How Can We Retain Employees for a Year? Seeking Advice on Contracts and Agreements

Dear Fellow HR,

While looking for a solution to retain employees for at least 1 year for experienced and 2 years for freshers (since the company provides high-skilled training), what is the best way? Should we require original certificates during the onboarding process? Or should we consider implementing a contract or agreement for 1 year with penalties for early termination?

Please share your ideas and any existing agreements related to this matter. Thanks in advance.

Dear Sir,

With reference to your post, having custody of original documents of an employee is not the right way and is not legal in India. You can enter into a contract for a period of 1 or 2 years as per your wish, which is also allowed as per the Employment Contract Act. However, one can challenge the contract if the terms and conditions of the contract are not reasonable.

The best way to retain any employees is through motivation and engaging them.

We do it, Sir, but the story behind this is that my company has high-end work which is very rare. People come here to get trained and then leave when they realize they are exposed, and their market value is much higher now. This way, the company is losing money, effort, and time. This is my only concern. Please suggest if there is any employment agreement (just to make them feel cautious or think twice when they make up their mind about leaving). However, I do not want any documents on legal papers, just a simple agreement for official purposes.

Employment Contracts as a Solution

An employment contract or employment agreement is the best solution for your organization. An employment contract, also known as an employee agreement, is a written document outlining the conditions of a job offer from an employer to a potential employee. It covers all the terms of the new working relationship that will exist between the employer and the employee.

There is no statutory obligation to have the contract of employment or the written statement of particulars signed. Once the applicant has accepted the job, there is a legally binding contract of employment between the employer and the applicant. The law does not require witnesses or a signature to make it valid. For employees, an employment agreement can provide a sense of stability and security, especially if the agreement lists the time frame for the period of employment. Hence, employees also accept these types of agreements without any doubt.

The Importance of Exit Interviews

An exit interview will give you a better idea of why your employees are not inclined to continue with you and prefer to opt for "better opportunities" (in their view). If your exit interviews are conducted professionally without rancor or bias, chances are that the exiting employee will share truthful feedback. Analyze these to identify the core issues and try to work on addressing them.

Understanding Employee Turnover

While an employment contract letter gives legitimacy to the terms of employment, in practical terms, people will look out for better prospects if you do not meet their aspirational goals. Some reasons why people leave, which you may find difficult to counter, include: preferring to work with established names or larger setups, seeking opportunities abroad, receiving much better terms of employment with better pay and perks in a larger setup, and their intrinsic work goals not being catered to by you. They may also take up the job just to gain training and experience.

Strategies for Employee Retention

Your focus on retaining employees should not be driven so much by legal recourse as by meeting the aspirational needs of those you select. Hence, it is also important to clearly identify personnel who, in your opinion, are less prone to move or would find it difficult to move. For example, I am aware of a company that was a struggling unit but needed to recruit to keep operations going. They shortlisted candidates who were academically sound but were not great communicators nor highly capable of cracking interviews with larger firms. The result was that these employees not only stayed with the firm for a fairly long time, but they also contributed substantially to turning around the company.

Dear Sipra,

The retention of employees is a major concern for the entire employment industry. There are various factors contributing to early exits, some of which are related to the employer, while others are individual-specific.

Retention of employee testimonials would be an illegal action, posing potential legal and safety issues. One simple solution could be to implement a contract bond while exploring ways to enhance employee retention.