Penalty Clause In Offer Letter - So Candidates Rethink Ditching Offer - CiteHR
Dinesh Divekar
Business Mentor, Consultant And Trainer
Boss2966
Industrial Relations
Teamgrouphr
Placement Consultancy
Imok
Hr Executive
Monica_p
Consultant
Hardeep
Scalper :-)
Eswar.potti678@gmail.com
Gujarat Intrux Limited Head Hr & General
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Pon1965
Construction
Nkulsh
Career Management, Talent & Capability

Prime Sponsor - FactoHR.com - Payroll Software with GPS Enabled Attendance, Travel, Performance Management, HRMS. Explore Features
Penalty Clause in Offer Letter..! Wats your opinion ??
We all are facing common problem as HR we make lots of efforts to offer a candidate..but at last movement they ditch...they did not join. even some co- has started penalty clause in offer letter...whats your opinion?
Cite.Co is a repository of information created by your industry peers and experienced seniors sharing their experience and insights.
Join Us and help by adding your inputs. Contributions From Other Members Follow Below...
Wrong Practice as per my view, let the seniors guide you. No one can force an employee to join the organization without their willingness.
Dear Deepak,
Greetings!!!
You are a Deputy Manager HR and you are asking this question ?
What penalty clause would you add that if we offer you and you do not join, you will have to pay xyz amount!!
You need to understand that it is called offer letter because it can either be accepted or rejected by the candidate. If you want all of your offers to go through, make such an offer which no one can refuse.
I am telling this, being a HR myself and facing this problem on everyday basis. You will have to agree that we are operating in an open market and both company and candidate is free to explore best possible options.
On the top of that, what if candidates start asking for a declaration that if they come for say 5 rounds and you do not select them, you as a company will have to pay xyz amount !!

I completely agree with Group Hr.
Since all the coins have 2 sides, think the other way. Are you ready to bear the cost in case you offer the candidate something and for so and so forth reason you can not take that candidate on board.
If you will answer to this question you will have an answer to your question.
Dear Deepak,
You may check the following news:
Rejecting a job offer? Get ready to pay penalty
Thanks,
Dinesh V Divekar
If they are refusing your offer; then there is something wrong with the offer, and not the candidate.
Please remember the famous line from Mario Puzo's epic book "The Godfather" - "Make him an offer he can't refuse !!"
that's how an offer should be made.
Warm regards.
Dear Mr. Dinesh,
Greetings!!!
As always, you were bang on. I was unaware of any such practice but do you really think it will work in Indian perspective !!! Companies like Philips Carbon Black may afford it, because they have a cult status and people will keep flocking to them for jobs even in a stringent regime. In case of small and medium companies , i think it will backfire. Reason, they are not capable enough to create that kind of employee friendly atmosphere ( in terms of salary, perks, engagement etc) which will keep bringing prospective employees to them. I guess, a fallout of such a practice will be dwindling number of applicants for job openings, if the company is not that big. In fact, HCL initiative sounds more reasonable and doable in Indian context.
Comments Welcome!!!!

Dinesh Sir,
I went through this article. It is really in the benefits of the organization. I have a stupid question here.
Will company bear the cost in case you offer the candidate something and for so and so forth reason you can not take that candidate on board.
In any case if the company decides to opt this law of charging 5% on CTC, how do we go about it?
Dear Monica,
Greetings!!!
This is not a stupid but a valid question.
I know for sure that there are companies where you may have to attend upto 20 rounds of interview for a senior position. My younger brother is up for a position of AVP at one of the most reputed financial companies of the world, has already taken 8 rounds of interview, and offer is no where in sight. In fact, he is hoping to attend at least 5 more rounds.
In my opinion, a penalty clause is a pressure technique. I may succumb to it , owing to my recruitment targets, but i will never support it. Need of the hour is better recruiter, more emphasis on employee branding and Pre joining engagement.
PS: I would like Mr. Dinesh to comment on Monica's question. He is a senior pro, and i am sure he will have a perspective on this.

Dear Monica,

In the appointment letter companies always mention clause about separation. Generally it is some one or two or three months notice from either side.

Now if company wishes to add penalty clause in their offer letter for accepting the job offer but failing to join then they should apply this clause to them also.

Now assume for a while that there is penalty clause in the offer letter and this clause is applicable to both the sides. Now assume that the company fails to provide the employment after the issue of the job offer then will it be sufficient for candidate to take some per cent of salary offered or even one month's salary and start job search once again? Even then also candidate could be big loser as any company SME or big, can absorb losses caused out of "No show" but for a candidate losses because of "No employment" are too big and by the time he might have left his previous employment.

For Atul: - What you say is correct. Big companies can afford to have penalty clause in their offer letter for "no show" but SMEs cannot afford to have this clause. This happens because of lack of brand image. As such SMEs find it difficult to get people as everybody wants to work in branded company. In case if they insert penalty clause of this kind, possibly job candidate may refuse to accept the offer letter itself. The situation could be something like Hindi proverb, "Na Rahega Bass, Na Rahegi Baasuri".

Ok...

Dinesh V Divekar

Dinesh Sir,

I went through this article. It is really in the benefits of the organization. I have a stupid question here.

Will company bear the cost in case you offer the candidate something and for so and so forth reason you can not take that candidate on board.

In any case if the company decides to opt this law of charging 5% on CTC, how do we go about it?
Prime Sponsor - Talentedge.com "Interactive Anywhere Learning". Executive courses from top reputed institutes like IIM, XLRI, MICA. View Courses

This discussion thread is closed. If you want to continue this discussion or have a follow up question, please post it on the network.
Add the url of this thread if you want to cite this discussion.






About Us Advertise Contact Us
Privacy Policy Disclaimer Terms Of Service



All rights reserved @ 2019 Cite.Co™