A bond period is a documented agreement between the employer and the employee, where the employee agreed to stay with a company for a stated period after joining the company (employment bond) or after being sent for training (training bond).
Breaking of bond by resigning during the bond period will result in the employee to pay the employer a certain amount as compensation.
Breaking a bond can be very expensive and might lead to financial stress for the employee.
But is there a way to break the bond without paying the hefty sum?
Let’s find out!
Ps. The employment bond is sometimes called a job bond, or just a bond agreement.
How To Quit A Job During A Bond Period?
The answer to this question is highly dependent on your state’s law.
Generally speaking, an employment bond’s main objective is to compensate the employer a certain amount for the liquidated damages.
Job bond is to protect against an employee who quits after the training, upgrading, and upskilling to find better employment after the employer’s investment in the employee.
Thus, if you want to quit your job during a bond period and not pay the compensation.
The bond must NOT be enforceable by the eyes of the court.
Most employment bond can only be enforceable if it is both reasonable and fair.
So…
How do we know if a bond is enforceable?
When Is An Employment Bond Enforceable?
This is probably the first question you should ask when you are deciding if you want to quit your job during the bond period.
The enforceability or legality of the bond depends on the following:
- Country/ State’s law.
- Both parties agreed freely and without any coercion.
- A pre-determined sum of money is a genuine estimate of damages.
Reasons that may lead to the bond becoming unenforceable or even illegal:
- Some Countries/States’ laws do not allow agreements/contracts such as bonds.
- Bond is deemed as a penalty clause that restricts the employee from leaving although no training, upskilling, or upgrading cost was provided.
- The amount of money is regarded as a penalty which is not a genuine estimate of loss or damage.
What will happen if you break the employment bond that is enforceable?
When you are dealing with anything that is law related, it is best to know what will happen if the bond is enforceable.
Things your employer may do if you break the employment bond:
- Allow the employee to go, take no action. The best case scenario is where you lose nothing, and you can leave the job without paying the bond.
- Allow the employee to go, and hold the employee’s salary. A most common scenario is where you will not get your final settlement salary. You will probably lose all fringe benefits, and bonuses and will not be able to perform encashment for any of your unused leave, etc.
- Do not allow employees to go, sue the employee for breaking the bond. Probably the least likely scenario where the company will take the case to court.
What happens if the company successfully sues you for breaking the employment bond?
Here are the possible scenarios if your employer successfully brings a claim for liquidated damages against you in court:
- Compensation of a flat fee as stated in the Liquidated Damage Clause (LDC).
- Compensation of a few months of salary.
- Fixed compensation amount for each calendar day from the time you serve notice to the end of the stated bond period.
- Compensation as per determined by the court.
However, these may not be the only money you need to pay if you loss the lawsuit.
You may have to bear the legal fees incurred by your employer, in addition to your own lawyer’s fee.
Does an employee often get sued for breaking employment bonds?
For the company to choose to sue the employee for breaking a bond, it will be a very long and expensive procedure.
In order to sue the employee, the company needs to prove the following:
- Provide evidence that the company is bearing costs due to your layoff.
- Terms and conditions stated in the agreement are reasonable and fair which can be subjective.
The company only chooses to sue the employee if it makes business sense:
- An employee is a highly important resource.
- An employee is in a high position that has access to sensitive and important information about the company.
Thus, it is not common for companies to sue their employees for breaking the bond.
Why is there an employment bond in the first place?
Although companies don’t usually choose to sue their employees. We need to understand that a bond agreement is generally used to prevent employees to perform certain acts.
There are mainly 3 reasons why companies bond employees:
- To protect the employer as a form of compensation in the event of costs incurred for providing training.
- To protect the employer as a form of compensation in the event of losses suffered due to time required to find a replacement.
- To prevent employees from leaving the employment before the agreed time.
Basically, a bond agreement will make the employee think twice before leaving their job.
How To Escape From A Company Bond?
If you want to escape from the company bond, here are a few things you’ll need to do:
- Determine if the bond is enforceable by seeking legal advice from a lawyer, or authorities such as;
- If the bond is not enforceable:
- Submit a resignation letter and quit your job after serving the notice period.
- Resignation letter and quit your job on the same day by paying the compensation for not serving the notice period.
- If the bond is enforceable:
- Fulfill the terms of your employment as per stated in the terms and conditions without breaking the agreement. You will not be liable to pay your employer compensation.
- Break your bond and pay your company the compensation stated under the Liquidated Damage Clause (LDC). You will be liable to pay your employer compensation.
- Negotiate with your employer for a lower Liquidated Damage amount for breaking the bond. You will be liable to pay your employer compensation at a lower cost.
- Settle the Liquidated Damage Clause dispute in court. You may or may not be liable to pay your employer compensation. In the event of losing the lawsuit, you will need to pay the lawyer fees as well.
Thus… the best way to escape from a bond is…
When your bond is deemed not enforceable by court, you can resign during bond period without paying bond.
Probably the other option is not to sign the bond in the first place.
Sample Bond Agreement At Work
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 to 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 the full sum of the training costs provided by the company.
- The company shall provide employee training of the 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 absent 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]
Up Next… Scary signs you should consider QUIT your job now!
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