Dear Padmini,
Since this is a financial matter, I recommend you making separate agreement between MD and employee on the bond paper. In the appointment letter just mention that employee needs to deposit the security amount with the company and separate agreement would be made for this purposes.
You need to work on various clauses on validity of the agreement. You cannot make the agreement one sided. Therefore, take your lawyer's opinion too before going ahead with this scheme.
Legal requirements apart, have you studied various pros and cons of this scheme? If you ask candidate to pay INR Two Hundred Thousand, will you be able to attract quality people? Those who are confident of their career may not agree for this scheme. Therefore, you will end up in getting those candidates who do not get job anywhere!
Through this scheme you may be able to control attrition but in the bargain you may retain less intelligent people. Is this acceptable to you?
Secondly, you need to decide in advance that how to handle the issue of non-performance or under performance. Suppose some employee pays your company Rs 200K. He wants to quit. For this he will start absenting, will start committing job errors. You will have to terminate him per force before two years. In that case will you not pay him this security amount?
I know few companies who held their employees' one month's salary as security deposit. However, this formula never worked. Employees just reconciled with their fate and continued to quit as ever. In your case what you are asking is security deposit equivalent to four to eight months salary. How many candidates will be ready for this? Have you done any market survey? What if you stop this scheme in between? Then will you return the money to the employees from whom you had taken this amount?
It appears that you and your management have not understood properly the challenge of retention. Your main challenge is to create organisation's culture that is conducive to growth. You need to create a culture of values, a culture of fairness, a culture of learning, a culture of respect, a culture of welfare and change, a culture of innovation. When you attempt to do all this you will be able to contain the malaise of attrition. Not otherwise.
You can also conduct the Employee Satisfaction Survey (ESS). Find out what your employees want.
Since you asked for, I have given my forthright opinions. I urge you not to take it personally.
Ok...
Dinesh V Divekar
Beware of false knowledge; it is more dangerous than ignorance.