blogger Significance of a Well-Written Appointment Letter back
Date: May 04, 2012                   Author: Pallavi Jankiraman
When a company first sets-up, the promoters tend to ignore the need for HR processes as the founding team typically consists of a small and trusted team. However as the organization grows and adds to its own manpower, it becomes more vulnerable to liabilities associated with the conduct of its employees.  Even in family run businesses, with a large semi-organized work-force, the hired middle and top management have started expecting a more professional milieu with stronger HR processes like Appointment Letters, an HR Manual and a structured appraisal process. This trend can be seen across industries, including the traditional manufacturing sector: employees have become savvy about these processes and now expect a professional induction into the company, with a clear definition of roles, responsibilities and terms.

In short, HR processes have now moved from being a convenience, to a preference and finally to a necessity. It has become critical for the organization to formalize its HR Code-of-Conduct processes. An Appointment Letter is the first step towards achieving this. It is the expressed Terms & Conditions of employment and it gives legitimacy to the employment. For the employee, its absence can be interpreted as the organizations unwillingness to recognize employees’ services and legal rights.

But how does a well drafted Appointment Letter really benefit your organization?

Say you are a start-up Application Development company with a small team working informally. One of your key employees has quit and is moving to competition. She takes with her a copy of the application that she may have developed in your organization. She may be the main brain behind this application, but it is still the property of your organization. However, in the absence of a formal Appointment Letter, verbalizing your Employer-Employee relationship and a stated copyright ownership / confidentiality clause, you have no legal basis on which to file a lawsuit. This is a very common mistake made by small companies in the IT space and a well drafted letter can serve as a strong deterrent.

One of our clients recently set up her consulting company and hired a small team consisting of professionals she had previously worked with- people who were used to working in larger multinational companies. In order to provide a similar professional work environment that her employees were used to, she choose to have a formal Appointment Letter highlighting all the terms, conditions and policies of the new organization. By way of the ‘Conflict of Interest’ declaration in the Appointment Letter, it came to light that one of her senior employees had an active company, also working in the same domain. This helped her take appropriate actions to safe-guard the interests of her company.

Another problem plaguing the IT, ITES and Financial Services space is that of ‘Fake CV’s’- where an employee falsely claims to have a specific experience that he does not actually possess. The most commonly faked items tend to be technical experience, salary, designations, qualifications and references. Recently a large ITES company fired over a 100 employees at one go, as their background verification did not check out. They could do this without being legally challenged as the Appointment Letters they had issued to these employees had not just a generic ‘Declaration of Truthfulness’ , but also a specific clause warning of such action, should their Background Verification not check out.

This is not to say that a good Appointment Letter will insulate your company from all frauds or legal liabilities. However, if drafted with care, it adds value to the company's health and safety management systems. It also sends a strong message to potential employees that yours is a professional organization, with mature processes that you are serious about. This helps ensure compliance.
About Pallavi Jankiraman
member-images Pallavi is a Principal Consultant at a leading Human Resource consulting firm based out of Mumbai, with offices in Delhi and Pune. She holds an MBA from the Indian School of Business, Hyderabad (India) where she specialized in Strategy and Entrepreneurship. She also holds a Post Graduate degree in read more...
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