Jumping jobs? SC ruling makes it hard for freshers

In a development that has the potential to lower attrition rates across industries, a Supreme Court judgment late last week allowed employers to enforce a service bond.

- Devina Sengupta

In a development that has the potential to lower attrition rates across industries, a Supreme Court judgment late last week allowed employers to enforce a service bond. The court clarified that companies can mandate a minimum tenure and recover training costs from employees who leave prematurely, without worrying that it will violate the country's contract law.

The judgment stemmed from a dispute where an employee—Prashant B. Narnaware of Vijaya Bank—was required to pay ₹2 lakh as 'liquidated damages' for quitting his job before completing a mandatory three-year service. While the Karnataka High Court ruled in favor of Narnaware, the apex court reversed the judgment in its order on 16 May.

"From the prism of employer-employee relationship, technological advancements impacting nature and character of work, re-skilling and preservation of scarce specialized workforce in a free market are emerging heads in the public policy domain which need to be factored when terms of an employment contract is tested on the anvil of public policy," the court said in its order, seen by Mint.