How Should HR Handle Salary Deductions to Prevent Employee Turnover?

Hi,

I am an HR professional working for an IT firm, and I am seeking some suggestions for addressing a management concern. The management is looking to implement actions regarding a specific issue.

Can anyone provide guidance on implementing salary deductions from employees for company security purposes? This measure aims to prevent employees from leaving the company as soon as they find better opportunities.

Regards,
H. Rodrigues

As per your query, you can include this in the appointment letter that the employee has a specific notice period. If they leave without serving this period, the compensatory salary will be withheld. For example, if the notice period is 2 months and the employee serves only 1 month or none, the salary due to them can be withheld by your company to cover backfill recruitment expenses.

In some companies, the new company hiring your employee may buy out the notice period in case they require your ex-employee to join immediately.

I hope this addresses what you are looking for!

Hey Rodrigues,

I am really shocked at your company's "action in Plan". Why would they like to penalize an employee who does not want to work with you? I guess you and your company should spend time, efforts, and money to devise a plan on "why an employee should not leave your company rather than the other way round". I am sure you have read that "it's twice as expensive to hire a new candidate than to retain trained staff". So, with a positive attitude, advise your company to plan a strategy to look into the area of high attrition and retain candidates.

All the best,
ukmitra

Hi,

We don't have the rights to deduct the employee's salary during his service unless there are any remarks in his record.

- Lingam

Hi,

In my view, if your management is looking to retain its employees, as an HR person, you should:

a) Plan and implement some Employee Retention Schemes.
b) Conduct regular communication meetings with the staff. Don't always act like a disciplinarian over their head. Have pep talks with them at times. It will help you understand the employees' frame of mind. So, if someone is planning to leave, you will get to know in advance and can talk to them to retain them, discuss promotion, salary hike, etc., which may make them stay.
c) Encourage a healthy work culture in your organization. Don't be too strict with employees. Allow them appropriate space.
d) Incorporate fun activities at work regularly to motivate employees to stay.
e) Consider changing their compensation structure slightly by offering long-term service rewards for each increasing year. You may introduce this after confirmation or after 2 years of employee service to motivate them to stay for a minimum of 2 years with your company. Discuss this with your management as it will incur an employee cost. Seek the help of a Compensation and Benefits expert on this.
f) Include the clause of Notice Period Pay in the appointment letter. A minimum of 15 days during probation and 1 or 2 months after confirmation. This will give you enough time to plan any of the above actions or, in the worst case, find a replacement for the resigned employee.

In my view, while retention is crucial in an organization, we should not aim to retain every employee of the company. Every 5 years, there should be a 50% staff turnover to keep things fresh. I hope you understand what I mean!

All the best! Parul