The primary question is why a company makes his employees sign an employee agreement. The reasons can be many:
- Primarily this contract serves as a deterrent to employees’ intention of leaving the job. The company might have invested a lot in enhancing the skills of the employees by ways of training. So it will definitely want to reap the benefits of such investment.
- Moreover one must not forget the cost of hiring additional employees.
- Furthermore, it takes a lot of time to make the new employee understand his job. By the time he takes up the responsibilities the company suffers in terms of delay in decision making.
Thus the solution to the high attrition rate is employment contract. It is an agreement between the employer and employee which contain clause like
- Tenure of the notice period
- Clause prohibiting joining the competitors firm
- A compensation amount to be paid in case the employee leaves before the time period stated in the clause
Such clauses pose a lot of problem to the employee when they wish to resign from their current job. Some people say that it is more difficult to resign from a job than find one.
Take the case of the notice period clause. What if the new company wants the person to join the very next day? How can an employee be sure that he will find a new job once the notice period ends? These questions remain unanswered.
The compensation clause is highly debatable. It stands justified in those cases where the company has incurred huge cost in training that has enhanced the employees’ skill. In cases where the employee is getting no value addition from the company (neither in terms of additional knowledge or experience, nor in terms of a pay hike) the bond is a liability to the employee. It would be reasonable if the employee breaking the bond be asked to pay a proportionate amount based on the past record of the employee and taking into consideration the time service to the firm.
As per the Indian Statute, “no bond can force any person to work against the employees wishes”. Thus given the statute, no legal action can be taken by the employer against the employee breaking the bond for a cause. What best the company can do in such scenario is retain the employees’ experience and relieving letter. These letters are very crucial when joining big corporate houses. But people joining startups need not bother about them.
2 comments:
Another side to the same story...
I agree with Mitali, when she says that reasons for making an employee sign an employment contract are to deter his intensions of leaving the job and reap the benefits of the investment company has done in recruiting and training that employee. But, then there is another side to this story as well. For this I would like to site an instance which one of my friends went through. After completing B.Tech one, of my friends got through an MNC during campus recruitments along with 100 such students. On the day of joining she was put in a domain which she dint want to be a part of. At the very same day she talked to her supervisor regarding the same and her supervisor refused to change her domain. So, she decided not to continue with the company after going there just for a day. But the MNC demanded that she should pay the notice period amount as she had not served the notice period before leaving the organization. In this case, neither was there a bond, nor did company spend huge amounts in recruiting her nor did she undergo any training and neither did the company have any dependency on her for which she should serve the notice period, then why was she being asked for the notice period amount. What, I could figure out was that it was solely on the discretion of her supervisor, who was not ready to let her go (2 more people from the same joining group did not continue with the company for similar reasons, but they were never bothered about paying any such amount).
The other point I would like to bring to your notice is that these employment bonds many at times force the employee to work for the company “against their will”. Suppose a person joins a company which has asked him to sign a bond at the time of joining. Now, if he is made to undergo training in the field in which he doesn’t want to join at all, he still will have to work for it as he can’t leave the company due to bond. If an employee is being forced to sign a bond, he should at least be given the work of his choice.
Thus, I feel that there is a strong need for companies to address this issue by making their laws some-what employee friendly also. They should try and communicate to the employee while recruiting which all domains he can be expected to join ( though I understand that giving exact no. of people in a domain is difficult for the company ) but steps should be taken in this regard as it will be beneficial for both the company and the employees. This would help in decreasing the attrition rate to a much greater extent than bonds can.
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