What is Employee Bond?
Employee Bond is a kind of recorded contract or promised agreement by an employee to his/her employer promising that he/she is bound to pay the amount spent in consideration of imparting the training given to him/her if he/she leaves the company before the agreed period. According to this contract, the employee is liable to pay a certain sum of money to the company i.e. the expenses incurred by the company/organization in training and grooming of the employee. This bond may also contain confidentiality and non- competition clauses. Employee Bond Agreement is typically issued to the employee at the time of joining the company and sometimes along with the offer letter.
Employment Bond: Enforceable or unenforceable?
As per the Contract Act, 1872, a “contract” is an agreement enforceable by law. The agreements not enforceable by law are not contracts. An “agreement” means ‘a promise or a set of promises’ forming consideration for each other. And a promise arises when a proposal is accepted. By implication, an agreement is an accepted proposal. In other words, an agreement consists of an ‘offer’ and its ‘acceptance’.
However, Bonded Labour System (abolition) Act, 1976 states that there can be no valid contract that compels employees to stick for a particular tenure in the company.
Checklist of important things while framing an Employment Bond
Here are few important things to keep in mind when you frame an Employment Bond:
1) Ensure that the bond period is reasonable. It should not be too high.
2) Ensure that payable bond amount is reasonable and should not be beyond the expenditure what you have spent on training and grooming of the employee.
3) Ensure that non-competition clause isn’t unreasonable.
4) Make sure that you have enough training material as the evidence of training and grooming in case you need to prove in court.
5) Also confidentiality clause that legally protects the company’s trade secrets in case the employee leaves.
Important Tips for Crafting an Effective Employee Bond
Here are some essential tips about what details should be included while crafting an effective Employee Bond.
Checklist for Employee Bond
●Bond Agreement Details
● Full details of employer and employee such as name and address.
● Brief job description like Title of the job or nature of the work.
● Date of commencement of the employment.
● Place of work of employee.
● Performance of Duties and Responsibilities
● Compensation, Pay and Benefits
●Salary or wages details along with any other cash benefits that the employee is entitled to.
• Deductions to be made from employee’s remuneration such as Medical Aid or Pension.
● Mode and method of payment and of calculating wages.
● Additional benefits like Achievement of Targets.
● Details of Work Hours, Schedules and Overtime
● Number of work hours in workday and workweek.
● Scheduling procedure.
● Alternative work schedules.
●Overtime work and pay (if eligible).
● Meals and rest periods.
●Attendance requirement and timekeeping.
● Nature of Contract
● Details of contract type: permanent, temporary or fixed term.
● Duration of the contract.
●Contract termination date.
● Entitlement of leaves such as Annual Leaves, Weekly leaves and holidays.
● Conditions relating to taking leave.
● Any other paid leave entitlements.
● Sick leave arrangements.
● Health and Safety
● Term and Probation Period
● Grievance definition.
● Explanation of grievance procedure steps.
● Employee’s right to represent the union.
● Disciplinary Procedures
●Details of the procedure.
● Conditions of terminating the contract.
● Protection of Business Information
● Confidentiality requirements details.
●Use and misuse of electronic communications such as Internet.
● Obligations of the Employee
● Retirement Policy and other Conditions
These above are the checklist which should be included when crafting a precise and effective Employee Bond Agreement.
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