Dinesh Divekar
Business Mentor, Consultant And Trainer
Partner - Risk Management
Legal Analyst, Hrm
Gopinath Varahamurthi
Mindhour Partner, Ass.professor/adm. Officer,
Recruitment/talent Acquisition, Career Counselling
Ashutosh Thakre
Hr Professional
+2 Others

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Can company put a clause in the appointment letter that if employee declines offer before date of joining then employee will reimburse the expenses incurred by the company for interview. Is this clause valid.
Dear Smriti,

First and foremost, you need to understand difference between "Offer Letter" and "Appointment Letter". Former is issued when candidate fulfils the recruitment criteria and company considers his/her selection. In most cases the latter is issued once the employee joins company. In extreme case appointment letter is issued even before employee joins the company.

You might introduce this type of clause nevertheless, please anticipate repercussions of insertion of this clause as well. Why recover just the cost of interview and selection? Why not cost of discontinuity in work as well? Latter cost is greater than former!

Introduction of this type of clause could scare away the job candidates. When a job aspirant starts searching a job, it is obvious for him/her to attend interviews at as many places as possible. Possibly he/she might get selected in 2-3 places. Therefore, the job candidates weighs options and chooses the best option. What if job candidates start declining job offer because of this clause?

Secondly, a needy candidate may accept the job offer even with this clause but then what if he/she still does not turn up? To recover the cost of interview and selection, will your company sue the job candidate? Under such cases, how many court cases you will go on fighting? By settling score with the job candidates, what image your company will cultivate in the job market?

Job candidates do not turn up even at MNCs as well. "No show" is fait accommpli that employers need to put up with. Nevertheless, what matters is brand image of the company. Higher the brand image, less the chances of "No show". Therefore, real challenge lies in how to enhance brand image of the company so that you can attract quality candidates. Failure of job candidate(s) to join your company after issue of offer letter shows that your brand image means nothing to the him/her. Rather than drawing solace from recovery of small amount owing to "No shows", please address the larger issues.


Dinesh Divekar

Divekar ji,
You may please like to review your answer in the spirit of the question put by the member.
The question was, "can company put a clause in the appointment letter that if employee declines offer before date of joining then employee will reimburse the expenses incurred by the company for interview. Is this clause valid," BUT CERTAINLY NOT about the brand image of the company.

Dear Friend,
As the learned shri dinesh divekar pointed out, no to such clause..go for better optitons. Also, today employees are passion for a good working place, they want to rid of bad boss even the organisation is the excellent. In most of the cases, the employee want to be recognised otherwise you are going to get substandard employees...

Dear Mr PS Dhingra,
Of the five paragraphs of my reply, paragraph number 2,3 and 4 deal with the direct query by the poster. First paragraph is to bring clarity in offer letter and appointment letter and last paragraph is reserved for brand image. This paragraph is written to assess why situation came to such a pass where company is thinking of introduction recovery clause in the offer letter itself.
From my point of view, these challenges are faced by the SMEs. Everybody wants to work in branded company and companies with lesser brand image suffer in the job market. I wanted to bring to fore this fact. Hence my the paragraph on brand image.
Dinesh Divekar

Dear Smriti,

You should understand that companies do not intend to spend a lot of money and time in the process of conducting interview to select a capable cadidate that goes waste and futile. But, if a selected candidate backtracks after accepting offer of appointment, the company has to restart its recruitment process a fresh resulting in wastage of another lot of time and money again and again leading to affecting productivity of the company and sometimes piling of backlog of work. So, there is nothing wrong if a company puts a clause for reimbursement of the recruitment cost by the acceptor of the offer of appointment and later declines to join.

It is for the employee to think ten times before accepting the offer of appointment. Brand image has nothing to do with the recruitment process. Brand image is not built by merely wasting money of the company and precious time of the management in fulfilling the greed of the candidates. If a candidate has attended interview for jobs in other companies also, he can very well request the selecter company for extension of time for acceptance of offer letter, but should not backtrack from the offer already accepted. Rather the action of the candidate can be viewed to construe dishonesty and selfishness on the part of the candidate. A candidate, if sees only his own interest, he may for the time being get benefitted from some other offer of appointment, but cannot be successful in developing his career. Future is always unpredictable. The same company can prove to be opening the gates of luck for the candidate, if he behaves ethically.

Every company expects a selected candidate to be honest and sincere to fit within management's expections and follow sincerely the employment ethics. A candidate nust have to bear in mind that any company makes recruitment for company's own needs, but not just to pay for unethical behavious on the part of the candidates.

Dear Shri Divekar,
I would like to totally differ with your views. There seems to be a big difference between yours and my views and in the understanding about the central idea of question. If liked, you may like to go through my reply in response to the question of the member. So far as question of scaring of the job candidate is concerned, when the clause is already included in the offer letter, why the candidate accepts that clause by accepting the offer?

Dear Smriti,
No, i do not think such a clause can solve any problem.
Isnt it same as saying that you can resign, but the company will release you (even after the notice period) if you provide us with the replacement.
If the above clause is unjust, so is the above clause.
On the other hand, this clause will deter the employee from saying a yes, especially if the joining date is after 3 months, as there is uncertinaty in that period. So, No, inserting this clause, will not serve any purpose, as the company will spend more on the letigation expense, then the actual recovery amount.
Instead make your selection and offer so sound in other manners, that it is difficult for the candidate to reject or fall back after accepting.
Ashutosh Thakre

Dear Nathrao,
Your point is quite valid, as that happens often. But, the question is of breach of contract, which becomes a legal issue, not to be adjudged by the candidate or the company themselves. Uunles some mutual settlement is arrived at that becomes the domain of the competent court to decide, as to whether breach of contract has happened or not and what penalty the offender has to bear. So, in respect of the case of the company asking the candidate not join the job after its offer is accepted, the cadidate is free to sue the company to claim damages from the company. Joining job, however is not advisable in that com[pany to avoid revengeful attitude of the company towards the candidate cannot be overruled after his joining.

Hello CS Smriti Sharma,
Are you the HR OR the candidate?
While the answer would essentially be the same.....it's NOT legal,,,,,the reasons/justifications/angles would vary depending on which side of the table you are.
If you have gone thru the responses of so many senior members, they have been on the basic PRESUMPTION of you being the candidate OR the HR........either way, some have wasted their time.
Don't you think everyone who responded with the WRONG presumption has wasted at least some time in addressing an issue that's way off the mark from your perspective & which may not have answered your query completely/appropriately?
.....and this coming from someone who has been a member of CiteHR since Aug, 2011.....
Suggest first clarify your locus-standi & also give the background of the query.....that will enable the members to give pointed & actionable suggestions for your benefit.

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