Is employment bond legal in India?


Employment bonds are employment agreements with negative covenant. Under the Indian Law, the employment agreements with negative covenants is valid and legally enforceable if the parties agree with their free consent i.e. without fraud, coercion, undue influence, mistake and misrepresentation.

Indian law mandates the employment bonds to be ÒreasonableÓ in order to be valid. The employment bond will not be enforceable if it is either one sided, unconscionable or unreasonable.

The validity of Employment bonds can be challenged on the basis of Section27 of the Indian Contract Act 1872. Section 27 of the Indian Contract Act, 1872 prohibits any agreement in restraint of trade and profession. Any agreement in trade and profession according to Section 27 is void.

As per the mandate of Section 27, any terms and conditions of an agreement which directly or indirectly compels the employee to serve the employer or puts a restriction on them joining the competitor or other employer is not valid under the Indian law, The employee has right to resign from the employment even if he has agreed in the employment bond to serve the employer for a specific period of time.

If the bond has something like deduction of some amount from your salary ,you can break the bond by leaving that amount deducted . The organisation will let you leave that way. I hope I have answered your question. In a oneway bond , company will not approach the court if you break it.

Reference: Section27 of the Indian Contract Act, 1872



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