Can a penalty clause in the offer letter be used to stop ghosting by candidates? Is it legal to mention the clause in the offer letter?
From India, Kolkata
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2From India, Kolkata
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Dear Richa,
When the job candidate accepts the job offer but fails to turn up on the specified date, it is called "ghosting". However, it is a term used in spoken language. If you wish to prepare an offer letter that remains valid under the provisions of the Indian Contract Act of 1872, you must use proper legal terms.
Secondly, if you wish to impose a penalty for not taking up the offered job, then as a corollary, you must also agree to pay the same amount if you revoke the job offer.
While issuing the offer letter, you need to issue the hard copy and obtain the signature of the candidate on the office copy. An employee working in the HR Department or any other department can be made a witness for the offer, and that employee may also sign for issuing the letter in his/her presence.
For additional information on the subject, you may check the following articles:
https://www.hrkatha.com/features/can-a-penalty-clause-in-offer-letter-stop-ghosting-by-candidates/
https://www.lawinsider.com/clause/obligatory-clauses#:~:text=If%20the%20invalidity%20of%20any,a s%20possible%20to%20the%20economic
Thanks,
Dinesh Divekar
From India, Bangalore
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When the job candidate accepts the job offer but fails to turn up on the specified date, it is called "ghosting". However, it is a term used in spoken language. If you wish to prepare an offer letter that remains valid under the provisions of the Indian Contract Act of 1872, you must use proper legal terms.
Secondly, if you wish to impose a penalty for not taking up the offered job, then as a corollary, you must also agree to pay the same amount if you revoke the job offer.
While issuing the offer letter, you need to issue the hard copy and obtain the signature of the candidate on the office copy. An employee working in the HR Department or any other department can be made a witness for the offer, and that employee may also sign for issuing the letter in his/her presence.
For additional information on the subject, you may check the following articles:
https://www.hrkatha.com/features/can-a-penalty-clause-in-offer-letter-stop-ghosting-by-candidates/
https://www.lawinsider.com/clause/obligatory-clauses#:~:text=If%20the%20invalidity%20of%20any,a s%20possible%20to%20the%20economic
Thanks,
Dinesh Divekar
From India, Bangalore
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Hi,
The current scenario is that employees who signed a Training Agreement, Indemnity Bond, or fixed Contract are vanishing from work one fine morning without serving proper notice, any update, and legal proceedings from the employer's side are of no use. While this is the current scenario, how is adding a penalty clause in the offer letter going to be beneficial for you? You may add a penalty clause, but as rightly pointed out by Mr. Dinesh Divekar, it should be mutual.
My point of view is that the Employer-Employee relationship commences only after signing the official appointment order, and the offer letter is only a preliminary intimation. Normally, there will be a clause added in the offer letter which states that "If you fail to report to our office on or before _________, this offer stands rescinded." You may add this clause and also bar such candidates when they apply again in the future.
From India, Madras
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The current scenario is that employees who signed a Training Agreement, Indemnity Bond, or fixed Contract are vanishing from work one fine morning without serving proper notice, any update, and legal proceedings from the employer's side are of no use. While this is the current scenario, how is adding a penalty clause in the offer letter going to be beneficial for you? You may add a penalty clause, but as rightly pointed out by Mr. Dinesh Divekar, it should be mutual.
My point of view is that the Employer-Employee relationship commences only after signing the official appointment order, and the offer letter is only a preliminary intimation. Normally, there will be a clause added in the offer letter which states that "If you fail to report to our office on or before _________, this offer stands rescinded." You may add this clause and also bar such candidates when they apply again in the future.
From India, Madras
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Dear Richa,
This is my second post on the subject. While issuing the offer, maintain the format of the existing offer letter. Thereafter, you may insert the following three paragraphs:
a) Acceptance of the offer letter denotes the obligation to take up the job on the date mentioned in paragraph ____ above. If Mr/Ms _________ (name of the candidate) reneges on the offer or fails to join the duties, then he/she is obliged to pay Rs _______ as hiring charges.
b) The issue of this offer letter denotes the obligation to provide a job to Mr/Ms _____ (name of the candidate). If the offer letter is revoked, or if the job cannot be provided on any account, the administration of ________ (name of your company) is obliged to pay compensation of Rs _____ to _____ (name of the candidate).
c) Provisions of the Indian Contract Act of 1872 apply to this offer letter. Acceptance of this letter, either in person or through electronic means, signifies acceptance of the terms and conditions mentioned in the previous paragraphs. All legal disputes and settlements shall be subject to the jurisdiction of the courts in _____ (name of the city).
Note: The amount mentioned in paragraphs (b) and (c) should be the same. Otherwise, (c) can be greater than (b). Though I have given the draft, I recommend you show this draft to a professional lawyer who takes up cases of the Indian Contract Act.
For Mr. Lakshminarayan: You have asked the purpose of inserting the extra clauses. These clauses are inserted because employers are fed up with "no show" by the selected job candidates. Employers spend a whole lot of time and money to select the candidate. If the selected candidate ditches the would-be employer, the employer is left in the lurch. Against this backdrop, by inserting an obligation to join, the employers create a deterrence in the minds of the job candidates. If not for the wayward, instilling fear works at least for the levelheaded or the serious candidates. The candidate who is not serious about taking the job will not accept the job offer. If the candidate turns down the offer letter, the efforts spent in searching for the candidate will go to waste but at least this wastage is better than waste happening because of the "no show".
Thanks,
Dinesh Divekar
From India, Bangalore
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This is my second post on the subject. While issuing the offer, maintain the format of the existing offer letter. Thereafter, you may insert the following three paragraphs:
a) Acceptance of the offer letter denotes the obligation to take up the job on the date mentioned in paragraph ____ above. If Mr/Ms _________ (name of the candidate) reneges on the offer or fails to join the duties, then he/she is obliged to pay Rs _______ as hiring charges.
b) The issue of this offer letter denotes the obligation to provide a job to Mr/Ms _____ (name of the candidate). If the offer letter is revoked, or if the job cannot be provided on any account, the administration of ________ (name of your company) is obliged to pay compensation of Rs _____ to _____ (name of the candidate).
c) Provisions of the Indian Contract Act of 1872 apply to this offer letter. Acceptance of this letter, either in person or through electronic means, signifies acceptance of the terms and conditions mentioned in the previous paragraphs. All legal disputes and settlements shall be subject to the jurisdiction of the courts in _____ (name of the city).
Note: The amount mentioned in paragraphs (b) and (c) should be the same. Otherwise, (c) can be greater than (b). Though I have given the draft, I recommend you show this draft to a professional lawyer who takes up cases of the Indian Contract Act.
For Mr. Lakshminarayan: You have asked the purpose of inserting the extra clauses. These clauses are inserted because employers are fed up with "no show" by the selected job candidates. Employers spend a whole lot of time and money to select the candidate. If the selected candidate ditches the would-be employer, the employer is left in the lurch. Against this backdrop, by inserting an obligation to join, the employers create a deterrence in the minds of the job candidates. If not for the wayward, instilling fear works at least for the levelheaded or the serious candidates. The candidate who is not serious about taking the job will not accept the job offer. If the candidate turns down the offer letter, the efforts spent in searching for the candidate will go to waste but at least this wastage is better than waste happening because of the "no show".
Thanks,
Dinesh Divekar
From India, Bangalore
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Dear Richa,
You can put a penalty clause, but how do you plan to enforce it. In all probability, the courts will laugh you off. Then even if you file it, what is the cost of filing a legal case against a candidate? Do you have a lawyer who will do it for a little? Considering that cases go on for years in Indian courts.
By the way, you will have to put every offer letter on stamp paper or pay a ₹500 stamp duty (actually higher as stamp duty will depend on CTC) else the document cannot be presented in a court.
Also, consider that in all probability, in 3 months time you will find no candidate is even bothering to apply to your company.
I do not think it is a practical solution even if it looks nice in a legal document.
From India, Mumbai
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You can put a penalty clause, but how do you plan to enforce it. In all probability, the courts will laugh you off. Then even if you file it, what is the cost of filing a legal case against a candidate? Do you have a lawyer who will do it for a little? Considering that cases go on for years in Indian courts.
By the way, you will have to put every offer letter on stamp paper or pay a ₹500 stamp duty (actually higher as stamp duty will depend on CTC) else the document cannot be presented in a court.
Also, consider that in all probability, in 3 months time you will find no candidate is even bothering to apply to your company.
I do not think it is a practical solution even if it looks nice in a legal document.
From India, Mumbai
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There is nothing wrong with putting a penalty clause in the offer letter. The clause should be fair and apply to both the employer and employee. The application of conditions is good for both parties. Many times, it is noticed that the employer withdraws the offer, so the clauses should be for both parties, and it is legal too.
From India, Mumbai
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From India, Mumbai
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