Is training bonds legal?

Hi,

Are training bonds legal?

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Hi Gowri,

Can you expand the question for better understanding to reply?

Regards,
Bhuvana Anand

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Looking for more information on considering scenario of employer providing training and spending a good amount on this training after which the employee needs to stay in service of the employer for a specific period of time.
If bond broken, costs have to be beared by employee.

Is this considered legal?

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Hi Gowri,

When it comes to an employment bond:-

(i) the employer has to execute an agreement clearly stating that there will be specific and dedicated training programs designed for such employment to equip the employee.

(ii) the employer has to evaluate the reasonable cost that goes behind such training programs and

(iii) can include a specific and reasonable amount that is likely to get adjusted as against the employee’s settlement amount in the event of an employee breaking the tenure agreed under such agreement.

(iv) the employer has to stipulate reasonable tenure for such employment.

The amount and tenure should be very reasonable; it cannot be arbitrary.

There are many judgments and rulings from different state high-courts and the apex court on such employment bonds in which the courts repeatedly reinstate the points that:

(i) the employer cannot insist on any higher amount than what has been spent for such training, and
(ii) the term has to be reasonable and not for a very long duration as it goes against the fundamental right of a person’s choice of employment.

So, the point is what is ‘reasonable’ here. This differs from industry to industry based on the nature of assignments.

When it comes to the litigation perspective, if an employee challenges such bond before the court of law, it is purely at the discretion of the court to decide on fixing the amount based on the reasonableness of the amount & term primarily, and then the efforts & money invested by the employer.

Hope the above helps.

Regards,
Bhuvana Anand

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Thank you so much for this detailed clarification @Bhuvana_Anand . Its very clear and informative.

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