It is like an employment bond between you and your employer. It is basically a contract between the two of you.
Usually, when a person immediately after completion of his education joins an establishment, he is required to be trained for meeting the requirements of the job. It may be in the form of a formal training and/or on-the-job training. The establishment may have to spend considerable money and time training such new employee. It is generally in consideration of such training, including practical on-the-job training, that the employee may be required to work for the establishment for a specific minimum period of time. In case of violation of such stipulation, the employee may be liable to pay a specified amount of money to the employer. This is the essence of the employment bond.
An employment bond is justified by the employer on the ground that he has to spend considerable amount of money and time for training the employee, who otherwise might not have been having practical experience to perform the job when he joined. Therefore, the employer has a legitimate expectation that he should get some benefit of the training imparted to the employee by ensuring that he is in the job at least for a minimum period of time. Secondly, the employer may also feel that if the employee leaves the job shortly after his training, he may join his rivals / competitors to give them the benefit of his training and/or reveal his professional / trade secrets. Thus, while the employer who imparted the training loses such trained employee, another competitor gets advantage of such trained employee. This is, in brief, the justification for the employment bond.
Being a contract, an employment bond may be valid under the Contract Act if it is signed by both the parties with their free will and consent, and if there is no force, coercion, misrepresentation, undue influence, mistake, etc.
It is true that Section 27 of the Contract Act lays down that every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. However, the restraints or the negative covenants in such agreement may be valid if they are reasonable.
In the event of a breach of the employment bond, the employer might incur a loss due to which he may be entitled for compensation. But, the compensation awarded should be reasonable to compensate such loss incurred by him.
This is the general legal position with regard to the employment bond.
In your scenario, you have already completed one year out of the two-year requirement. It may be advisable that you should negotiate with your employer in a transparent manner and try to find an amicable settlement. It is not uncommon to see employers agreeing to allow employees leaving the job prior to the stipulated periods if some convincing reasons are given.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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