Can Offering a Higher Salary Stop an Employee from Joining Another Company? Legal Concerns Explored

Dear Sir,

Is it possible for the company to retain the employee by offering a higher salary at the time of joining another company? Can the other (opposing) company have the liability to sue the company in this regard?

Regards,
Lahari

Employees can't be retained solely by offering a salary hike. Employee retention is directly proportional to employee satisfaction. Dissatisfaction can arise due to various reasons such as salary issues, role conflicts, organizational culture discrepancies, reporting problems, management concerns, work overload, and more. Therefore, it is HR's responsibility to identify the reasons behind employees taking such steps and to take necessary actions.

In response to your query, yes, you can retain an employee by offering a salary increase. However, do this only if the employee is a high performer and is currently underpaid based on their capabilities, or if their departure would significantly impact the performance of their department. Otherwise, refrain from offering a salary hike, as some employees may attempt to leverage resignations for higher pay.

There are instances where HR is compelled to retain an employee due to resource scarcity for a specific position. This aspect should also be considered.

Regarding legal action, the opposing company cannot take any action against your company or the candidate. Typically, an offer letter does not contain legal terms and conditions, so there are no obligations on the candidate's part. However, some companies, including real estate firms, have started issuing combined offer and appointment letters prior to or on the day of joining. If this is the case for the new company, the candidate must adhere to the terms stated in the letter, or else the company may take action against them. Your company is protected in any scenario.

Regards

The Risks of Offering a Raise After Resignation

Giving a raise after an employee has resigned is a bad practice. What is the guarantee that the same employee will not use this hike letter while negotiating their salary with a new employer? What about the dissatisfaction of employees who have not resigned and still remain employed? Are you not sending a bad message to them that if they want a raise, they should try the stunt of resigning first? Is the employee so indispensable to the organization? You are giving that signal to the resigning employee and asking for trouble in the future. Instead, I suggest trying other proactive actions in employee retention.

Legal Implications of Retaining Employees with Raises

As for your other question, whether the other company can sue you if you give a raise to the employee who intended to resign, my answer is no, they cannot sue you for such an action. Legal experts may opine on this.

Concerns About Retaining Employees with Higher Offers

This is not a healthy practice, not only in the interest of management but also in the interest of employees. You cannot put pressure on any employee by paying more and expecting them to meet your offer. On the contrary, you are spoiling the good working environment in the organization and inviting unprecedented problems. If anybody wishes to leave, let them go, as the door is meant for both entry and exit. Mr. Roy has given an excellent opinion with examples of consequences. Thanks to Mr. Roy.

Regards,
Adoni Suguresh
Labour Laws Consultant.

If you are asking whether it's possible to retain an employee by offering a higher salary, then yes, it is possible. However, it would depend on the employee's intentions and circumstances. If the employee values the salary increase and it aligns with their expectations, they may choose to stay. On the other hand, if the offered hike is not compelling or if other factors outweigh the salary increase, the employee may still decide to leave. There are various reasons why an employee may choose to stay or leave, and sometimes an employee may only be testing the waters with their current employer regarding their retention.

Legal Considerations

Regarding your second question, since this situation is at the offer stage, there are no established contracts or covenants between the employee and their potential new employer. Therefore, there is no legal standing for the other employer to take action against your company. As the current employer, you have the right to offer additional benefits to your employees, even if they have decided to leave. It is within your company's rights to make such offers, and there should not be any grounds for legal action from the other company. It seems that you may have intended to use the term 'right to sue' instead of 'liability' in this context.

No need to worry, friend.

As rightly pointed out by Mr. Roy, there can be many reasons for employee dissatisfaction. The best practices in HR will never recommend luring employees only by way of salary or any other monetary benefit. Today, talent has its unique identity, and employees are always on the move to where their talent is respected. Accordingly, they are hired for positions that suit them, providing all the comforts and welfare that make them happy and proud of their achievements.

Employee Involvement and Satisfaction

In a nutshell, I can say that employees need mainstream involvement in the organization, need to be committed towards organizational goals, and should be allowed to find job satisfaction through self-motivation.

Retaining employees by money only is a short-term solution. To gain the loyalty of an employee, the key is to build their trust and help them feel satisfied and recognized. Here are some interesting facts about employee satisfaction to provide ideas on how to retain the best employees: [Employee satisfaction's facts](http://vnmanpower.com/en/employee-satisfaction-facts-to-help-keep-your-best-staffs-bl180.html)

Employee Retention Strategies

In this case, you can retain an employee by offering a salary hike. The other company cannot sue you; in India, no employer can forcefully employ any employee. The offer made by the company can be terminated by either the employer or the candidate. We need to put effort into retaining core employees even after they resign.

You need to analyze the impact of this in your establishment. All employees will follow the trend, so consider what your options will be. Find out the reasons why employees are leaving your establishment. What measures can be adopted by management for retaining talent?

You can find numerous posts and articles regarding reasons for employees leaving an organization and ways to motivate and retain them. Implement what suits your establishment. You need to understand employee behavior.

Salary is a basic factor, and an employee doesn’t leave just for the sake of a salary hike; there are other aspects as well.

Regards