How Do You Feel About Penalty Clauses for New Hires Who Leave Early?

Hi all,

Considering the increasing number of cases where:

1. The candidate joins a company and leaves within 15-20 days, or
2. Accepts the offer and does not join (does not even inform),

We are planning to include a clause in the offer letter and also a clause in the policy handbook that might bind the candidate to pay us a penalty if he leaves within 3-6 months. Please let me know the impact of the same and also your opinions.

Hi Sushma,

"Considering the increasing number of cases where:

1. The candidate joins a company and leaves within 15-20 days

Analyse the situation; insights from the exit interviews by a third party may reveal certain findings which can prevent this situation.

2. Accepts the offer and does not join (does not even inform)

To ensure this doesn't happen, you can add a clause in the terms of acceptance that a "copy of the acceptance of resignation is required to be furnished within 4 to 7 working days from the date of acceptance, failing which this offer letter stands null and void."

"We are planning to include a clause in the offer letter and also a clause in the policy handbook which might bind the candidate to pay us a penalty if he leaves within 3-6 months."

I don't think it is a good idea. Why don't you look at this situation from their perspectives? Also, it would be a deterrent to potential employees. The reputation of the companies matters when it comes to recruitment, especially your employees who are the brand ambassadors of the company.

Cheers,
Rajat

I don't agree with having a legal clause in an appointment letter or in an employment offer because it does not give a good impression to the employee. Instead, we can write:

In case of acceptance of this offer, please let us know your decision within the next seven days, so that we can plan accordingly. Please submit a copy of your resignation letter duly approved by your present employer along with acceptance of our offer.

Since this letter represents the initial offer of employment, however, it does not constitute an employment letter which will be issued upon your joining.

BK