What is the issue - the love contract or the way of implementation?

Love contract is an unfamiliar concept in the Indian corporate world. But in the Western world it is very common. The primary reason may be because of the barrage of law suits filed against corporates there. In order to preempt the law suits, the companies are adopting love contracts. The intention behind this type of contracts could be,
1) To prevent any professional favoritism by one employee (Senior) to the other (junior)
2) It may prevent any attempt by the senior employee to harass the junior employee directly or indirectly incase their relationship takes a sour note. It may preempt any law suit by the junior employee against the company on the pretext of harassment or discrimination.
3) It may preempt any attempt by the junior employee to sue the company in case she breaks up with the senior employee and afterwords fired for genuine reasons.
The second and third reasons make this type of contract more pervasive in the western world as there are many precedence of law suits on the similar pretext in those countries. But in India this type of law suits are rare. The adoption of this type of contract by Indian companies can be attributed to their operations in the geographies where similar contracts can save big bucks and their reputation. In India, the main reason behind having such contract could be to prevent favoritism.
Similar contracts exist in Indian companies but in a different form. Infosys has a policy which prohibits near relatives (spouse, fiancee, first relatives) of the employees from being under his/her direct supervision. Change of project or change of business unit of employees due to this reason is a common occurrence in Infosys. Dr Reddy’s Lab has “Near relative policy”, which forbids the first relatives (Spouse, brother, sister etc…) of an employee to apply for a job in the company.
I have personally witnessed the impact of this policy in Infosys. In my very first project, the girl friend of the Senior Project Manager was a senior team mate mine. Her peers were very discontent with the matter that she was getting good ratings because of her clout rather than performance. The issue was escalated and she was transferred to a different Business Unit.
Another instance in the same company; one of my friends, who was a project lead, fell in love with a girl who was directly reporting to him. They decided to get married. But my friend had to conceal the news. Because, if he had disclosed it, one of them would have to move to a different project, and as the appraisal was around the corner, he didn’t want his boss to construe his feedback on his girlfriend as biased, so that both of them get a fair deal in the appraisal.
In the first situation the policy on personal relationship helped to prevent favoritism in the team. From the second case it can be inferred that everybody doesn’t voluntarily disclose his relationship. So it is very difficult for a Manager to apply this policy. They have to read between lines, look for clues, take feedback from the team members to find out whether there exists any romantic relationship between any of his team members.
In Love contracts effective communication and implementation of the contract is very important. In the case in focus, the company failed on both of these parameters. The GM HR tried to implement the contract without any notification to Pritam and Jagruti, he even didn’t want Pritam to read the contract. He used coercive and blackmailing techniques to get the contract signed. This situation could have been handled in a lot better manner. If Pritam is treated in this way, will he give his best for the company? That too he is a HR Manager and suppose to ensure the implementation of policies and handle Human Resource issues. His lack of commitment may have severe repercussions for the company.
If the GM HR really found any serious reason to apply the Love contract, then he should have treated Pritam as a mature and responsible guy and spoken to him straight about the issue. He should have communicated that, the company is not against the relationship but, as per the policy (which Pritam must be aware of and would appreciate its importance as a HR guy) and for the betterment of the company, he has to sign the contract. If Pritam was considered for senior manager HR for the coveted Detroit office, he must be mature enough to understand and appreciate the above point. Similarly, Jagruti should be communicated about the issue and the reasons to sign the contract. They should be made understand that the policy is not personally against them. But as per the professional code of conduct and for the larger benefit of the company, they have to sign it just as any other couple in the company signs. This contract is not discouraging them to have personal relationship, but rather intends to prevent the professional problems the company might face in future. By this approach, the contract can be signed and the employee’s good will can be retained.
I don’t see any major issue with the love contract policy. But the important thing is how it is implemented. How the employees are treated in order to sign the contract. No company can afford to treat their employees badly. How stringent the policy may be the employees should be communicated properly and treated well while implementing it. Coercion can work in short run, Pritam & Jagruti can be forced to sign the contract. But how many Pritams the company will force to sign. This technique will not definitely be taken in right spirit and will increase the level of dissatisfaction among employees. Many good resources may leave the company. The company’s reputation might deteriorate. This in turn might cost the company more than what the company would have thought to gain out of the contract. So the company should find the best way to communicate and implement the contract in order to realize the intended results.