Understanding Notice Period Calculation and Employee Rights in Employment Contracts

Hi All,

I would like to know what is the notice period that needs to be served by a Marketing and HR person.

Regards,
Seema

Hi Seema,

It all depends on company policy. It varies from 3 months to 1 month. Do let me know if you require any other info regarding the same.

Thanks,
Sujata

Hi,

The notice period is the time an employer and/or employee needs to give the other if they decide to separate before normal retirement age. If a person does not serve the notice period given in his terms and conditions of employment, then he needs to pay for the short period. For example, if the notice period is 3 months and a person wants to leave after 2 months, then he needs to pay back the company an amount equaling his 2 months' salary. The Industrial Disputes Act of 1947 in India first introduced the concept of the notice period or payment in lieu of notice period to protect the workers.

This system has a very good base since it protects the employee from an immediate loss of pay due to job loss and also protects the employer by giving it time to find a proper replacement and enabling induction and handing over of charge. The notice period, in general, is not specific to a particular department like HR or Marketing but is applicable to all employees on regular rolls.

Regards,
SC

Hello,

Correctly said by Sujatha and SC. Perhaps in rare cases, the notice period can be waived by the organization.

Wishes, Senthil Raj

Hi Sujata, SC, and Senthil,

Thanks for the input. I thought that the notice period depends on the critical skill sets. If the skill set we are looking for is very critical and rare, then the notice period will be longer, say 3 months. If the skill set is easily available in the market, then the notice period is shorter.

Kindly clarify.

Regards,
Seema

Dear Seema,

Usually, the notice period is kept the same for all employees, but if you want, you can keep a different notice period for a different class of employees. Please keep one thing in mind: the variation in the notice period must not create differences across various departments. For example, suppose you feel that Marketing is a critical skill set category and you keep a notice period of 3 months; on the other hand, in Operations, you keep a notice period of 1 month. This might give rise to grievances, as people will perceive that to the company, Marketing is more important and valuable than Operations, and you are also putting an official stamp by giving a different notice period.

I agree that in all companies, some departments are more important than others, but we should never officially admit the difference. Isn't it?

Regards,
SC

Hi SC,

That's a valid point. According to you, in an IT company, what should be the notice period?

Regards,
Seema

Hello,

The notice period does not depend on the skill test; it is the policy of the organization.

Senthil Raj

Dear Seema,

The notice period should be kept as per your requirement, varying from one to three months. It does not depend on the type of industry.

Regards,
SC

Hi Seema,

You may adjust the notice period based on the level of the position in question. For example, for Assistants and Junior Executives, it could be one month; for Executives, two months; and for Senior Executives and Managers (and above), three months.

Govardhan

Hi Seema,

I think you are correct. The criteria for defining the notice period should be whether a particular skill is core and critical to the business. Each business/organization has its own model of skills requirements. In general, companies define this level. However, as an employer, you reserve the right to define the notice period for each employee depending on the importance of the function. It is always better to define this in the offer or appointment letter.

In cases where you provide special training to an employee or promote them to shoulder higher responsibilities, you can change their notice period, which should be documented in a written contract.

Avinash Desai

However, it is not a fair practice to have a unique notice period for each employee and different notice periods for different employees at the same level across departments. Also, a notice period beyond 6 months is not common in India. A 6-month notice is usually reserved for very senior positions and is considered rare. Therefore, stipulating a notice period of 1 year or 2/3 years is not typical.

Can someone share any cases where a notice period of 1 year (or more) was stipulated in employment contracts?

Govardhan

Hi Seema,

The notice period required in resignation depends on the companies' policies. The private sector typically has a notice period of 1 to 3 months, while PSU (Public Sector Undertaking) has a standard 3-month notice period. Employers need the notice period for the following purposes:

1. TOT and completion of tasks within the notice period
2. Clearance of dues
3. Arrangement of alternatives

Employers must check the following in resignation cases:

1. Resignation should be clean and unconditional.
2. If the staff is involved in moral turpitude, public claims, or suspension, resignation is not accepted.

Basant

Hi Avinash and Govardhan,

Thanks for the contribution. In the IT sector, the skills required by IT professionals are very critical, which is why we set long notice periods. However, this practice also applies to HR, Marketing, and admin staff, which, in my opinion, is not fair. For HR and Marketing personnel, serving a three-month notice period can make it very difficult to look for another job as most employers are not willing to wait that long. On the other hand, we could resign first and then start looking for a job so that we can serve the notice period and secure a new job. This approach is risky as we might end up in a job that we don't really want to do.

Kindly share your views.

Regards,
Seema

Yes, Seema,

You are correct, but we have to convince our bosses. HR and Marketing are core but not critical to find. (HR is becoming critical these days.)

Convincing our boss that all positions in our organization can't be core & critical. If we think of ABC analysis - it should not exceed 20% of total positions. For all core+Critical positions succession planning is very important. Keeping alternates available is a must. If all positions in our organization are core+critical, it means that the business is 100% at risk!!

Developing employees to acquire key skills will be important. Defining quarterly training/skill up-gradation incentives for employees and giving mentoring allowances to team leaders will help in the process of continuous skills development.

For HR - the best thing is to provide our replacement before leaving. I think we can very well do it through our network. I have done it in my previous organization - given my replacement, and there was a 7-day overlap in my relieving and the new person's joining. (Make a cartel!!! - the replacement of our successor should be our friend only!!! Inform us of your plans of moving, and we will help you!!)

In short - a realistic competence model, proper succession plan, and continuous development are keys.

What do you think? Please comment.

Thanks,

Avinash Desai

Hi,

In case someone wants to pay up for the shortfall in the notice period, how would you calculate that amount? Is there a hard and fast rule?

Hi,

I am working for an IT firm. I am an entry-level engineer with a 3-month notice period. However, when I resigned, HR is not willing to release me before the notice period even if I offer to pay for the shortened period. Is there any recourse I can take in this situation?

Regards, Raghavendra

Can anyone kindly advise whether the repayment of the notice period is on the gross salary or on the basic salary? Is there a law where the terms are mentioned clearly? I need to know this very soon. Can anyone advise me?

Regards

Dear Sunny,

It is usually kept at basic pay. If you are looking for a statutory angle, you can check the Industrial Dispute Act. However, do remember that for the Management Cadre, it should be as per the contract of employment, which has legal validity.

Regards,
SC

Hi Everybody,

I have a doubt about Swastik's example: If the notice period is 3 months and a person wants to leave after 2 months (meaning the person is not going to work for 1 month within the mentioned 3-month notice period), then that person needs to pay back the company an amount equivalent to his 2 months' salary.

Is the person required to pay double for the days not worked, or is it an extra one month's salary? For example, for a 3-month notice period, if a person wants to leave the job after 1 month and buy out the remaining notice period for two months, does he/she have to pay 3 months' salary or 4 months' salary? Can anybody help with this?

Regards,
Deepa

Please let me know the exact meaning for the following notice period terms:
1. Notice Period

This contract of employment is terminate by either party giving one-month’s (30 days) notice during the training / probationary period. After confirmation or services, either party will have to give one month’s (30 days) notice for every year of completed service, or a part thereof exceeding 6 months, subject to a maximum of 3 months (90 days). For the purpose of calculating of notice period, the completed period spent in the service of the company including training / probationary period will be taken into account. The Company reserves the right to pay or recover salary in lieu of notice period. Further, the Company may at its
discretion relieve an employee from such date as it may deem fit even before the expiry of the notice period without compensation for the remaining period and is not bound to give any reason thereof

Nowadays in the IT industry, individuals serving in their notice period are receiving more than 2 or 3 offers and securing a salary increase in their Cost to Company (CTC) by presenting the other offers. Consequently, the CTC for a particular skill set is escalating. Ultimately, all other HR/Consultants are the losers after making efforts to extend the offer.

Regards,
Shiva

Hi all,

Would you entertain/process a candidate who is serving a notice period, has three offers, and is looking for another?

Regards,
Shiva

I have resigned giving 15 days notice. According to the appointment letter, one month notice is required. However, the company is normally not following this procedure. The company has been relieving employees against the notice period of 10 to 15 days. I have followed this procedure. But now the company is deducting the notice period of 15 days. When I resigned, they never asked me to give a notice period of one month, so how can they deduct my notice period amount.

Can anybody tell me whether the notice period salary comprises only basic + DA or the full salary (CTC) for the month?

Regards,
BN Sharma

Dear BN Sharma,

Please review your appointment letter for information regarding the notice period or wages in lieu thereof.

Regards,

R.N. Khola

(Labour Law & Legal Consultants)
09810405361

If any employee has completed 1.5 years of service without either receiving a confirmation letter in writing or it being mentioned in the appointment letter that after the completion of the six-month probation period, they will be deemed as a confirmed employee, will they have to serve the notice period of one month or what? Kindly clarify.

Sir, I worked in a company for 11 months and as per appointment order, both the parties have to give the three months notice. Due to their pressure & harassment I submitted my resignation as they requested and quit the company. Now they didn’t get any replacement. Now they are issuing legal notice for 3 months gross salary and legal fee also. Actually they only got resignation forcefully from my end and I didn’t demand any compensation also from their end because I got job through some reference in their company. Now the old company issuing legal notice and court summons. What is the way to get my actual compensation (salary, bonus, gratuity, ROS, Leave Encashment etc) from that company and whether I need to pay any notice pay since the resignation given on last day (as per paper I didn’t completed notice period, but orally both the parties agreed). Please suggest me how to get the claim.

Hi,

Thank you for your suggestion. In my case, the company received my resignation after torturing and harassing me. Now, they are demanding a 3-month notice period as stated in the appointment letter. Interestingly, the company did not have a Standing Order in place. I have refused to comply with the 3-month notice period, and as a result, the company has issued a court summons by filing a case in the labor court.

Please advise me on what steps to take and how to proceed. I do not have the financial means to challenge the company in court, and even my colleagues are hesitant to provide witness statements due to concerns about job security from the company's end.

Please suggest what I should do.

Hi,

What is the maximum notice period allowed to a company legally? Is a 4-month notice period along with an additional 4 months' salary valid as per Indian law?

Regards,
Palak

I have resigned from my current job, and my notification period is 3 months. My future company is asking me to join in 1 month, and they have mentioned that they will pay the money for the notification period over the phone. I need to receive an email confirmation for this. Could anyone provide a sample letter for requesting this via email?

Hi,

Why don't you ask them to send it over mail via telephonic conversation? You'll come to know why they have not given it in writing.

Nonetheless, if you still want to communicate through mail, you can use the draft below:

Dear Sir,

Greetings!

This is with reference to my appointment in your esteemed organization as "HR - Executive." Thank you for giving me this opportunity to serve your organization. I assure you that I will prove myself and be an asset to the organization.

During the final round of the interview, it was discussed that I should join within 1 month instead of the 3 months, which is my actual notice period. However, as per my company policy, I am liable for notice pay in lieu of the notice period.

I request you to acknowledge this email as a confirmation of the telephonic affirmation that the notice pay shall be bought back by your esteemed organization.

Thank you.