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 offers 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 the 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 is 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 finish 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 expense paid for?
  • Getting an indispensable skill for your future career advancement?
  • Getting an education with a top tier certification in 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 outweighs 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 is 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’s a few reason you may not want to sign bond with the company:

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

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

  • Company which is reputable and provide reasonable incentive that is attractive to the employee.
  • Company is known to develop and help their employee to progress in the 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 though that one day you will want to break a company bond.

Breaking a company bond can be very costly.

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

The compensation or penalty of breaching a bond is known as a Liquidated Damages Clause (LDC). LDC is a clause in your bond agreement which 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 company 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 an compensation, enforceability of the bond might be in question.

So, why some may still break the bond?

Situation may have arise that force you to consider breaking the bond.

  • Your parents or children may have become chronically ill, and you need to take care of them.
  • You 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 which 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 few months, or even few years in the future.

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

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

You love the company, the culture, the people, 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, 10 years of the bonded period?

Company may change…

  • The company may face financial issue 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 melt-down and lack of cash flow.

People may change…

  • The company culture you once loved, may become a toxic workplace with people back stabbing and coworkers laying blame on each other.
  • You coworkers whom you met may get replace by people you can’t stand.
  • You boss whom you love might change department and replaced by one 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?

Acting on impulse is usually a bad idea.

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

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 to understand the document’s contents.

Thing to consider when reading a job bond agreement:

  • What are the terms and condition?
  • How long is the bond period?
  • When does the bond period start and when does it ends?
  • 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 for compensation for the loss they suffered.

Understand and think thoroughly before you sign the dotted lines.

Not sure how 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

Training Bond Agreement

The articles of agreement made and executed at _____ [place] on the day of _____ [date] between _____ [Employer’s Name], _____ [Company registered name] incorporated in _____ [Country Name] , located at _____ [Address],hereinafter referred to as the Employer or Company.

and

Mr./Ms._____ [Name], _____ [Occupation] currently residing at _____ [Address] hereinafter referred as Employee.

The employee shall be bound to agree and abide by all the terms and conditions specified hereinafter framed by the employer periodically during the bond period of the employee.

The employee has reviewed and agreed to enter into a training bond period of 1 year with the company from _____ [Date] to  _____ [Date] on terms and conditions as stated and expressed hereunder:

  • Whatever reason that might prompt the employee to leave the company, he/she shall pay the company full sum of the training costs provided by the company.
  • The company shall provide the employee training of equivalent of US$______ [Amount] during the period of training.
  • If any time, during the training, the employee does not show the expected performance or remains absence without prior permission, his/her service can be terminated by giving one day’s notice or by making payment of one day in lieu of notice.

(Ps. The company can add on as many terms and conditions as possible.)

In witness whereof and acknowledging the acceptance of the foregoing, the Employer and Employee affix their signatures hereto.

Employer

___________ [Name of Employer]

___________ [Sign & Date]

Employee

___________ [Name of Employee]

___________ [Sign & Date]

Witness 1

___________ [Name of Witness]

___________ [Sign & Date]

Witness 2

___________ [Name of Witness]

___________ [Sign & Date]

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 have their 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 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, amazing joining bonus, or an extreme high remuneration package.

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

Ultimately, the final decision should always come from you.

Disclaimer: We do not provide any family, health, financial, or law related advice. The publisher and the author make no guarantees of completeness, accuracy, usefulness, or timeliness. You accept any action you take upon the information on this site is strictly at your own risk. All information is based on personal opinion and experience and is for entertainment purposes only.

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