Am I understanding this right. People have to pay a 'bond' to a new employer?
Is this common in India? Other countries?
Although, one of my professors in college (I majored in finance) told us that the labour laws in India forbid such contractual obligations and you can get away with not paying the amount asked.
While it seems like a rather defensive & oppressive move, the companies might offer a different justification, maybe on the following lines: 1. Largely service driven IT industry 2. Projects running into several months - planning, estimation, allocation nightmares 3. The recruited talent has to generally be trained from scratch for the skills required for these projects. This is probably the most important point - as even the article above says, there is good talent but by a large sourcing good talent is way beyond trivial.
As such companies would want to protect their investments.
This is not meant to be a justification for such activities of course :) The point I'm trying to make is there are multiple variables in this. As the industry matures I expect things will change for the better.
Also if you resign and don't want to serve the notice period, you can 'buy' your way out.
Also, in many many fields less meritocratic than software, you typically gain privileges as you accrue seniority with little regard to experience or actual contribution.
It's extremely common in union contracts.
More conservative employment laws would mean less employment rights for workers.
Less liberal in the UK would be the fringe torys who want to get rid of all employment protection.
Coming to giving a 3 month notice before firing some one, firstly when they ask you to leave they may not necessarily tell you that they are firing you for some socially acceptable reason like cost cutting. Instead they will give you two options, get fired for some fictional violation of company code or you can put in your resignation.
The choice is obvious, the person resigns, while he is actually fired. The quarterly results project this as attrition.
Having said this, the last I have heard about this bonds is that they are not valid in the court of law.
Probably not. But what will you when they decide to not pay your final paycheck since you did not pay for breaking the bond. Heck, in some countries like HK again, you need to get tax clearance from your employer before you leave permanently, if you do. So the question is: do you just bite the bullet or go fight with the corporate giants regardless of who could win.
It's pretty common if you're doing a professional qualification (accountancy, etc.) with training and exam costs paid for by your employer, that if you quit before a set period you have to pay back your employer for the amount they invested in you.
In countries like India companies have to pay a lot to train new inexperienced graduates and staff turnover is a huge issue far more than in western countries.
Many western companies that hire graduates just write-off training expenses when a recent hire quits which they can afford to do so because it happens relatively rarely, but if it was a frequent occurrence like in India it would be economically unviable to do so.
Similarly, if you quit your job quickly, you need to give back the signing bonus.