Can a company include a clause in the appointment letter stating that if an employee declines the offer before the date of joining, the employee will be responsible for reimbursing the expenses incurred by the company for the interview? Is this clause valid?
From India, Lucknow
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From India, Lucknow
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Dear Smriti,
First and foremost, you need to understand the difference between "Offer Letter" and "Appointment Letter". The former is issued when a candidate fulfills the recruitment criteria and the company considers his/her selection. In most cases, the latter is issued once the employee joins the company. In extreme cases, an appointment letter is issued even before the employee joins the company.
You might introduce this type of clause; nevertheless, please anticipate the repercussions of the insertion of this clause as well. Why recover just the cost of the interview and selection? Why not the cost of discontinuity in work as well? The latter cost is greater than the former!
The introduction of this type of clause could scare away job candidates. When a job aspirant starts searching for a job, it is obvious for him/her to attend interviews at as many places as possible. Possibly, he/she might get selected in 2-3 places. Therefore, the job candidate weighs options and chooses the best one. What if job candidates start declining job offers because of this clause?
Secondly, a needy candidate may accept the job offer even with this clause, but then what if he/she still does not turn up? To recover the cost of the interview and selection, will your company sue the job candidate? Under such cases, how many court cases will you go on fighting? By settling the score with the job candidates, what image will your company cultivate in the job market?
Job candidates do not turn up even at MNCs as well. "No show" is a fait accompli that employers need to put up with. Nevertheless, what matters is the brand image of the company. The higher the brand image, the fewer the chances of a "No show". Therefore, the real challenge lies in how to enhance the brand image of the company so that you can attract quality candidates. The failure of job candidate(s) to join your company after the issue of an offer letter shows that your brand image means nothing to him/her. Rather than drawing solace from the recovery of a small amount owing to "No shows", please address the larger issues.
Thanks,
Dinesh Divekar
From India, Bangalore
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8227First and foremost, you need to understand the difference between "Offer Letter" and "Appointment Letter". The former is issued when a candidate fulfills the recruitment criteria and the company considers his/her selection. In most cases, the latter is issued once the employee joins the company. In extreme cases, an appointment letter is issued even before the employee joins the company.
You might introduce this type of clause; nevertheless, please anticipate the repercussions of the insertion of this clause as well. Why recover just the cost of the interview and selection? Why not the cost of discontinuity in work as well? The latter cost is greater than the former!
The introduction of this type of clause could scare away job candidates. When a job aspirant starts searching for a job, it is obvious for him/her to attend interviews at as many places as possible. Possibly, he/she might get selected in 2-3 places. Therefore, the job candidate weighs options and chooses the best one. What if job candidates start declining job offers because of this clause?
Secondly, a needy candidate may accept the job offer even with this clause, but then what if he/she still does not turn up? To recover the cost of the interview and selection, will your company sue the job candidate? Under such cases, how many court cases will you go on fighting? By settling the score with the job candidates, what image will your company cultivate in the job market?
Job candidates do not turn up even at MNCs as well. "No show" is a fait accompli that employers need to put up with. Nevertheless, what matters is the brand image of the company. The higher the brand image, the fewer the chances of a "No show". Therefore, the real challenge lies in how to enhance the brand image of the company so that you can attract quality candidates. The failure of job candidate(s) to join your company after the issue of an offer letter shows that your brand image means nothing to him/her. Rather than drawing solace from the recovery of a small amount owing to "No shows", please address the larger issues.
Thanks,
Dinesh Divekar
From India, Bangalore
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Divekar ji,
You may please like to review your answer in the spirit of the question put by the member. The question was, "Can a company put a clause in the appointment letter that if an employee declines the offer before the date of joining, then the employee will reimburse the expenses incurred by the company for the interview? Is this clause valid?" BUT CERTAINLY NOT about the brand image of the company.
From India, Delhi
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You may please like to review your answer in the spirit of the question put by the member. The question was, "Can a company put a clause in the appointment letter that if an employee declines the offer before the date of joining, then the employee will reimburse the expenses incurred by the company for the interview? Is this clause valid?" BUT CERTAINLY NOT about the brand image of the company.
From India, Delhi
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Dear Friend,
As the learned Shri Dinesh Divekar pointed out, do not adhere to such clauses; opt for better options. Furthermore, nowadays, employees are passionate about finding a good working environment. They are eager to rid themselves of bad bosses, even if the organization is excellent. In most cases, employees desire recognition; otherwise, you will end up with substandard employees.
From India, Arcot
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As the learned Shri Dinesh Divekar pointed out, do not adhere to such clauses; opt for better options. Furthermore, nowadays, employees are passionate about finding a good working environment. They are eager to rid themselves of bad bosses, even if the organization is excellent. In most cases, employees desire recognition; otherwise, you will end up with substandard employees.
From India, Arcot
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Dear Mr. PS Dhingra,
Of the five paragraphs of my reply, paragraphs 2, 3, and 4 deal with the direct query by the poster. The first paragraph is to bring clarity in the offer letter and appointment letter, and the last paragraph is reserved for brand image. This paragraph is written to assess why the situation came to such a pass where the company is thinking of introducing a recovery clause in the offer letter itself.
From my point of view, these challenges are faced by SMEs. Everybody wants to work in a branded company, and companies with lesser brand image suffer in the job market. I wanted to bring to the fore this fact. Hence, my paragraph on brand image.
Thanks,
Dinesh Divekar
From India, Bangalore
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Of the five paragraphs of my reply, paragraphs 2, 3, and 4 deal with the direct query by the poster. The first paragraph is to bring clarity in the offer letter and appointment letter, and the last paragraph is reserved for brand image. This paragraph is written to assess why the situation came to such a pass where the company is thinking of introducing a recovery clause in the offer letter itself.
From my point of view, these challenges are faced by SMEs. Everybody wants to work in a branded company, and companies with lesser brand image suffer in the job market. I wanted to bring to the fore this fact. Hence, my paragraph on brand image.
Thanks,
Dinesh Divekar
From India, Bangalore
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Dear Smriti,
You should understand that companies do not intend to spend a lot of money and time in the process of conducting an interview to select a capable candidate, only for it to go to waste. However, if a selected candidate backs out after accepting the offer of appointment, the company has to restart its recruitment process from scratch, resulting in a waste of time and money, ultimately affecting the productivity of the company and potentially causing a backlog of work. Therefore, it is not unreasonable for a company to include a clause for reimbursement of recruitment costs by an offer acceptor who later declines to join.
It is essential for the employee to carefully consider before accepting an offer of appointment. The company's brand image should not be at stake during the recruitment process. Brand image is not built by merely squandering the company's money and management's valuable time to cater to the whims of candidates. If a candidate has attended interviews at other companies as well, they can request an extension of time for accepting the offer letter from the selecting company but should not renege on an already accepted offer. Such actions can be viewed as dishonest and selfish on the candidate's part. A candidate who is solely focused on self-interest may benefit temporarily from another job offer but may not succeed in advancing their career in the long run. The future is always uncertain, and the same company that is currently offering a position can turn out to be a significant opportunity for the candidate if they act ethically.
Every company expects a selected candidate to be honest and sincere, meeting the management's expectations and following employment ethics diligently. A candidate must bear in mind that a company undertakes recruitment to meet its own needs, not to fund unethical behavior on the part of candidates.
From India, Delhi
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You should understand that companies do not intend to spend a lot of money and time in the process of conducting an interview to select a capable candidate, only for it to go to waste. However, if a selected candidate backs out after accepting the offer of appointment, the company has to restart its recruitment process from scratch, resulting in a waste of time and money, ultimately affecting the productivity of the company and potentially causing a backlog of work. Therefore, it is not unreasonable for a company to include a clause for reimbursement of recruitment costs by an offer acceptor who later declines to join.
It is essential for the employee to carefully consider before accepting an offer of appointment. The company's brand image should not be at stake during the recruitment process. Brand image is not built by merely squandering the company's money and management's valuable time to cater to the whims of candidates. If a candidate has attended interviews at other companies as well, they can request an extension of time for accepting the offer letter from the selecting company but should not renege on an already accepted offer. Such actions can be viewed as dishonest and selfish on the candidate's part. A candidate who is solely focused on self-interest may benefit temporarily from another job offer but may not succeed in advancing their career in the long run. The future is always uncertain, and the same company that is currently offering a position can turn out to be a significant opportunity for the candidate if they act ethically.
Every company expects a selected candidate to be honest and sincere, meeting the management's expectations and following employment ethics diligently. A candidate must bear in mind that a company undertakes recruitment to meet its own needs, not to fund unethical behavior on the part of candidates.
From India, Delhi
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Dear Shri Divekar,
I would like to totally differ with your views. There seems to be a big difference between yours and my views and in the understanding of the central idea of the question. If you wish, you may want to go through my reply in response to the question of the member.
So far as the question of scaring off the job candidate is concerned, when the clause is already included in the offer letter, why does the candidate accept that clause by accepting the offer?
From India, Delhi
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I would like to totally differ with your views. There seems to be a big difference between yours and my views and in the understanding of the central idea of the question. If you wish, you may want to go through my reply in response to the question of the member.
So far as the question of scaring off the job candidate is concerned, when the clause is already included in the offer letter, why does the candidate accept that clause by accepting the offer?
From India, Delhi
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Dear Smriti,
No, I do not think such a clause can solve any problem. Isn't it the same as saying that you can resign, but the company will release you (even after the notice period) if you provide us with the replacement? If the above clause is unjust, so is the above clause.
On the other hand, this clause will deter the employee from saying yes, especially if the joining date is after 3 months, as there is uncertainty in that period. So, no, inserting this clause will not serve any purpose, as the company will spend more on the litigation expense than the actual recovery amount.
Instead, make your selection and offer sound in other manners, that it is difficult for the candidate to reject or fall back after accepting.
Regards,
Ashutosh Thakre
From India, Mumbai
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No, I do not think such a clause can solve any problem. Isn't it the same as saying that you can resign, but the company will release you (even after the notice period) if you provide us with the replacement? If the above clause is unjust, so is the above clause.
On the other hand, this clause will deter the employee from saying yes, especially if the joining date is after 3 months, as there is uncertainty in that period. So, no, inserting this clause will not serve any purpose, as the company will spend more on the litigation expense than the actual recovery amount.
Instead, make your selection and offer sound in other manners, that it is difficult for the candidate to reject or fall back after accepting.
Regards,
Ashutosh Thakre
From India, Mumbai
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Hello CS Smriti Sharma,
Are you the HR or the candidate? While the answer would essentially be the same, it's not legal. The reasons, justifications, and angles would vary depending on which side of the table you are.
If you have gone through the responses of so many senior members, they have been based on the basic presumption of you being the candidate or the HR. Either way, some have wasted their time.
Don't you think everyone who responded with the wrong presumption has wasted at least some time in addressing an issue that's way off the mark from your perspective and may not have answered your query completely or appropriately?
And this is coming from someone who has been a member of CiteHR since August 2011. Suggest first clarifying your locus standi and also giving the background of the query. That will enable the members to give pointed and actionable suggestions for your benefit.
Regards,
TS
From India, Hyderabad
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Are you the HR or the candidate? While the answer would essentially be the same, it's not legal. The reasons, justifications, and angles would vary depending on which side of the table you are.
If you have gone through the responses of so many senior members, they have been based on the basic presumption of you being the candidate or the HR. Either way, some have wasted their time.
Don't you think everyone who responded with the wrong presumption has wasted at least some time in addressing an issue that's way off the mark from your perspective and may not have answered your query completely or appropriately?
And this is coming from someone who has been a member of CiteHR since August 2011. Suggest first clarifying your locus standi and also giving the background of the query. That will enable the members to give pointed and actionable suggestions for your benefit.
Regards,
TS
From India, Hyderabad
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