Banking on fairness

It has recently been reported that private banks are facing the great resignation, the speedy attrition. RBI Governor Shaktikanta Das has stated that every bank must build a core team to address such issues.

Our laws provide some solutions. Before discussing them, it is imperative to emphasise that the Supreme Court has repeatedly remarked that a bank employee holds a position where honesty and integrity are sine qua non. After all, banks deal with public money. One's trust should not be restricted solely to the work performed on the job but should also extend to other assurances given at the time of accepting the appointment letter.

There are some steps that banks can take to curb this issue. First of all, include a notice period in the appointment letter clearly. In case an adequate notice period clause is missing, an addendum may be issued, especially at the time of increments, promotions, etc. This must be accepted by the employee in writing. If an employee leaves before completing this notice period, the bank would be able to sue for damages, compensation, interest, etc. Sending legal notices for damages or even filing civil suits generally creates a deterrent in the organisation. However, notice period clauses should not be unreasonable; otherwise, the court may not grant such relief. They should be in line with industry standards and commensurate with salary/CTC.

Banks often provide training to employees. It's logical to expect a return on their investment by having competent and well-trained employees serve for an appropriate period of time following the training. Banks may also consider having training bonds signed in cases where the salary is equitable and a considerable amount of time is spent on training. Nowadays, corporates also offer special incentive packages based on performance and retention, wherein employees are granted incentives for the period they are required to stay in employment. In case they choose to leave early, there is an appropriate clause for recovering such amounts on a pro-rata basis.

Corporate banks annually lose a fraction of a percentage of gross revenue due to attrition. With many private players, another crucial challenge faced is employees joining competitors and soliciting other employees, clients, vendors, as well as disclosing trade secrets. In middle-level and higher-level employee contracts, banks can include restrictive covenants of non-competition, non-solicitation, and non-disclosure, etc. The ambit of non-disclosure includes information, whether written or oral, relating to the business, financial affairs, employee records, trade secrets, technology, contacts, and much more. Parting away with confidential information is generally enforced by courts.

Compensation for breaking a bond or non-compliance with the terms of the appointment is possible; however, as per current legal provisions, an injunction compelling an employee to serve for a specified period is generally held to be barred by the provisions of the Specific Relief Act. According to this act, a contract of personal service cannot be enforced. Section 27 of the Indian Contract Act, 1872, also applies, prohibiting any agreement in restraint of trade and profession. For entities like banks, the legislature also needs to rationalise such provisions. Nevertheless, seeking compensation, as allowed by current provisions, itself creates a strong overall estoppel, including on bandwagonism.

Banks may as well keep a pool of temporary staff, granting extra benefits. Though this may be plausible generally for stereotyped clerical and technical jobs, suggestions coming from all around, such as employee increments, training, fostering a better work environment, etc., are also viable.

Vigilance in the banking sector has been emphasised by the Apex Court in many judgments. There are also dictums in the banking sector holding that merely because an employee has retired will not absolve them from the misconduct they had committed in the discharge of their duties while in employment. There are rulings that if an act of negligence by a bank employee causes some profit by luck, that too would be considered seriously and as an act of misconduct, as the bank needs to function strictly as per norms. Going by such dictums, the overall intention of various courts is to emphasise integrity and efficiency in the banking sector. Even a case of negligence is viewed seriously.

The banking business needs a robust system. Foreign banks would consider investing in countries even more that are free from such issues. In the past couple of years, fortunately, there has been offshoring of branches, etc., to India to a substantial extent. Therefore, the issue of high levels of attrition needs urgent attention.

The writer is a practising Advocate in Supreme Court and High Court of Delhi. Views expressed are personal