High Attrition in BPO: Can We Legally Recover Training Costs from New Employees?

Hi,

I am working in a BPO where attrition rates are high, ranging from 30% to 40% for new joiners who may not even complete a period of 2 months. This high attrition rate results in significant training costs.

Is there a legal way through which we can recover the training costs from the employee or require an employee to commit to working at least 6 months in production after completing their training? Is there a specific type of contract or bond that can be used for this purpose?

You can go for a bond whereby the employee may be asked to remain until the training costs are recovered. However, there should be proof of training given to employees, and it should not be for the sake of collecting an amount or compelling the employees to remain with you.

Regards,
Madhu.T.K

Hi Madhu,

Please, what kind of proof do I need to keep with me for this?

1. Can you please forward me some kind of format on this?
2. Can the company hold documents of an employee for a specific period until it covers its training cost?

If you have any verdicts, cases, notices, or circulars related to this issue from any court, please send them to me. The main reason for posting this issue is to get some kind of verdict or circular that has been issued by the court or legal authority to serve as proof.

Thanks & Regards,
Yajuvendra Singh Bisht

As a lawyer, I can say you cannot force anyone to be with your organization just because your organization has imparted some training or education to the candidate. Training is very tricky. If you do not train, you lose, and if you train and employees leave, again you lose.

You must work on retention policies, engage your employees along with their families quite often, host get-togethers, etc., to make them feel they work for a fun organization. The stress of BPO-related jobs should be reduced professionally to encourage employees to stay. Bonds serve no purpose.

If you do not want to pay for training costs, outsource it and ask the new joiners to pay for it upfront and provide them with valid certificates. You can have a tie-up with professional organizations that can provide good training.

Dear Mr. Mathu,

We are an automobile OE manufacturer with plants across India. We used to have DET and GET for a 2-year training program.

As per our trainee agreement, they are required to serve a minimum of 2 years after completing the training.

If a trainee decides to leave immediately after completing the training, they will be obligated to repay the stipend equivalent to 2 years' worth of what the company has paid.

Similarly, there are provisions for reasonable recoveries for the period they have served in the company during the specified period.

Is this legally acceptable or not?

Regards,
ARD

For an establishment having a network all over India, there shall be separate Standing Orders. If the certified standing orders provide for such kind of training and commitment of each trainee to serve for at least two years after training and repayment of training costs if they fail to comply with such provision, the same will be valid and maintainable.

In order to demonstrate that training is provided in its true essence, theory classes by qualified individuals should be included in addition to the routine practical training in the workshop. It should not be limited solely to 'on the job' training, as this could be seen as an attempt to deprive employees of their status and rights.

Proof of providing training should be integrated within the organization. The question of whether any training was given to an employee only arises when the issue of leaving service without completing the specified period is raised as termination of contract or violation of bond conditions. In such cases, it is the employer's responsibility to demonstrate that the employee received training justifying the amount claimed from the employee. It is advisable to maintain logbooks of sessions and other training records for this purpose. The system can be customized according to your preferences.

Regards,

Madhu.T.K

Bonds are applicable only if the company has spent money on the personal growth and enhancement of the employees, not just on training that helps employees perform better.

In India, bond is illegal as follows:

As per the Indian Statute, the bonded labor system was long abolished, and no bond can force any person to work against the employee's wishes.

Article 19 of the Indian Constitution talks about fundamental rights. According to Article 19 of the Constitution, the right to work is a fundamental right, and under no circumstance can fundamental rights under Article 19 be waived by any person, nor can any person be forced to do something that violates the rights mentioned under Article 19.

According to the Indian Contract Act, contracts entered into between two parties, if one-sided, would be null and void. Most bonds are one-sided.

Again, as per the Indian Contract Act, no contract can be enforced on any person if the contract being enforced causes harm to the person on whom it is enforced, or if performing it would violate principles of natural justice.

As per Section 368 of the Indian Penal Code, if any person or institute withholds any document, uses any legal document, or threatens legal suits or actions to force a person to act against their wishes or against the law, it constitutes extortion by threatening to file a legal suit, with a minimum punishment of two years under this act.

The Supreme Court of India has clearly stated that no employee can be forcefully employed against their will just because they have signed a contract with the employer. The court also stated that the employer cannot withhold any personal documents of the employees as they are earned by the employees and the company has no claim on them.

Any complaint against the company could lead to the Directors and Managing Directors of the company being jailed, as the company is not an actual living entity but a legal entity, and the management are the hands and heads of the company.

You can have a bond with all the new employees. In the bond, you can add a clause which states that if the employee leaves the company before completing one year, he/she will have to pay a specified amount.

Hi Yajuvendra,

Please find the attached agreement document. It might help you.

Regards,
Vipin

Dear Folks,

Such agreements do not hold up in a court of law. If you are providing generic training to all employees, it is company policy to train for a specific job, and no bond or agreement is really necessary. However, if special training is being organized for one or two specific individuals, then a bond does come into play with a two-way option. For instance, if a person is sent abroad or to a college for a period during which they will receive their full salary but will not be working full-time or at all.

I hope the difference is clear.

Best regards,
Ajay Chaudhari

Hi all,

I joined my present company in January '09 and received training for 2.5 months in Delhi until March '09. In February '09, the company asked us to sign an agreement stating that I would have to repay training costs for the previous 12 months from the date of termination if I leave the company or if the company terminates my employment within 12 months of my appointment.

Since the 12 months had elapsed, I signed the agreement. In March '09, the company asked us to sign an amendment agreement, which now states that I will have to repay training costs if I leave the company or if the company terminates my employment due to incompetence and misconduct within 18 months of joining.

I am wondering if this amendment is legally valid. If I choose to leave, I am prepared to pay, but if they terminate my employment, it should not be considered a breach of the bond from my side. Would I still be required to pay in that situation?

I am concerned that the company might use this signed agreement to create undue hardship for me. What should I do with this amendment agreement? Should I sign it or not?