Leaving your job before serving your full bond period? That move could now legally cost you ₹2 lakh.
“You may have to pay Rs 2 lakhs to your employer if you leave before completing three years in your job,” warned investment banker Sarthak Ahuja in a LinkedIn post following a Supreme Court judgment that’s reshaping how employment contracts are enforced in India.
The Court, in Vijaya Bank & Anr. v. Prashant B Narnaware, upheld a three-year bond agreement, ruling that employers can recover training costs from employees who exit early—as long as the terms are reasonable.
“For a long time, employees didn’t take such bonds seriously because courts would strike them down under Section 27 of the Contract Act as restraints of trade,” Ahuja noted. “But the Supreme Court has now said that if the bond is limited to recovering genuine training costs, it is valid.”
The judgment clarified that a bond amount must reflect actual expenses—such as recruitment, training, and administrative costs—and not serve as a penalty. In this case, the Court found the ₹2 lakh claim justified, stating: “The amount was not arbitrary or punitive; it reflected tangible losses.”
The ruling opens the door for private companies to enforce similar clauses. Ahuja cautioned employees: “People will now not be able to leave jobs as easily as they were doing earlier because of a Supreme Court order that has just come in.”
Employers, however, must stay within limits—recovery must be tied to costs incurred, and the bond period should range from six months to three years.
Each case will still hinge on its specific facts. But the days of casually signing and dismissing employment bonds may be over. As Ahuja summed it up: “Do not take these clauses lightly anymore.”
