Apex court ruling makes it hard for freshers to jump jobs

The Supreme Court has upheld the validity of an employment bond clause, allowing a public sector bank to recover ₹2 lakh from an employee who resigned before completing the mandatory three-year service period.

The verdict brings clarity to a long-standing grey area in employment contracts.

The apex court’s ruling came in a case involving Prashant B. Narnaware, a former employee of Vijaya Bank, who was told to pay Rs2 lakh in damages after leaving his position before completing a mandatory three-year term.

The Karnataka high court had earlier ruled in Narnaware’s favor but the Supreme Court overturned that verdict on 16 May.

In its order, the apex court noted that the changing dynamics of employment relationships, including changes in job roles due to technology and the need for reskilling, are significant considerations in employment contracts.

“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 judgment stated.

The ruling comes as the Indian job market sees slow hiring trends and concerns over employee retention.

During and after covid, many companies experienced high attrition, with employees switching jobs quickly or managing multiple roles.

The Supreme Court’s decision may affect such short-term exits in the future if companies choose to apply the ruling.

A Hiring Outlook survey by recruitment platform Naukri.com, released in March, found that talent retention in IT remains uncertain for this year, with 42% of employers predicting high attrition.

However, 96% of more than 1,200 employers surveyed said hiring in the first half of 2025 would increase. Meanwhile, layoffs are projected to decline, with only 2% of respondents anticipating workforce reductions—down from 3% last year.

According to the findings, 58% of employers are now focusing on the creation of new roles and fill existing ones, up from 48% in the previous year.

Another 18% are focusing only on generating new positions, while 20% plan to concentrate on replacement hiring.

IT roles are expected to lead recruitment this year. About 37% of employers surveyed identified IT as their top hiring focus, up from 24% in 2024.