An Overview Of Employment Bonds

Have you ever heard of the term, “Employment Bonds” probably throughout your stay in your organization. Have your employer mentioned it and you are possibly wondering what it is all about?

Employment bond is an agreement in a document form that sets out all the terms of a contract between an employer and an employee.

This is meant to protect both parties as well as provide a standard term to which both agree through either orally or in a writing form.

Having said that, we will unravel many more details that you need to know about this in this article.

Just keep going!

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What Is An Employment Bond?

An employment bond is simply an agreement between an employer and its  employee which states that the employee shall remain with the company for a certain minimum period of time after joining the company or after being sent for training. 

It also contains a further agreement that if for any reason the employee leaves before the agreed-upon time, the employee will have to pay the employer a certain amount, called liquidated damages, as compensation. So, the employee will agree to remain with the company in return for the training received.

This is done to protect the employer and also to provide compensation for any losses that might be incurred especially during training and also the period of sourcing for a new replacement which in return will cost a fortune for hiring and training.

In addition, the bond amount will also serve as a deterrent to stop the employee from terminating the employment contract before the agreed-upon 

time because it will cause the employee to think twice before leaving.

But no matter how fair and reasonable this is, sometimes these employment bond restrictions are unethical, unfair, and can be very detrimental to the employee.

For instance, the employee must pay excessive sums of money if they leave the company during the bond period. 

Atimes, some of the bonds are also imposed although there has been no training, upgrading, or upskilling. This is certainly unfair for employees who are penalized.

That’s why the court has adopted a freedom of contract approach inorder to protect employees from getting exploited.

Which means that the court wouldn’t hesitate to hold an employment bond unenforceable if it is excessive or isn’t a right penalty.

Need For Employee Bond Agreement

In every organization, an employment bond is always very crucial. This is because:

An employment bond agreement is the fundamental contract between a corporation and an employee that outlines parameters for training and employer expenses in exchange for a specified time of work. 

An employee bond is a legal agreement that serves as legal proof that the employee accepted the company’s terms and conditions of employment and that if he or she disobeys the company’s policies in the future, appropriate legal action can be taken against the employee or the employee can be warned for not following the company’s policies.

90% of companies have made signing employment bonds a requirement. 

In this agreement, it must contain the following information:

A. Rights of employees.

B. Employees may be subject to restrictions when they leave a company.

C. Penalties for leaving a firm before the bond period has expired.

Read Also: 6 Steps To Apply For A New Job After Being Fired Or Laid-Off

Employee Bond Agreement Criterias

Below are some of the necessary criterias that must be included in a bond agreement such as:

A. The name and address of the employer and employee

B. The title and nature of the job

C. The start date of employment

D. The wages and salary details

E. Overtime rate if applicable

F. Cash benefits available to the employee

G. Any deductions from the employee’s pay

H. Method of payment and wage calculations

I. Noncash benefits

J. Leave and entitlements

K. Scheduling procedure

L. Alternative work and flex time

M. Meals and rest periods

N. Timekeeping

Conditions For A Valid Employee Bond Agreement

There are some conditions that prove that a particular employment bond agreement is valid.

It includes:

The first condition is that the employee must have spent a significant period of time with the company. An employer cannot force an employee to work for him for a long period of time. 

The acceptable time period would fluctuate on a case-by-case basis depending on the firm and field of employment. To avoid being arbitrary or inappropriate, the length of the employee bond should be determined by taking into account the employee’s position, growth rate, replacement availability, and other criteria. 

An employee bond that enforces an excessive duration of mandatory work will be considered forced labor.

The second condition is that in the event of a contract breach and termination, the compensation paid by the employee must be reasonable that it compensates the employer adequately, and not excessively, for the costs incurred as a result of the breach.

Read Also: 8 Tips When Explaining Your Career Journey

Employment Bonds Issues

The employment bond has been facing a series of issues which one of them is whether the bond agreements are enforceable or not.

For an employment bond to be enforceable, it must first be considered a contract under law. 

However, all agreements start with an offer which is a legal obligation to fulfill certain responsibilities in exchange for compensation. 

The acceptance of this offer is the next stage in completing a contract and will constitute a promise of compliance. If either party is not competent to enter into the contract the contract can be considered null.

There are certain requirements of any contract for it to be considered enforceable which some of these requirements includes: 

A. It must state a definite purpose

B. It must be made under legal capacity

C. Minors cannot be considered competent to enter into a binding contract

D. There must be reasonable restrictions set such as training in exchange for one year of guaranteed work

E. The sum of the breach of contract must be listed as liquidated damages

Furthermore, it is important that you bear in mind that for a court to grant monetary damages to a company, they must have sustained a loss as a result of the early termination of the employment. 

It is the responsibility of the employer to prove the number of damages that were suffered. Though this might be easier if the company maintains well-kept records of all of the costs required for training the employee. 

Though it is important to note that even if the amount is higher than what is in the contract the employer cannot seek more damages than are listed.

Lastly, while the court can set a monetary award for an employer, it cannot force the employee to stop work due to an injunction but the employer has the right to petition the court to prevent the employee from using or divulging trade secrets.


1. What Is Meant By Bond Employees?

A bonded employee is one for which the employer has taken out such a policy which is covered by a fidelity bond. 
These bonds are insurance policies designed to protect against the risk that an employee will intentionally steal from or damage the property of his employer or one of the employer’s clients. 

2. Why Is An Employment Bond An Illegal Legal Document?

As a general rule, employment contracts which state that the employee must stay in the employment of the employer for a certain period of time or else pay a sum of money, are void and unenforceable because they constitute a restraint of trade and violate our Labour Laws.

3. How Do You Enforce Employment Bonds?

No employer can compel any employee to work for them by enforcing an employment bond. 
If there is infringement, the only remedy available to the employer is to obtain a reasonable compensation amount.

4. Why Is It Important For Employees To Bond?

It is important so that you can gain a better understanding of each team member.
During team bonding activities, you will learn a lot about your fellow co-workers and establish friendships with them that may not have formed in the office. 
This makes team bonding exercises one of the most effective methods for boosting office productivity.

5. Why Is A Bond Important In The Workplace?

Building bonds especially at work creates a harmonious and healthy environment for you to work in. 
In turn, this will help you become more engaged and productive at work. You will feel more in control and less stressed out at work knowing that you have people around you that have your back.


We hope that this article was enlightening and satisfied your expectations.

For further questions, do well to comment on them in the comment section provided below.

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