Struggling Startup: How to Handle Employee Resignations Amid Project Delays and Financial Losses?

I am one of the directors of my company, it's a very small-scale and self-funded startup. We started with a backup plan of 4 months with sufficient funds. Currently, we only have 2 developers working on a single project.

For the last 3 months, the company has been experiencing a downgrade due to poor performance by its employees and irresponsible behavior towards deliverables. Both developers, including a senior developer, were working on a single project that was planned to be completed in no more than 30 days for a client with due commitments.

The developers assured us that they could finish the project within the timeframe, given their expertise. We followed a very specific approach to completing the project, including requirement gathering, planning, setting deadlines, performance evaluation, and more.

Since these individuals come from an IT background, according to SDLC, the responsibility of the technical team is to gather requirements, plan, and develop the project within the set deadline. I personally mentored them through these activities. When they estimated one month for completion, I expected 45 days. Despite my efforts to analyze and ensure a buffer between their commitments to the client, they consistently missed deadlines. I extended the deadlines multiple times, believing that terminating them and hiring replacements would not solve the underlying issues.

The project, initially slated for 30 days, has now exceeded 85 days without completion or testing. This has caused the company to lose business for the past 3 months, solely due to this single project.

The client is now dissatisfied with our commitment and service quality, demanding compensation for their lost time in the amount of XYZ. Given the lack of business for the past 3 months, the company lacks the capital to pay either the client or the employees. While the responsible party should incur a fine (a minor portion of the overall loss), the major losses include client dissatisfaction, damage to reputation, loss of future business, wasted resources, and the inability to pay salaries.

I am not seeking sympathy, but rather a solution to overcome this situation without further exacerbating the losses. It is worth noting that both developers have resigned and are requesting their full salaries. Despite Indian law prohibiting employers from withholding salaries, the company, burdened by loans and substantial losses due to project delays, cannot fulfill these payment obligations.

Key Questions and Concerns

1. Can a person's disposition to raise concerns in times of need be accurately judged during a brief interview?

2. Is it fair for an individual, provided opportunities for growth and career development by the company, to leave amidst significant debts and still be entitled to full payment?

3. Given that salary is exchanged for services rendered, what recourse does an employer have if the quality of service is subpar?

4. Should an employee be allowed to depart without properly transitioning responsibilities, or can the company insist on completion before departure?

5. Who bears responsibility for the losses incurred by the company?

6. If employees are the backbone of a company's service offerings, and their performance impacts clients and the business, what options remain for the company?

7. Despite granting dedicated employees additional chances, are employers still at fault if employees opt to leave?

8. As a private limited company under Indian law, what protections or guarantees exist for employers when faced with irresponsible employees?

9. Can a candidate's true character and performance be accurately assessed through a single interview, and should payment obligations still stand even in times of loss?

10. What provisions does Indian law offer for employees in a probationary period, especially if their actions contribute to company setbacks?

11. In the face of dreams shattered by significant financial losses attributed to certain employees, who should bear the burden of compensation?

12. Is it permissible under the law for employees to act without consequences while companies are obligated to pay, allowing them to act with impunity?

I seek the best solution to understand my errors and explore options to withhold salaries, as it is impossible for the company to pay those individuals who are directly responsible for its current predicament.

While empathizing with your situation, there are a few aspects that you could have done differently. Please recognize that this situation is something that every start-up goes through—only the responses vary. It's a sort of chicken-and-egg story. That's a part of the growing and learning process for any start-up, I guess.

Written Commitments from Employees

Coming to your situation, do you have anything in writing with the employees that they commit to completing the project in 3 months? Before answering your queries, please don't mix up emotional and commercial issues. I know this could be tough—but the sooner you learn to separate both, the better. And this again is something every start-up goes through.

Since you asked for frank feedback to 'understand your mistakes,' some points below will be straight to the point and, to an extent, blunt.

Coming to Your Queries:

1. Is it possible to judge a person by his interview of xyz time that he is expected to raise hands when the company needs his support more desperately?

ANS: No—it's not possible to completely judge a person during the span of the interview process. But, the chances of misjudgments can be minimized. Please note that any interview process, though meant to select, is more a process of elimination. You are 'selecting' by 'eliminating' the wrong (or to be more exact, the less-eligible) candidates from the relative context.

2. Is it okay if someone to whom the company gives an opportunity to grow and build his/her career leaves the company in such great debts and still we are lawfully required to pay him the salary?

ANS: Let's face it: Any company hires employees due to the company's interests. This isn't charity. By nature, any business entity is bound to make profits or losses—which is dependent on many factors, the employee situation you mentioned being just one of them.

3. Salary is the exchange of an individual's service. If his service is not up to the mark, then what control do we have as an employer over it?

ANS: This is one aspect where I think you went wrong or, to put it another way, could have done things differently. Going by what you mentioned, the employees seem to have understood clearly that you are more dependent on them than the other way around. So they just took advantage of it. I am not justifying their actions—I have seen it happen and faced it myself too. You should have been alerted within the first couple of months when the critical milestones weren't reached. The moment you gave them a long rope and benefit of doubt, they got the message that they can take you for granted—or more bluntly, 'for a ride.' If I get the scene right, I am sure there would have been occasions when you would have supported your employees and screened/saved them from the wrath of the client. Please confirm regarding this aspect.

4. Is it okay if an employee leaves a company without properly handing over the responsibilities? Can't a company even ask him to finish the assigned job before leaving?

ANS: The company can and should ask for the job to be completed before relieving an employee—as a rule. But, are you in a position to implement it? Small companies always have this Hobson's choice to make—if one is strict with the employees, they feel very restricted, and if one is very free and friendly, then the mutual respect is usually misunderstood/misplaced as a lack of authority or, in the worst-case scenario, one of indispensability. It's always better to be fair and firm—the gist being: balance between fairness and firmness. The moment any employee gets the message that you have options (whether you really do or not is not the issue), the response mechanisms from them undergo a change.

5. Who is responsible for the loss occurred to the company?

ANS: While the employees surely contributed to the situation, at the end of the day, it's the company that has to take the flak. The client gave the order to the company—not to the employees directly.

6. An employee is the strength of a company on behalf of which we do commit our services to the market. If we don't serve them properly, then the client can also claim for his loss, and the employee can also claim for salary. Then what is left with the company?

ANS: This is surely a problem. Suggest waiting for other members to respond.

7. Every startup company needs more dedicated and committed service people. If we trust them and give them a few more chances to overcome the hurdle, then also we are the defaulters and the employee is free to move on?

ANS: Let's not mix up 'trusting' and 'giving a long rope.' What you did was the latter—without realizing. You gave them chances—but at whose expense? I have partially touched this aspect in my response to Point 3 above. You gave them chances at the company's and the client's expense. Would that be a fair deal if you were an employee?

8. Company is also an entity of the Government of India (it's a private limited company). What kind of employment support or guarantee do we have from the law? As the employee holds the right of salary to be paid in any case, then what do we have in our pocket to secure our business from such irresponsible candidates?

ANS: Suggest waiting for other members to respond.

9. A single interview can't possess their actual attitude. No one can predict the performance and behavior of an employee in a single interview. Then why are we liable to pay the salary even if it is at a loss?

ANS: Already covered the first part of this query in my response to Query 1. Regarding the second part ('...why we are liable to pay the salary even if it is at a loss'), it is related to your Query 5 and my response.

10. If the employee is in the probation period, then what kind of provision does Indian law say? As these employees were on probation, which clearly means a judgment period, which is still not over, then also we are liable for their salary even if they do perform/don't perform or if they are responsible for the sinking of a company?

ANS: What does the appointment letter you issued to them say about this aspect?

11. We started this company with lots of dreams and a measurable capital which is no more with us now. These two useless employees came into the picture and ruined the whole scenario of growth. Now who will compensate our loss and dues?

ANS: Please begin to take responsibility for your actions—you hired these guys. If you hired the wrong ones, that surely was your decision. No one forced you to hire them—right? Please note that I am not...repeat not...justifying your employees' actions/attitude or taking sides. I am just trying to bring your focus to the way you could have handled things differently.

12. Is it permissible by law for any employee to do whatever they want, but the company has to pay you? You are all over free to hit and run.

ANS: Suggest waiting for other members to respond.

Options Open to You

Now coming to the options open to you. I am not sure if you have any further leeway (howsoever tough) with your client. If you do have, suggest meeting them and convincing them to give you another chance with new guys. Your immediate focus vis-a-vis the client is to ensure you don't lose them. And do whatever...repeat 'whatever'...is needed to achieve it.

Hiring New Employees

Now, how do you get new employees? One way is to hire freelancers or on-contract with clear delivery goals laid out. Another way is to hire the new employees through known references—that way you have some semblance of checks made (for which you aren't geared-up yourself). In fact, most start-ups induct the first few employees from those whom they know personally or through known references—you realize the reason(s).

Suggest waiting for other members to respond too. In case any replies have caused you any heartburn—please ignore them. The intent wasn't that.

All the best.

Regards,
TS

I appreciate the elaborate response from Tajsateesh, which covers all aspects of the queries posed. What has been cited are business risks that an entrepreneur must take into account while starting their venture, aptly summed up in the first paragraph: "Please recognize that this situation is something that EVERY start-up goes through—only the responses vary. It's a sort of chicken & egg story. That's a part of the growing/learning process for any start-up, I guess."

I think Liza should have avoided putting all eggs in one basket and should have had a Plan B as well as a contingency plan, like outsourcing the assignment to someone or a third party who was more competent—even if it meant a loss in the short term. The trust, credibility, and timely delivery could have impressed the client and attracted more business from others.

With reference to other points: As rightly observed, the order was given to the company, not the employees. Moreover, since the company is facing a loss, there is talk of penalizing the employees. What would have happened if the company had made profits and continued to make profits? The employees would continue to be paid their salaries and not the profit made by the company.

One has to remember that any gains belong to the company, not the employees, right? In the same way, if there is a loss, then it is only the company that has to bear the loss, not the employees. Otherwise, the employees should also be made prominent shareholders of the company, which obviously was not the case. The assignment was taken up solely by the company, without any consultation or stakes from the employees, so it would be unfair to ask them to compensate. It was not a business venture for them but a job or employment, and they have to be paid for their services. If their services were not up to the mark, then appropriate actions could have been taken at the proper time.

Perhaps more competent and proficient persons could have been brought in, rather than depending on them to keep the costs at the same level. As it seems evident, the recruitment process was defective, and the candidates were not evaluated for their technical skills. Moreover, it is apparent that the senior management was not bothered with the progress, monitoring, and supervision of the project and left everything in the hands of these developers.

In fact, I find the management team—who thought they could sit back and relax while the developers worked hard to rake in the moolah—equally, if not more, guilty for the loss.

Warm regards.

I appreciate your response in detail, Mr. TajSateesh. Please find my inputs after your answers/queries below.

Project Commitment and Employee Accountability

Coming to your situation, do you have anything in writing with the employees that they commit to completing the project in 3 months? I have more than 5-7 emails in their own words mentioning the deadline, which was never met 100%. Every time they left something unfinished, which led to deadline extensions. The project is almost 85% complete now, but they have raised concerns.

Before answering your queries, I suggest PLEASE DON'T mix emotional and commercial issues. I know this could be tough, but the sooner you learn to separate/discriminate both, the better. I am definitely not mixing up both. I am trying to be fair to the employees, but loss is also a matter of fact that should be discussed only if it is the outcome of their negligence and irresponsible behavior.

Judging Employee Potential During Interviews

1. Is it possible to judge a person by his interview of xyz time that he is expected to raise hands when the company needs his support more desperately?

ANS: NO, it's NOT possible to COMPLETELY judge a person during the span of the interview process. However, the chances of misjudgments can be minimized. Please note that any interview process, though meant to SELECT, is more a process of ELIMINATION. You are 'selecting' by 'eliminating' the wrong (or to be more exact, the less-eligible) candidates from the relative context. I don't say they are not capable; they made it critical for me by not paying expected attention. I agree they were not 100% perfect, but to be honest, I would rate them 6-8 out of 10. It again depends on how many options you have to select from. At the time of their interview, we eliminated 15-17 candidates who we did not find fit.

Employee Departure and Company Obligations

2. Is it okay if someone to whom the company gives an opportunity to grow and build his/her career leaves the company in great debt, and we are still lawfully required to pay him the salary?

ANS: Let's face it: Any company hires employees due to THE COMPANY'S interests. This isn't charity. By nature, any business entity is bound to make profits or losses, which depend on many factors, including the employee situation you mentioned. I am not concerned about different aspects because I had a handful of projects for the last 3 months. My marketing, counseling, convincing, and converting power were sufficient to drive business. However, what I was waiting for is to complete this project, but they never made it clear that they needed 3 months. They specifically mentioned in their reports about the expected time requirement, which is not more than a maximum of 40 days. I understand their planning may have gone wrong, and considering this aspect, I handled my client for some extra period. Loss occurred because of the incomplete project after several extensions, and more specifically when they raised their hands.

Employer Control Over Employee Performance

3. Salary is the exchange of an individual's service. If his service is not up to the mark, then what control do we have as an employer over it?

ANS: This is one aspect where I THINK you went wrong, OR to put it in another way, COULD have done things DIFFERENTLY. Going by what you mentioned, the employees seem to have understood clearly that YOU are dependent MORE ON THEM than the other way around. So they just took advantage of it. I am NOT justifying their actions—I have seen it happen and faced it myself too. You should have been alert within the first couple of months when the critical milestones weren't reached. The moment you gave them a long rope and benefit of doubt, they got the message that they can take you for granted—or more bluntly, 'for a ride.'

Here I understand my mistake, but from my experience, I should understand their problem and give them some time to overcome the hurdle. I must not expect that my employees should not face any hurdles. If I start replacing my employees for each project and their hurdles, then I will need to be engaged in recruiting every alternate month. Sometimes giving them space helps us to motivate them to work hard for the company that understands them and lets them learn to tackle the situations.

IF I get the scene right, I am sure there would HAVE BEEN occasions when you would have supported your employees and screened/saved them from the wrath of the client. Please confirm regarding this aspect. Yes, as it doesn't matter to the client who is developing the project; they are more concerned about the deliverable. I faced the client every time and took responsibility on behalf of the company. I never introduced my team for escalations, but when they needed to understand the requirements, I asked them to contact the client to boost the speed of development.

Employee Exit and Responsibility Handover

4. Is it okay if an employee leaves a company without properly handing over the responsibilities? Can't a company even ask him to finish the assigned job before leaving?

ANS: The Company CAN and SHOULD ask for the job to be completed before relieving an employee—as a rule. But, ARE YOU IN A POSITION to implement it? Small companies always have this Hobson's choice to make. IF one is strict with the employees, they feel very restricted, and IF one is very free and friendly, then the mutual respect is usually misunderstood or misplaced as a lack of authority, or in the worst-case scenario, one of indispensability. It's always better to be Fair and yet Firm—the gist being BALANCE between fairness and firmness.

They knew I had options as I was planning to expand due to more business opportunities. I started screening new fresher candidates for future growth. I tried being friendly and lenient in the beginning, but later, I found no output. Then I became slightly strict about deadlines and the quality of implementation, but it still did not affect them. Even in the later stage, they were not following instructions and orders. I remained quiet and did not take any action against such behavior because I thought to be diplomatic and wait until the project ends before taking action against misconduct and misbehavior.

One more thing I would like to add here is that I came to know that they have deleted data from their system, which was the periodic backup of the project, plan sheets, testing data, learning materials, software required to run this project, and the database backup file. They left a single copy of the project in their system. As far as I know and explained to them in the handbook, any material developed/downloaded/used as a part of the project is the property of the company, and they must not delete/copy/distribute/claim rights/manipulate/disturb it in any way. Isn't this a very unprofessional and immature act? This is a very concrete part to be considered when taking any action against them. I am yet to hand over the relieving documents to them, which means they will come at least once to me. I am not interested in holding their documents, but I am interested in imposing a penalty.

Responsibility for Company Losses

5. Who is responsible for the loss incurred by the company?

ANS: While the employees surely contributed to the situation, at the end of the day, it's the Company that HAS to take the flak. The client gave the order to the Company—not to the employees directly. I appreciate your answer, but let us discuss the fact that the company is nothing but an empty vessel without employees. It cannot do anything without a team, especially in the IT industry. One option is to outsource, but I will explain below...

Now, I don't want to present the employees in front of the client and ask him to punish them. The company should take responsibility in the market (to the client). But what about inside the organization? Within a company, it is nothing but a body or team of people working together. It's a fact that the company is not developing the project, but the people are doing it for the company. Any human-made mistake or irresponsible behavior should be noted and necessary actions should be taken. If every employee starts thinking this way, then the company won't have any control over such cases. Now, if I consider that the company is responsible for this in the market, then the question arises within the organization: who was doing this project? Who is responsible for this loss? Suggest on this...

Every startup company needs more dedicated and committed service people. If we trusted them and gave them a few more chances to overcome the hurdle, are we still at fault, and is the employee free to move on?

Let's NOT mix up 'trusting' and 'giving a long rope.' What you did was the latter—without realizing. You gave them chances, but at WHOSE EXPENSE? I have partially touched this aspect in my response to Point-3 above. You gave them chances at the Company's AND the Client's expense. Would that be a FAIR DEAL if you were an employee?

Here, I mean trusting in their abilities. For example, if I would have terminated them, then that also would not have been fair! You must have said that you should have given them a chance or notice. Being a manager, my role is not only to evaluate the abilities but also to try enhancing them, grooming them by making them fight for deadlines, motivating them, or providing sufficient technical support. I trusted their capabilities that they would improve within this project, and that would help me for future growth. The company has to bear the expense if it wants trustworthy and hardworking employees because we are not running a bullock-cart. We need dedicated people, and in this case, if the company is bearing the expense just for future planning, it's not an expense; it's an investment, and every business entity does it.

A single interview can't possess their actual attitude. No one can predict the performance and behavior of an employee in a single interview. Then why are we liable to pay the salary even if it results in a loss? Already covered the first part of this query in my response to

I think Liza should have avoided putting all her eggs in one basket. It also matters how many baskets you have. A business can grow with just one employee; we had two. I can't understand why we can't discuss the faults of those defaulters. Whatever decisions we made were in order to sustain and not go down. Strategies may go wrong, but not every decision.

We should have had a Plan B as well as a contingency plan, like outsourcing the assignment to a more competent third party, even if it meant a short-term loss.

We first tried outsourcing, but it didn't work due to cost factors. I understand your perspective, but that wasn't truly applicable in this context as the project duration was too short to plan a replacement. We decided to handle the client for some more time to allow our team sufficient time to finish it. It was not beyond their expertise level. I must explain the project - it was just a billing system for a shop, not very difficult or complicated, requiring a Plan B when we have experienced developers in the team.

With reference to other points, as rightly observed, the order was given to the company, not the employees.

Why are you trying to defend the scenario? Of course, it was not given to the employees, and we didn't hire them to play chess in the office. This is part of their responsibility, and they should execute it. If someone doesn't fulfill their responsibility, they should be held accountable by higher authorities, in this case, the company. Please understand we didn't hire animals, and they were not here for free; we were not giving charity.

Moreover, since the company is facing a loss, there is talk of penalizing the employees.

What would have happened if the company had made profits and continued to do so?

It was a service-based industry, not a product. We earn profit for the work completed. We lost fame, name, brand, and business. What profit could we have earned is money, which is dependent on future successful submissions. So, there is nothing to share stakes; they would have received an incentive for finishing the project on time and with quality.

Moreover, it is apparent that the senior management was not bothered with the progress, monitoring, or supervision of the project and left everything in the hands of these developers.

I think you didn't clearly understand the details I provided. I personally mentored this project with significant updates. Your comments are not suggestive or problem-solving; they are defensive towards the employees and blame management.

In fact, I find the management team equally guilty, if not more, for the loss. Mr. Raj, don't judge anybody based on your understanding, which may be limited to some aspects. How can you justify that we sat back and relaxed when the project was running double the given time? You also evaluated that employees were working hard?

We made investments, and you think we had peaceful sleeps until now. I have no words for your expertise. I hope you are playing a vital role in HR. The company you work for, please consider their perspective too.

Mr. Raj, thanks for your spotlight, but I'm okay with others' torches.

Effective Project Management Strategies

The best idea to keep projects on timeline and within budget is to deploy good project management systems. You need to define the project goals correctly and ensure the team meets them without fail. A system like Gantt Charts will greatly help.

Responsibility and Accountability in Project Management

In the true perspective, as a project manager, you hold the responsibility for failure, not your developers. In any IT project, a 20-30% time delay is usually acceptable in normal practice. However, in your case, it is more than 200%. Take this as a lesson, go back to the drawing board, and sort things out.

Steps to Address Project Delays

You can do the following: Sit with the developers, identify the most difficult logical part in your software, hire expert freelancers, and ask them to finish the job. These freelancers have tons of experience and will fix or write the code in a few days. Try using platforms like eLance to hire freelancers and escrow the amount. Do not pay until the job is done.

Thanks for your quick response. I do not wish to defend my opinions given earlier, which were based on the facts as available and put up before the forum; nor do I wish to reject your criticism. I accept your responses at face value. My attempt was only meant for the purpose of soul-searching and to present the case in a fair manner, when the Management is bent upon recovering the loss from the employees.

If it is so, you must understand that NO COMPANY CAN EVER MAKE ANY LOSSES, since the Employees are the only LIVING factor driving the business, ANY LOSS can be recovered from them. Hope you agree!!!

Also, I do take objection to your remarks - "The company to which you work, for god's sake start thinking something from their side also." Let us not discuss or pass judgment on anything that is IRRELEVANT to this discussion and UNCALLED for. Moreover, it amounts to a personal attack. When you initiated this discussion you could have specified that any viewpoint CONTRARY to yours (the Management's) will not be entertained.

I think that is one more factor that may have affected this project. The AUTHORITATIVE, TOP-TO-DOWN One Way communication!!! From the nature of your response, one can be sure at no point of time any genuine attempt was made to understand the problems and difficulties faced nor any Suggestions for Improvement were solicited.

Since it was a simple project - "It was just a billing system for a shop." - One fails to understand how it could not have been delivered on time; since every other shop in Metros and Malls has such software supplied to them by such start-up and new companies. Moreover, since it is an Indian (local) client, it appears that all the higher management did in this case was; just to buy out time from the client.

Had genuine involvement been there, such a simple project would not have backfired. The onus lies squarely on the project supervisor or person in charge of it.

It would be enlightening to know - what action was taken on him or her??

One must be brave and strong enough to own up the responsibility of something going wrong and learning from it; rather than passing the buck to someone else.

Being vengeful, complaining, lamenting in an overbearing of emotion does not help the situation. It is like a bad workman blaming his tools!!

I do not wish to add further, as one's inability to handle criticism does not augur well for a healthy discussion. All I wish to say is - Penalizing the employees financially or recovering the business losses from them is unethical and illegal.

Moreover, there is a widely known business principle - "caveat emptor" - let the "buyer" beware!! which means that the "buyer" cannot recover damages from the other party if things did not turn out as he expected. It was his own duty and responsibility to have verified the facts and consequences.

Also, let us take the example; if one is running a transport business or say, a car; then in case of an accident, one cannot ask the driver to compensate for all the damages and losses. Certain risks have to be borne by self and cannot be transferred to other parties.

Having said that, I must say that I empathize with your situation; more so since it was a self-funded project. You have a right to feel ditched by your employees on whom you had placed some trust on timely completion of the project. However, instead of feeling bitter and being let down, one must consider this as a learning experience and use it to one's benefit in the future.

P.S. I omitted to mention it in my last post; so let me specifically mention it here:

Please forgive in case you find any of my opinions harsh or offensive.

As an HR person, I cannot but have more concern for the employees and organic growth of an organization through human resource development.

Warm regards.

A few quick points regarding your remarks on Raj Kumar's response. Please note that the members of CiteHR focus on the 'issues' and also the behavioral aspects of those who raise issues/queries to be resolved. The premise for this is: Human psychology being what it is, once a person's way of thinking is tuned/directed in a particular direction, any and every situation that comes that individual's way is most often handled the same way—'right' or 'wrong' isn't the issue here at all. While suggestions/solutions for the issues raised are given, the basis for also focusing on the thought process of the thread initiator is to help him/her to change the way he/she handles any future similar situations. This is something like 'the difference between feeding a person and teaching him how to fish'.

Hope this enables you to see Raj Kumar's comments in a different light.

Your Recent Posting

Now coming to your recent posting, you mentioned, "I can't understand why can't we discuss the faults of those defaulters."

Is your immediate priority to focus on how to save your contract and consequently the long-term retention of the client, or to focus on the actions of employees? Again, that is not to say that you should forget about them—but I think the time is not now.

If you have a company lawyer, suggest directing the employees to him/her—so that you can redirect your focus completely to the primary issue at hand: which is to complete the order and retrieve the situation with this client.

Like Karthick Kumar suggested, you can depend on eLance or freelancer.com or many such sites focused solely on freelancers—you can pick up only those residing in Pune. Or like I mentioned earlier, you can hire on contract to finish the pending task (though my experience is that many hesitate to work for short-term contracts, as they prefer either long-term contracts or permanent employment, or even if they did, they would be more expensive).

All the best.

Regards,
TS

Thank you for your replies and valuable inputs. I would like to make it clear that I am an Engineer by qualification and I belong to the business development team for the company. I hold the responsibility of business development. To execute the requirements, we have one Senior Developer and one Junior Developer.

The Senior Developer has experience in handling, developing, and delivering projects, including more than four projects. It was expected from him to take care of the development center.

I agree that asking for compensation for the loss is not legal or ethical. However, I want you to understand the efforts and support given by the management to the team.

Now, when they faced problems, those were very silly based on my evaluation and that of our other experts. I believe you will understand the scenario best with this short description (one of the many problems they faced):

The Senior Developer was unable to design reports in Crystal Reports. He mentioned he had done it several times in the past, but the current issue was different. He assured he would definitely solve it. After some time passed with no positive outcome, I consulted one of our industry tech experts. He suggested using RDLC in dotnet as an alternative. I shared this information with the team. One person worked on the RDLC while another continued trying Crystal Reports. Suddenly, I found out that Crystal Reports were now working.

I then instructed them to design all the reports, they did so, and I requested a few look and feel changes. This process took more time than expected.

Next, we needed to host the application and during testing, we discovered that the reports on the server were not displaying data from the server database. This presented a new challenge.

At this point, we had spent a considerable amount of time on the process, and we did not anticipate such an issue. The only option left was to resolve the bug. It took the Senior Developer an additional two days to make one report run perfectly with server data, but others were still not working. Both the developer and I were puzzled. We tried to understand the situation together but couldn't find a solution.

We sought advice from a few experts, who all suggested that there must be something overlooked, but my Developer could not find the bug.

Please advise on any other options we could have considered.

On another note, a new issue has come to light. I discovered that they had deleted data from their system, which included the periodic backup of the project, plan sheets, testing data, learning materials, and the software required to run the project, as well as the database backup file.

They left only a single copy of the project in their system. As I have explained in the handbook, any material developed, downloaded, or used as part of the project belongs to the company and should not be deleted, copied, distributed, claimed, manipulated, or disturbed in any way. Isn't this unprofessional and immature behavior? This is a critical aspect to consider when taking any action against them.

I have yet to hand over the relieving documents to them, which means they will have to come to me at least once. I am not interested in holding their documents but will impose a penalty, of course.

I do not have a data transfer log, but I am certain he took the data with him before deleting it from the system, which is unethical. It seems like an attempt to cause harm to the other party. He may have taken all that data with him as the USB lock policy has not been implemented, even though they were informed that data should not be stolen.

I have reference details if you need them for analysis. I used a data recovery tool and found that 17.5GB of important data was deleted from the system, including the periodic backup, application software, various levels of source code, libraries DLLs, product source code, and more.

How do you justify this behavior? I understand you may not believe it immediately, but it is true. I have already informed the concerned person via email, and I have system log data as well. I am attaching the log file for you to review. On 08/19/2013, he deleted a significant amount of information from our system. Do you think it is the company's fault for allowing access to it?

To understand the document, please search and find '08/19/2013' and check the respective time with the action to see that it was intentional.

Please guide me on this matter as well.

I understand that my previous comments to Raj Kumar may have seemed disrespectful, but my intention was to draw attention to my perspective and vision.

I apologize if I have offended you. Please share your thoughts on this data theft.

Thank you.

Like I already mentioned, you don't have to forget what the employees did. The very reason for my suggesting to refer these guys to your company lawyer was this very fact: data theft and deletion of data. Lawyers have a better way of handling such issues—like the saying goes: 'Even a small snake needs to be hit with a big stick.'

And coming to such incidents, you can rest assured that these are not uncommon in the IT industry, so your experience is not unique. Looking back, there's a distinct possibility that at least some of the situations you mentioned could be deliberate and not accidental. However, as I mentioned earlier, assign someone else (your company lawyer was just a suggestion—if you have others who can act tough with your employees, that should be enough too) to handle the guys, and you focus on the client and on how to complete the project.

Though not very pertinent, I just thought you should know. Many of the active CiteHR members are technical professionals who take a very keen interest in human relations aspects of an organization (some of them being practicing HR professionals too)—so you can be sure to find suggestions that always have the grounding in technical aspects too.

All the best.

Regards,
TS

You already have some great inputs from TajSateesh, RajKumar, and other members. You hadn't mentioned whether you had paid them any salary at all throughout the period they worked. From going through the posts and your replies, I get the idea that you had placed strong reliance on them and so are enraged when they turned you down. Being an engineer yourself, you shouldn't have let these guys have the freedom to do stuff you wouldn't want them to. It's also surprising that this has gone unnoticed by you all this while.

When an employee has shown his intent not to continue service, you should have immediately taken steps to secure your data and all that has their access from the office and from outside. Perhaps you must have been affected emotionally when this happened, which didn't allow you to think much. You're also acknowledging that they were working hard to get the system up as you've been with them personally. Imagine a situation where the project was going on successfully and completed to a state of 95%, and suddenly your engineer resigns for a better prospect and quits the job. I am narrating this situation as almost every employer faces the same issue nowadays with a lot of jobs for employees like fishing inside the fish tank at your home. As others said, you need to be prepared to face it. However, even if you're ready to solve 1000 hurdles, you might face 1001, which is common in any business but very complicated in a startup firm where the capital is low, and all the money goes out from an individual's pocket. Also, how did the second person resign at the same time? Was he not competent enough to do it without the Senior?

How can they harm your data when you have their documents in your possession? As TajSateesh said, you could get legal advice since you have proof of them manipulating your systems.

All the best, but remember to focus mainly on the progressive aspect and try to maintain a backup option unlike before, rather than worrying over the failure.

Addressing Employee Misconduct and Legal Recourse

Notwithstanding what has been said earlier, indiscipline or willful damage causing loss of the company's property, including any "work-in-progress" whether tangible or intangible products such as those related to data, software programs, etc., should be viewed seriously. Strict action can be taken on these acts of misconduct—whether they are stated or implied.

As already advised, you may seek legal advice on this and force the ex-employees to undo or compensate for the damage to the extent possible or permissible.

Recovering compensation for any willful damage, including theft (of tangible or intangible products in any stage of development), to an extent permissible or possible is entirely lawful. However, please note that this is entirely different from any "business loss" for which employees are not directly responsible.

Accordingly, you may follow up on this aspect while doing the Full & Final settlement and settling their outstanding salaries.

Also, you are at liberty to record appropriate remarks in the Relieving Letter or Experience Letter which can reflect the true state of their contributions (or lack of it) during their tenure with your company.

Hope you would go ahead with a fair and legally-compliant line of action on this.

Warm regards.