I am working as a Hiring manager for a manpower consulting firm in India. We got a contract from a firm to provide them with workforce. The primary reason employer outsourcing this contract is because they have a very high attrition rate. We wanted to ask the resources we hire to pay certain amount as deposit which will be refunded while leaving the organisation. This will be clearly mentioned in their offer letter. We wanted to know if this is illegal to do so?
Suggestion are most welcome.

From India, Hyderabad
Insolvency N Gst Professional
Management Consultancy
Aniket Pathak
Sr. Executive Hr
Man Power Supplier
+3 Others


It is not an illegal practice and is used by many organisations though it is not very ethical.
From India, Mumbai

What will happen if the resource paid the amount and company has not been anymore within 1-2 years. Do the resource have to struggle hard reach LO and Court to get that money which was deposited?
Being a Manager, do you really like it? and even when were new to your job if an employer offers you the same will you deposit that amount to any company?
Company can ask employees to work for free or pay less as they are beginners but I don't recommend all the companies in the world to ask funds from employees or resources for offering a job - we can call it as a bribe often.
Don't know how many companies give it back till now! Guys in the forum any of you have personal experience in the topic.

From India, Hyderabad
Aniket Pathak

Dear Sir,
It is not illegal. however there is a good solution to do this while giving an offer you can say that this amount is a loyalty or retention bonus which will be paid on completion of say 1 or 2 year.

From India, Pune

It is illegal because it is not legal. Which act permits employer to force employees to lodge monetary deposit? It is employer who pays for work performed, on what account employer can ask for deposit. As long the practice is not challenged it will continue. But if it is challenged, such employer may later repent.
From India, Mumbai

Better try to change policies which make encourage attrition.
analyse why there is attrition and act.Taking deposits, withholding educational certificates and other acts are not good practises.try to run on ethical and competitive lines.

From India, Pune

Instead of asking for Deposit you may keep part of the salary as variable pay which can be paid at the end of completion of certain period say, 6 months or 12 months. This amount will only be paid at the end of such predetermined period and those who are serving Notice Period shall not be eligible for the said variable pay. Hope this helps.
From India

Instead of retaining any part of the salary, the company can have an incentive scheme directly correlated to the length of service. The frequency of the payment of incentive and the amount could be decided depending on the detailed analysis of the situation. But, be it retention of any salary/ original documents or incentive you are only attacking the symptom but not the deeper malaise within. You may heed to the advice of Shri Nathrao Sir.
From India, Mumbai

Dear Member,
It is illegal to take deposits, withholding educational certificates or identity proofs for the sake of employment. It would fall under forced labour as per section 2 of Bonded Labor System (Abolition) Act, 1976 and your agreement will be void.
Explanation : For the removal of doubts, it is hereby declared that any system of forced, or partly forced labor under which any workman being contract labor as defined in clause (b) of sub-section (1) of Section 2 of the Contract Labor (Regulation and Abolition) Act, 1970 (37 of 1970), or an inter-State migrant workman as defined in clause (e) of sub-section (1) of Section 2 of the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 (30 of 1979), is required to render labor or service in circumstances of the nature mentioned in sub-clause (1) of this clause or is subjected to all or any of the disabilities referred to in sub-clauses (2) to (4), is 'bonded labor system' within the meaning of this clause.
So please refrain from such kind of activities. As suggested by other senior members, find out root cause of high attrition rate and take counter measure like incentives, counselling to reduce attrition.

From India, Delhi
Asking for a security deposit or guarantee is not hit by contract labour act or any other law, if it is mentioned in the agreement executed between employee and outsourcing agency. In fact all principal employers abide outsourcing agency regarding any loss or damage done by the manpower provided by outsourcing agency. An agreement itself put an end to bonded labour practice because at the end of agreement , both parties are at their will.
From India, undefined

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