legally enforced in the Court
We should understand that Most of the Employment bond are one sided and it is drafted in such a way that it only favors the employers and not the employees. The poor employee are signing the bond only to get a job and to earn a livelihood and there are employers who take advantage of the same. It is to be noted that when the employer gives training to the employee trainee they also make them work for the same and they are only giving them very less amount as salary. So according to me and as per the above quoted judgment by the Supreme Court and various High Courts the bond system ( Employment Bond) is against the law and against the mankind.
From India, Kochi
Section 27 of the Indian Contract Act. Agreement in restraint of trade void. - Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Exception of this section is that
Exception-1 : Saving of agreement is not to carry on business of which good is sold – One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business.”
In Superintendence Company of india Vs Krishna (1980 AIR 1717) Supreme court held that a contract for restrain for trade is one by which a party restrains his future liability to carry on his trade, business or profession in such manner and with such person has he choose. A contract of such class is prima facie void.
In Pepsi Foods Limited and Others v Bharat Coca-Cola Holdings Pvt. Ltd. and Others (1981-1985 DLT-) delhi high court has held that that freedom of changing employment for improving service conditions is a vital and important right of an employee, which cannot be restricted or curtailed by a Court injunction.
The learned Single Judge of the Delhi High Court in Ambience India Private Limited v Naveen Jain ( 2005 (3) KLT SN 61 ) observed that the law is well settled that all contracts in restraint of trade are void and hit by section 27 of the Contract Act. He also held that prima facie view that the agreement between the parties prohibiting the defendant for two years from taking employment with any present, past or prospective customer of the plaintiff is void and hit by Section 27 of the Indian Contract Act. The court also held that the employment contract between the plaintiff and defendant was determinable in nature and as such the defendant was entitled to determine the same and seek another employment. Everybody has a right to strive for progress in career. The restrictions imposed upon the defendant in the agreement, therefore, were void and unconscionable.
In Star India Private Limited v. Laxmiraj Seetharam Nayek and Another the Bombay The Court observed that if the plaintiff had right to terminate the contract on the ground of misconduct, it cannot be said that the Defendant had absolutely no right to resign from the employment on account of better prospects or other personal reasons. If he finds a better employment with better remuneration and other service conditions, he cannot be tied down under the terms of the service contract. The Court held that any agreement restraining an employee, post-termination, from seeking employment elsewhere.
In R. Babu and Another v. TTK LIG Ltd Chennai,( 2005 LLR 71 (Mad. HC)). has vacated the injunction order issued by the learned Judge whereby an employee after tendering his resignation has joined another Company notwithstanding that he has entered into agreement that after cessation of his employment with the Company, he would not seek any employment in any establishment elsewhere of similar nature for a period of five years. The Court held that an agreement whereby an employee agrees not to join another competitive concern for a specified period after cessation of his employment, will be violate of public policy as stipulated by Indian Contract Act hence it cannot be legally enforced in the Court
We should understand that Most of the Employment bond are one sided and it is drafted in such a way that it only favors the employers and not the employees. The poor employee are signing the bond only to get a job and to earn a livelihood and there are employers who take advantage of the same. It is to be noted that when the employer gives training to the employee trainee they also make them work for the same and they are only giving them very less amount as salary. So according to me and as per the above quoted judgment by the Supreme Court and various High Courts the bond system ( Employment Bond) is against the law and against the mankind.
From India, Kochi
Even if you quote 100 cases pertaining to section 27 of contracts and Art 19, it is clearly established in India that, the bond which hinders the development of the individual, and the bonds which are void abinitio, the bonds of malafide intentions, acts impossible to do anymore, would only be made exceptions..... In this case, it is only for 3 years, and that too are bifercated, secondly the purpose is clearly established, both parties benefit from it, thridly, terms and conditions of the contract and any clauses in it does not prove the malafide intentions nor does it highlight the exploitation....... And, as discussed earlier, very true and agreed that No body can force any one to do anything, in such cases the other party who under go the losses can not keep quite in silence, he also has the right in personam to get what he was asked for and invested upon, so can always claim either for specific performance, surely for compensation and damages......
I kindly request you to read the case completely, and please know the difference between complete restraining/restrictions and reasonable restrictions, because the cases you have referred are irrelevant in this matter...... I would rather request you to check out for the case for "breach of employment contracts" in which the rights and libilities of the employer and employee.......... and also refer the cases under apprenticeship act......
In this case, if the areement is valid and the employer is bonafide mens mentis , then the candidate here can never escape the liability........
In simple words, no body can force you to do the act, but once you have agreed to do the act, which is legal, possible to be completed, then you are ;iable for what ever you are agreed for, and in case of your failure to do such acts agreed upon, you will have to pay the compensation and damages to the otherparty.....
Just think generally, if what ever the cases mentioned in there apply in every case, what should the employers do?? every on leave after the training..... who will substantiate the losses and what is the return on investment???
If still could not grasp the points said, I can explain the same taking each case being quoted and how they are not relevant in this particular matter, and how the issues completely differ.......
Both the parties are equally supported by law, what ever may the matter, afterall natural justice can never be ignored.....
From India, Bangalore
I kindly request you to read the case completely, and please know the difference between complete restraining/restrictions and reasonable restrictions, because the cases you have referred are irrelevant in this matter...... I would rather request you to check out for the case for "breach of employment contracts" in which the rights and libilities of the employer and employee.......... and also refer the cases under apprenticeship act......
In this case, if the areement is valid and the employer is bonafide mens mentis , then the candidate here can never escape the liability........
In simple words, no body can force you to do the act, but once you have agreed to do the act, which is legal, possible to be completed, then you are ;iable for what ever you are agreed for, and in case of your failure to do such acts agreed upon, you will have to pay the compensation and damages to the otherparty.....
Just think generally, if what ever the cases mentioned in there apply in every case, what should the employers do?? every on leave after the training..... who will substantiate the losses and what is the return on investment???
If still could not grasp the points said, I can explain the same taking each case being quoted and how they are not relevant in this particular matter, and how the issues completely differ.......
Both the parties are equally supported by law, what ever may the matter, afterall natural justice can never be ignored.....
From India, Bangalore
Dear Babu,
The Company may offer you to sign service bond at the time of joining. However the Service Bond to be valid and enforceble should fulfil following conditions. If these conditions are not fulfilled the bond may not be valid and enforcble.
1) The company should have spend at least Rs.75,000/- towards your
training and personal devlopment etc.
2) Or the company should have offered you additional amount by way of
Retention of Salary or by any another means over and above agreed
Salary offered to you for signing the Bond. If no addtional benefits are
offered the Bond is invalid.
3) In your absence if the company is in fact sufferieng loss of Rs.75,000/-
only then only they can claim the said amount by way of
Liquidated Damages.Before the said amount is claimed from you they
should be able to establish with documentary proof that they will suffer
loss of Rs.75,000/- on acount of your absence.
4) Under the provisons of Indian Contract Act no party can claim Penalty
from opposite party. The imposition of penalty is prohibited in India.
5) Under present laws no employer can withhold Provident Fund or any
other dues from employees.These are retained by Statutory authorities
and could be withdrawn in absence of employer.
Under such circumstance only option avaliable with your employer is to
file only civil suit for recovery of their Bond amount if they could justify
their demand before court of law.
Just because you have signed Service Bond does not mean that you are
required to deposit any amount to your employer.
If they recover any amount from your full and final settlement amount
they would be doing so at their own risk and cost and shall also be liable
for prosecution under The payemnt of wages act.
P.N.PATHAK.
SR HR MANAGER.
From India, Pune
The Company may offer you to sign service bond at the time of joining. However the Service Bond to be valid and enforceble should fulfil following conditions. If these conditions are not fulfilled the bond may not be valid and enforcble.
1) The company should have spend at least Rs.75,000/- towards your
training and personal devlopment etc.
2) Or the company should have offered you additional amount by way of
Retention of Salary or by any another means over and above agreed
Salary offered to you for signing the Bond. If no addtional benefits are
offered the Bond is invalid.
3) In your absence if the company is in fact sufferieng loss of Rs.75,000/-
only then only they can claim the said amount by way of
Liquidated Damages.Before the said amount is claimed from you they
should be able to establish with documentary proof that they will suffer
loss of Rs.75,000/- on acount of your absence.
4) Under the provisons of Indian Contract Act no party can claim Penalty
from opposite party. The imposition of penalty is prohibited in India.
5) Under present laws no employer can withhold Provident Fund or any
other dues from employees.These are retained by Statutory authorities
and could be withdrawn in absence of employer.
Under such circumstance only option avaliable with your employer is to
file only civil suit for recovery of their Bond amount if they could justify
their demand before court of law.
Just because you have signed Service Bond does not mean that you are
required to deposit any amount to your employer.
If they recover any amount from your full and final settlement amount
they would be doing so at their own risk and cost and shall also be liable
for prosecution under The payemnt of wages act.
P.N.PATHAK.
SR HR MANAGER.
From India, Pune
Dear Mehrunisa,
You are again mixing things. No bond says that you have serve the management for eternity. Every bond says that the employee has to serve till the money spent on the training of that individual employee is recovered and even though you want to leave the organization of the employer, you may do so but in that case you have to pay the amount the employer has spent on the training of such employee.
One simple question from you, Suppose you are the employer and you train a fresher or any employee to raise his skills in his work domain and just when he gets trained he leaves your employment by saying that now i know how to do such things and some other employer is paying me more hence i am going. Just step into the shoes of such an employer, dont you feel it is cheating against him. The employer spends a lot on employee training and he is well within his right to get benefit out of it to some extant. The bonds are totally legal documents. Believe me i have got them enforces in the court of Law. But the same were genuine ones.
Article 19 and section 27 are different Scenarios. they give you safety from being slave of a company not from cheating a company.
From India, New Delhi
You are again mixing things. No bond says that you have serve the management for eternity. Every bond says that the employee has to serve till the money spent on the training of that individual employee is recovered and even though you want to leave the organization of the employer, you may do so but in that case you have to pay the amount the employer has spent on the training of such employee.
One simple question from you, Suppose you are the employer and you train a fresher or any employee to raise his skills in his work domain and just when he gets trained he leaves your employment by saying that now i know how to do such things and some other employer is paying me more hence i am going. Just step into the shoes of such an employer, dont you feel it is cheating against him. The employer spends a lot on employee training and he is well within his right to get benefit out of it to some extant. The bonds are totally legal documents. Believe me i have got them enforces in the court of Law. But the same were genuine ones.
Article 19 and section 27 are different Scenarios. they give you safety from being slave of a company not from cheating a company.
From India, New Delhi
Hello Everyone,
Where, in this mela, is Lokesh Babu?
Looks like he's vanished into thin air--after realizing that he can't misuse the many well-intentioned provisions of law--not even clarifying some points as requested by some members.
However, a BIG WORD OF THANKS to him--got to learn a lot due to this thread initiated by him.
Thanks everyone for such a high enriching level of debate.
Rgds,
TS
From India, Hyderabad
Where, in this mela, is Lokesh Babu?
Looks like he's vanished into thin air--after realizing that he can't misuse the many well-intentioned provisions of law--not even clarifying some points as requested by some members.
However, a BIG WORD OF THANKS to him--got to learn a lot due to this thread initiated by him.
Thanks everyone for such a high enriching level of debate.
Rgds,
TS
From India, Hyderabad
Mr. babu,
first of all Bond is not valid in India under fundamental right, second at the time of resignation u r under probation period i.e. they have not permanent you, relation between \'teacher and student\' dose not stand because training period over(after 16 months)and if we consider this relation then question who is teacher and who is student because they have hired your service, ask company to give you training documents which you have signed that indicate that you have been given proper training, and never use word \'prove\' before company,company can prove it.
Best of Luck
From India, Ahmadabad
first of all Bond is not valid in India under fundamental right, second at the time of resignation u r under probation period i.e. they have not permanent you, relation between \'teacher and student\' dose not stand because training period over(after 16 months)and if we consider this relation then question who is teacher and who is student because they have hired your service, ask company to give you training documents which you have signed that indicate that you have been given proper training, and never use word \'prove\' before company,company can prove it.
Best of Luck
From India, Ahmadabad
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Employer suit for breaking service bond within 3 yrs - Delhi HC 5.9.2014.pdf
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