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Friday, August 23, 2013

Rejecting a job offer? Get ready to pay penalty

MUMBAI: Job aspirants, who accept a job offer but don't join, may have to pay a penalty. Phillips Carbon Black inserted a 'penalty clause' in its offer letter to 15 candidates holding them liable to pay 5% ofoffered salary (CTC) if they accept the offer but don't join. 

After rechecking with the HR, two of them refused to take the offer and one vice-president hopeful had to pay Rs 4.5 lakh for breaching it. "It takes us back by months if a probable employee backtracks. We ask them to think twice before signing the offer letter," says Sabyasachi Bhattacharya, executive director of human resources (HR) of the carbon maker. 

Search for the right fit in junior cadre takes a week while it can go up to 3 months for senior professionals, say recruiters. Last minute dropout wastes all their efforts. "Almost 25% of candidates accepting a job offer back out. They are suffering from fear of last-in first-out syndrome because of the plunging economy," said Shiv Agrawal, managing director of ABC Consultants. 

But such penalty clause is uncommon in India, says Sajan Poovayya, managing partner of Poovayya & Co, but niche skilled jobs in the West have this clause. "Such a clause is absolutely valid as it does not hinder the employee's right to earn a living," he says. "It is a very smart and legal way of weaving in the exact damages that one has to pay if there is a breach of contract," said Kartik Ganapathy, partner, Indus Law. 

"It is a contractual obligation between two parties but will be difficult to prove legally," says Rajeev Uberoi, group general counsel for IDFC. The firm, according to Uberoi, will find it difficult to explain how the value (5%) was reached. Companies want recruitment firms to find ways to make candidates feel the pinch of rejecting an offer. 

"Tiredness has crept in hiring teams of companies with employees refusing to join after the entire process is over. Few IT and FMCG firms have approached us on (finding) a penalty form," said Ajit Isaac, chairman and MD of Ikya Human Capital Solutions. 

Phillips Carbon Black is cracking the whip on recruitment firms as well. In a pact, with its recruiters, the agents will have to replace a candidate for free if he backtracks. In case, another agent provides the replacement then the first agent will have to pay 50% of the hiring cost. 

"This was added to ensure a recruiter does athorough job," added Bhattacharya. Some, like HCL, have stepped up efforts to engage candidates 45-60 days before they join. The IT company uses gamification, where it tests candidates' participation and keenness through quizzes. 

Gamification is when games are introduced in work environment to improve engagement and productivity of the employees. If a candidate does not participate or interacts with other colleagues, it is a sign that he may drop out. HCL reaches out to him and re-engages, says Naveen Narayanan, global head - talent acquisition, HCL Technologies. This halved its dropout rate in past 4 months. 

Ernst & Young has asked managers to call a probable employee before he joins to show that the firm is interested in him. "This is a crucial period and now even great organizations have to sell the job profile," said Sandeep Kohli, national director, HR for E&Y. The probable is then given a hamper of detailed job descriptions, company profile and career path chalked out.

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