High Attrition and Notice Period Woes: How Can We Ensure Compliance Without Appointment Letters?

I am working with a rapidly growing company. The attrition rate is excessively high in all departments, particularly in marketing where it stands at 50%. Consequently, in line with top management's directive, we have refrained from issuing appointment letters. Senior and middle-level employees are leaving without serving a notice period, leading to disruptions in work.

Optimal solutions to ensure notice period compliance

Instead of issuing appointment letters to the current 700 employees, what might be the optimal solution to ensure they leave with a notice period?

Incorporating notice period clauses

1. Can we incorporate a clause in the appraisal letter regarding the notice period?
2. Can we include a notice period clause in the offer letter for prospective candidates?

High Attrition Rates in a Growing Company

I am working with a rapidly growing company. This means that our top management also aims to grow. The attrition rate is too high in all departments. What are the reasons for it? Particularly in marketing, where it stands at 50%, is there a specific issue with this department such as the boss, colleagues, or team spirit?

Unethical Practices and Employee Departures

For a while now, we have not been issuing appointment letters as per top management instructions. This practice is unethical and contradicts the notion of being part of a growing company as mentioned initially. Senior and middle-level employees are leaving without serving a notice period. Who are the individuals influencing them to do so? The work is suffering due to their abrupt departures, which is quite evident.

Exploring Solutions to Employee Retention

Instead of issuing appointment letters to the existing 700 employees, what could be the best solution? Perhaps ensuring they leave with a notice period would be more beneficial. Why not implement necessary measures to prevent employees from even considering leaving the organization shortly?

The importance of an appointment letter

This is in addition to what Prashant has said. An appointment letter is a contract between the employer and employee, valid under the provisions of the Indian Contract Act, 1872. If the appointment letter is not issued, it does not mean that the contract does not exist. Even then, it exists and is referred to as an implied contract. However, an implied contract does not specify the terms and conditions of employment, which need to be explicitly stated in the appointment letter itself.

Not issuing an appointment letter is illegal under the provisions of the Shops and Establishment Act or Factories Act, as applicable.

Difference between offer letter and appointment letter

Regarding the issue of the offer letter, it seems that, like many in HR, your management is confused between the offer letter and the appointment letter. The former cannot be equated with the latter. The validity of the offer letter ceases to exist once the employee joins the company. Even if the conditions of separation are mentioned in the offer letter, they will not be valid if the contract itself is not established, making them legally unenforceable.

Addressing employee attrition

For a growing company like yours, if employee attrition is a severe problem, it indicates faulty management practices or practices that are unfriendly to employees. Therefore, your management needs to address this root cause. Measures such as introducing a notice period clause in the offer letter are superficial and will not be effective in the long run. Perhaps, the focus on business growth has blinded your management, leading to tinkering with general management practices.

Thanks,
Dinesh Divekar

Dear Seniors,

Good Morning! All departments have their targets/key KPIs. Those who perform well have been working for a long time. However, those who fail to achieve the target will either be terminated by top management or will quit on their own. For the sales team, they are given 2 to 3 months to show results. In the FMCG sector where I work, employees will be terminated quickly if they do not bring in any business. Other departments are given a one-year timeframe.

Every month, there will be 50 to 60 terminations, and recruitment will follow accordingly. Issuing offer letters, handling F & F, and recruitment are major HR responsibilities in this scenario.

Now, I seek guidance on the best approach. Can we issue backdated appointment letters to other departments or implement a policy specifically for the sales and marketing team, or should it be common for all? I am considering creating a policy that covers all terms and conditions for existing and new sales employees, similar to an appointment letter. This will help in breaking the monotony and focus on building a positive organizational culture.

Please advise on the compliance with the Factories Act 1948. Are there any alternatives to issuing appointment letters?

Thanks,
Mili

You need to conduct exit interviews with the associates who have recently left, whether they departed after securing a new job or due to any issues. If there were issues, what were they? 1. Manager 2. Work Burden 3. Unable to Understand the type of work. This process can help address your problems. An important point to note is that a company should not stop or withhold offer letters without informing the employee at the time of joining - conditions apply.

High Attrition in the Marketing Department: Why?

Attrition is high, with 50% in the Marketing Department. The Marketing department is the visible face of the company, and departures of senior staff will be noticed rapidly and easily. A growing company means a lot of pressure on employees. However, remember that your attrition rate will impede growth. An immediate action plan to tackle attrition and the adoption of basic HR rules needs to be initiated.

Importance of Appointment Letters

Appointment letters are a fundamental requirement of any job contract. The terms and conditions of employment, including the notice period for exit and other job-related terms and conditions, need to be clearly outlined. Do not operate in an opaque manner.

Role of Top Management

Top management needs to take a holistic view of the situation—have proper HR policies, exit, and entry policies in place. Attrition of senior-level staff is not a good sign, and conducting exit interviews can help analyze the reasons. Essentially, management should treat employees as valuable assets and not as easily replaceable pawns. Improper HR policies will severely impact growth.