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Respected managements!

I have to make an appraisal letter for my employee, I need to add on one line in the appraisal letter ( after appraisal you can't leave the company for atleast 1 year )

I have to write in a formal way because this line is not a contract line, but I need to write in this letter,

Please help me out with this, I will be very thankful.


From India, Delhi
Dinesh Divekar
Business Mentor, Consultant And Trainer
Partner - Risk Management
Sr. Hr Manager
Workplace Assessment And Training
Sr Management
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Dinesh Divekar

Dear Sunakshi,

Do you mean to say that after conducting the Performance Appraisal (PA) a salary hike will be given to the employee and because of the salary hike, the employee cannot leave the company for one year?

It may be noted that Performance Appraisal (PA) and the annual salary increment, though related, are two indistinct terms. Therefore, these cannot be used interchangeably.

Now coming to your query. It appears that employees leave the company even after awarding an annual salary increment. To curb their exit, you wish to make a trade-off. Take an annual increment but stay compulsorily for a year. Though such conditions are tempting for the employer, their legal validity is questionable. Under the provisions of which act can you introduce this condition?

PA is conducted to measure the work done in the past. The salary increment is a recognition of that. The organisation should recognise the work, whether the employee stays with the company in future or not. In the case at hand, your organisation demands that not only the employee should render a desired level of performance, but over and above, he/she must stay in the organisation also.

If you introduce a sentence of compulsory employment in the company for a year, then two issues will arise. One is what if the employee quits before one year? Will you ask the employee to refund the amount already disbursed? Secondly, what if the employee wants freedom of choosing his career opportunities outside your organisation and is ready to forego the annual salary increment?

Therefore, before initiating the whole thing, I recommend you consult a lawyer who handles the cases under Indian Contract Act and take his/her opinion.

From the HR Management point of view, the case needs to be seen with due sensitivity. This condition could demotivate the employees. In that case, what will be the cost of demotivation? Will it be lesser or more than the total cost of salary increment?

The employees work in the company when they are convinced that their intellectual growth takes place. They also work when they feel that they are learning something new in the company. However, the condition that you are proposing will put a focus only on the money. It will set off a culture of trade-off and it is not good for the organisation in the long run.

Final comments: - While you have asked for help in drafting a sentence in the post-PA letter issued to the employee, I have given a long post. It may sound like an unwanted lecture to you, nevertheless, it may be noted that the posts on a public forum are bound to come under public scrutiny. The essence of these forums lies in questioning and debating, and not obediently fulfilling the requirement of a fellow member.


Dinesh Divekar

From India, Bangalore

If it is not specifically written in an employment contract, then how is it enforceable? I’d be taking legal advice on that one, lest you open one big can of worms with unintended consequences.
From Australia, Melbourne

Just curious,

How do you propose to enforce this clause?
You think people will stay on just because it is in the appraisal letter?
Or do you think that this is enforceable in a court or in any other forum?

From India, Mumbai

An Appraisal letter handed over to an existing employee is a letter of acknowledgement of his commendable services during the past year and he is given a XYZ increment/perks etc., The Management or HR in any way would look pathetic and pedestrian, if it include a clause of compulsory employment of One year w.e.f. appraisal date/letter, which is a sham on HR policy. If the employee does not perform up to your standards, call him, counsel him, still he does not perform, you can terminate his services through a proper HR framework and it does not warrant any inclusion in Appraisal letter.
From India, New Delhi
It is better to retain quality people through offering them loyalty bonus over the period of services in the staggered scale based upon years of services offered in the Company. Ashok kella Ahmedabad
From India, New Delhi

Leaving or Joining a Company is based on both in agreement with the terms & conditions mentioned in the appointment letter and accepted by both. Apprisal is the process of improvement and growth mechanism cycle for employees and employers.

No need to write "After Appraisal You Can't Leave The Company For At Least 1 Year". leaving a company notice period applicable as agreed by the employee.

Regs, PNR

From India, Nellore

Performance appraisal is only a tool to measure an employee's performance for the review period (previous year) by his immediate supervisor and reviewed by his HOD and approved by a higher authority. Based on the rating - final rating - his increment is awarded and salary increment letter is issued to the concerned employee. You can not ask the employee to stick to one year fully, because of the increment. If you are awarding an excellent rating and proportionate increment to employees, you can arrange a meeting of all employees with HR Director and inform them that their performance are reviewed and management has extended its gesture by enhancing their package, emphasise the importance of their involvement for the success and growth of the company in the days to come, urge them to grow by helping the company to grow.

But never write in the appraisal letter that "you can't leave the company for 1 year"

From India, Aizawl
It will otherwise harm the organisation, you would see the exodus of the employees because of this restriction, as well prospective manpower would avoid to join the organisation; thus risk is multifold in long run.
It is better to retain good people with offering them withholding bonus.

From India, New Delhi
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