High Attrition Woes: Can a One-Year Employee Bond Legally Protect Us?

Dear Seniors,

Greetings!

Due to the high attrition rate in our company, I am planning to introduce a one-year bond for newly joined employees. After signing the bond, if an employee decides to leave the company, what legal actions can we take?

Please advise me.

Regards,
Sai Ganesh

You must find out why employees are leaving. A bond cannot prevent those who wish to leave. Is the rate of attrition higher than normal for your industry? Try to analyze fundamental reasons rather than look for short-term remedies.

Dear Seniors,

Greetings! Due to the high attrition rate in our company, I am planning to introduce a one-year bond for newly joined employees. After signing the bond, if an employee leaves the company, what legal actions can we take? Please advise me.

Regards, Sai Ganesh

It is not at all appreciable if you take measures like this. Getting a bond signed for this purpose is illegal, as some courts have held. However, you may draft something like this in your appointment letter or draft a bond where both sides have equal rights in the termination of the contract. Remember, you can't bind an employee to work with you in cases like bad work culture, untimely salary disbursements, and many other reasons that make employees leave.

Moreover, getting a bond signed may be a short-term remedy that may eventually affect attracting talent in the future if you have issues like bad work culture, salary disbursement issues, etc.

Steps to Reduce Attrition

Hence, instead of doing all these, you may initially conduct an employee survey to find out the reasons behind the attrition. You may conduct one-on-one counseling. You may collect feedback/reasons during exit interviews to familiarize yourself with the problems. Take corrective measures on these. Implement some employee development plans. Focus on employee engagement programs and handle employee grievances effectively. These actions may help you reduce attrition.

Hope this will be helpful for you.

Employment Bonds in India

Employment bonds in India are restricted to cases where the company has provided some training, and only to the extent of money spent on the employee. If formal training is not provided, then the bond is not enforceable. Legal action can be taken by sending a legal notice and filing a civil suit for the recovery of the bond money. However, a good lawyer can potentially persuade the judge to dismiss the suit and even grant litigation costs. The primary impact of the bond is likely to make it more challenging to recruit. There are more efficient ways to retain employees.

You are happy if employees work for just one year and then leave? Find some other methods of retaining employees. Even if basic things employees require are not provided by the employer, it can make employees leave—such as a good office environment, comfortable seating arrangements, adequate lighting, spacious work areas, provision of water coolers, quality equipment like desktops or laptops, servers/UPS, proper delegation of authority, addressing training needs, timely recognition, and appreciation of good work by employees, and more. Experts can suggest many additional strategies.

Remember, one-sided bonds, where there is no obligation on the part of the employer, do not constitute a valid document.

Introduction of Bonding with New Joiners

Introducing a bond with new joiners will not be a legal and appropriate solution to curb the attrition rate. Instead, you must try to find out the reasons for high attrition, as rightly pointed out by senior members of this forum. You can also seek the help of a vendor to conduct a detailed survey on why the attrition rate is high in your company. The consultant/vendor can be asked to submit a report along with their observations. This method may provide you with the proper reasons for high attrition since employees will feel free to express their views to a third party.

Regards,
Optimus Consultants
[Phone Number Removed For Privacy Reasons]

The Ineffectiveness of Employee Bonds

It's a really misguided culture that is followed by many reputed companies. I totally disagree with this concept. By signing the bond, the employee is supposedly retained. However, just as no one can stop the rain if it is destined to come, if an employee decides to leave the company, they will leave; no bond or legal action can stop them.

If there are issues within the company, you need to address them directly instead of imposing restrictions on others. Try to identify the reasons why employees are resigning and fix the underlying problems. Then, you will see better results over a longer duration. Don't suggest such a misguided idea to your management for retaining employees.

Regards