Canceling A Campus Recruitment Offer - CiteHR
Dinesh Divekar
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I am not sure how Indian Law operates on this, but here are the questions:
1. If a company cancels a Campus Recruitment offer, is it liable to pay severance pay?
2. If a company postpones a Campus Recruitment offer, is it liable to pay a subsistence allowance?
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Dear Mr Nikhil,

Offer of employment is limited to the extent of wish of the employers to offer a job. Considering the volatile market conditions, at times it may not be feasible to honour these offers. However, ethical business practice demands honouring this commitment albeit belatedly.

Definition of severance pay is "The compensation that an employer provides to an employee who has been laid off". Since offer of employment does not establish employer-employee relationship, question of severance pay does not arise.

Subsistence allowance is paid when the employee is suspended or when the enquiry is in progress. This allowance is paid to avoid economic hardship. As offer of employment does not establish employer-employee relationship, question of subsistence allowance does not arise.

In economic recession of 2008-2010, many IT companies did not go ahead with recruiting the candidates that they had selected in the campus drive. They had put on hold the recruitment. However, none of them had paid any allowance or money to the freshly passed out students. Infosys as a matter of courtesy had sent e-mail to the candidates saying their offer of employment holds good though actual employment could be delayed.

Appointment letter is the threshold document. Once the employee signs the appointment letter, he/she becomes employee and then Indian Labour laws are applicable to both the sides.

Heading of your post says "Canceling a Campus Recruitment Offer". Cancellation of campus recruitment is in bad taste. It will mar the brand image of the company.

Imagine the plight of the students. As the student gets selected in campus drive, college authorities do not permit that student to take part in campus drive by another company. Now if the company select the students and later withdraws the offer, where these students will go?

If the company starts playing these tricks then possibly education institutes may forbid that company from future campus drives. In the economic boom is this not a big loss to the company then?


Dinesh V Divekar

Beware of false knowledge; it is more dangerous than ignorance.
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