5 BIG Questions to Ask Before Signing a Bond with a Company (Important!)

Bond agreement is a long term commitment that should be taken seriously.

Company bond with employee comes in a few different names; employment bond, service bond, and training bond.

Companies may offer to groom their young employee with education or training, as it helps to increase their talent pool. Often, these companies may ask their employee to sign a bond with the company for a certain period of time in exchange for benefits. Timeframe of these bonds can range from 3 months to 2 years.

If you’ve been asked to sign a bond with a company, ask yourself these few questions.

1. What form of training or education will be provided, and is it worth it?
2. What are the Career Advancement opportunities that are given by the company?
3. What happens if you break a company bond?
4. Are you prepared to stay with the company for the bond period?
5. Are you acting on impulse?

Company bond usually comes in the form of an agreement or contracts, which are legal documents.

Nonetheless, there is still a way to leave a job during your bond period if you know how.

Let’s get started!

1. What form of training or education will be provided, and is it worth it?

You are signing a bond for a certain period of time. It means you won’t be able to leave the company unless you’ve finished serving the bond.

Thus, it is important for you to know what are you going to get from this lack of flexibility.

Types of training will be provided:

• Will you be sent overseas for training?
• Will you be attending a course?
• Will you get sponsored fully for the education?

Benefits of signing the bond:

• Getting sent overseas for the training with all expenses paid for?
• Getting an indispensable skill for your future career advancement?
• Getting an education with a top-tier certification in a reputable institute?

Balance the pros and cons before signing the bond with the company.

If the period of the bond is unreasonable, or the cons outweigh the pros, that’ll be a red flag. You should really reconsider before signing on the dotted lines.

The key is:

You need to know your worth!

2. What are the Career Advancement opportunities that are given by the company?

If the company is willing to spend on you and pays for your education, does that means you’ll have amazing career opportunities in the company?

Not really…

Some unethical companies are known to use bonds with incentives to “trap” employees in the company.

Here are a few reasons you may not want to sign a bond with the company:

• Companies may train the employees specifically in a certain skill, thus it makes no sense for the company to put you in any other position. Thus, you’re “trapped” in a position with no chance of career advancement.
• Companies that are unethical may ask you to sign bonds that come with attractive incentives such as; a huge sum of money, in the form of a loyalty bonus or some other names. These companies usually have a high turnover rate with a toxic working environment. These bonds’ sole purpose is to prevent you from leaving the company.

Here are a few reasons some employees may want to sign a bond with the company:

• The company is reputable and provide reasonable incentive that is attractive to the employee.
• The company is known to develop and help their employee to progress in their career.
• Most importantly, the employee is willing to bear all consequences of signing the bond.

Even then, be wary when signing the bond.

Bond with the company can come in many names (employment bond, service bond, training bond, etc.), and can be confusing.

“When things seem too good to be true, it probably is.”

3. What happens if you break a company bond?

When taking up a bond, you may never think that one day you will want to break a company bond.

Breaking a company bond can be very costly.

Some companies will have clauses that state the compensation if a term of the bond agreement is breached, such as; breaking a bond.

The compensation or penalty for breaching a bond is known as a Liquidated Damages Clause (LDC). LDC is a clause in your bond agreement that states a fixed amount of compensation in the event that you breach the agreement.

Liquidated Damages Clause (LDC) examples are:

• Lump-sum compensation of a flat fee: USD$5,000.
• Lump-sum compensation of a few months of salary.
• A fixed amount for each calendar day from the time you serve notice to the end of the stated bond period.

Some unethical companies may have an interest rate clause. This is payable to the company if you break the bond.

But when the clause becomes a penalty instead of compensation, the enforceability of the bond might be in question.

So, why some may still break the bond?

A situation may have risen that forces you to consider breaking the bond.

• Your parents or children may have become chronically ill, and you need to take care of them.
• Your job is too overwhelming and your mental and physical health is suffering.
• You are moving to another city due to some unforeseen circumstances, and your workplace is too far.
• You have family plans and your job prevents you from moving forward.
• You just want to quit your job, because you don’t like your boss.

We’ll never know what will happen tomorrow, let alone a few months, or even a few years in the future.

4. Are you prepared to stay with the company for the bond period?

You may already be working with the company, or the incentives offered are very attractive.

You love the company, the culture, the people, and your boss and you are ready to sign!

But…

Bond is a serious commitment.

Are you prepared to stay with the company for the next, 2, 5, or 10 years of the bonded period?

The company may change…

• The company may face financial issues and your job security may become a problem.
• The company may need to cut your bonus or salary due to black swan events such as; pandemic, economic meltdown, and lack of cash flow.

People may change…

• The company culture you once loved, may become a toxic workplace with people backstabbing and coworkers laying blame on each other.
• Your coworkers whom you met may get replaced by people you can’t stand.
• Your boss whom you love might change departments and replace them with a toxic personality.

Nothing is certain for the future.

But if you are prepared to stay with the company for the bond period, never let the incentives be your sole consideration when signing the bond.

5. Are you acting on impulse?

Impulsive behavior is when you take action without thought of the consequences. Examples include saying something without thinking, buying something you’ve never planned to, and signing an agreement or contract without understanding the consequences.

Acting on impulse is usually a bad idea.

Although the impulse of signing a bond happens less, the fat juicy incentives and perceived rare opportunities can cause you to “impulse sign”.

Before you are signing a bond with a company, it is recommended for you gain a deep understanding of the document’s contents.

Things to consider when reading a job bond agreement:

• What are the terms and conditions?
• How long is the bond period?
• When does the bond period start and when does it end?
• What is the compensation you will incur if you breach the agreement?
• Why is there this agreement in the first place?
• Who is involved in this agreement?

These documents have legally binding contractual terms which have to be followed.

If there is a breach of contract, your employer is entitled to compensation for the loss they suffered.

Understand and think thoroughly before you sign the dotted lines.

Not sure what a bond agreement looks like?

We’ve created one for your reference, so you may know what you are looking at when you received one.

Sample Of Bond Agreement

Should I Sign A Bond With A Company?

We can’t give you an answer, nor can we advice you on this question.

Every individual has unique circumstances. For some, it might be a good idea. While for others, it can be the worst idea to sign a bond agreement.

Nonetheless, some argued unless you are in a compromising position i.e. “fresh out of college“, “desperately in need of a job“, “incentives too good to ignore“, or “there is simply no better way of getting a job“, just say NO.

Otherwise, if you are deciding to sign the bond, do ensure you’ll receive some substantial training, an amazing joining bonus, or an extremely high remuneration package.

We suggest you ask your friends and family members whom you can really trust for their advice.

Ultimately, the final decision should always come from you.

What now?

Understanding that a bond should not be signed without looking at the fine print is important for you to protect your future.

But if are looking to increase your options in finding a job, getting a new skill and certifications will increase your chances immensely.

If are thinking about finding a job that suits you or making a career change, you can enrich yourself by learning from the best in the industry.

Nowadays, there are online learning platforms in which you can learn new skills at a fraction of the cost of traditional education.

Like this post?

Let us know in the comments below!

Wait a minute…

Do you want to join our community of high achievers?

Join us in the conversation at our Career Forum!

• How to Answer “How Do You Prefer to Learn?” Job Interview Question (Tips and Examples)
• How to Answer “How Do You Get Feedback from Others” Job Interview Question (Tips and Examples)
• How to Answer “What makes you excited to come to work?” Job Interview Question (Tips and Examples)
• How to Answer “How Would Your Previous Colleagues Describe You?” Job Interview Question (Tips and Examples)
• How to Answer “How Would You Handle a Disagreement At Work?” Job Interview Question (Tips and Examples)