How Should I Address Employee Resignations and Trust Issues with Our Client?

Dear all,

As per the client's request, we are allowing our employees to work from our client's place after establishing an MOU between the two companies. After three months, our employees who are working from the client's place are starting to resign one by one. Meanwhile, I came to know that one of my outsourced employees, who had absconded a month before, is now working in the client company. I am no longer interested in continuing business with them. Kindly guide me on how to handle this situation with the client and please correct the letter below, which I wish to send to my client:

Disappointment Letter

I would like to express my disappointment. I hope you agree with me that our outsourced employees working from your place are resigning gradually, and this is not acceptable under any circumstances. We need to understand the reasons behind this issue. I trust that you will address this matter urgently. I also trust that you will take the necessary precautions to prevent such incidents in the future.

I am looking forward to hearing back from you.

Regards,

XYZ

Correcting the format of the "Disappointment Letter" is a different matter. However, before sending the letter to the client, have you investigated the causes of employee exits? How many employees exited in what span of time? What is the percentage? What is the attrition ratio in the client's company for the employees who are on their rolls?

Just because of continuous exits, it would be wrong to blame the client. Have you conducted exit interviews? What are the outcomes of such interviews? Sending a disappointment letter could be counter-productive and it might challenge your assumption. Possibly some other reasons like poor remuneration may also be the cause, for which not necessarily the client is responsible.

Lastly, if possible, go in person and visit the client. In the personal meeting, explain your difficulties regarding employee turnover and how it increases your costs. Sending a letter like this could be assertive in the highest kind. The language that you have used is quite harsh. Please note that harshness has no place in a professional setup.

In view of this, I recommend investigating the matter thoroughly, having a personal meeting with the client, and then sending a letter as a follow-up or just sending minutes of the meeting. Please note that there are intricacies in every business and losing a client is not advisable. In running a business, one has to wade through these challenges. You have this type of challenge.

Thanks,

Dinesh Divekar

Root Cause Analysis on Employee Attrition

Have you done root cause analysis on employee attrition? Have you taken exit interviews of the employees who left? What type of difficulties or problems do your employees face at client locations?

Understanding the MoU

First of all, you need to study the MoU. This document governs your relationship with your client. If your MoU is silent on the issue of employing your current or ex-employees, then nothing can be done.

Handling Absconded Employees

Regarding absconded employees, is there any complaint or charge against them from your side? If not, you should not do anything. If there is something related to dues or integrity, you can inform your client, and the rest depends on your client.

A face-to-face meeting may help clear any misunderstandings or doubts.

As you said, I conducted a thorough investigation with my employees regarding their resignations. The client is a startup company, and they are personally approaching our employees to recruit them as their own and offering some monetary benefits. At the same time, they are receiving a salary from my end. This is the second time I am facing this issue. In order to retain my client, I have continued my business with them after having two personal meetings. However, I am incurring losses due to their irregular payments and pending payments each time. If this continues, there may be further losses in the future. Therefore, I have decided to stop continuing the business with them.

Thank you.

Dear XYZ, this is the reply to your second post.

Client Poaching and Contract Issues

If the client is poaching contract employees, it could be partially due to the improper wording of the contract. Startup companies often resort to these methods to save costs on the service charge of the contractor plus service tax.

Addressing Irregular Payments

Regarding irregular payments, I recommend having a third and final meeting. Discuss each point and take notes to create the Minutes of the Meeting (MoM). Afterwards, send out the MoM. As a follow-up to the MoM, send a letter for the termination of the contract.

My main point was about maintaining a professional approach in your communication. It's understandable to feel frustrated because of your client; not all clients are as easy to work with. However, we can separate professionally without letting this frustration show. You have provided the format of the letter in your first post. However, a letter of this nature could alienate the client and potentially lead to further delays in payment. Please do not overlook this aspect.

Thanks,

Dinesh Divekar

Mr. Dinesh,

Thanks for your suggestions, and I want to address this issue in a polite manner. Could you please provide a sample letter for the termination of the contract?

Thank you.