This is the employment act stated in one of our country's gov. website.
A party may terminate the contract of service without waiting for the required notice period to expire by paying to the other party a sum equal to the amount of salary which would have been earned by the employee during the required period of notice.
I have an example to enquire & I need to know the calculation to be done.
Eg. Miss A has worked for more than 2 yrs in a co. and she has decided to resign without serving her 1 month's notice. She is required to work 5 days a week. Her gross salary is $1900 a month. In the month of June 2009 she has worked till 18th of the month & she submitted the resignation letter on 19th of the month.
a) Is her last day of work on the 18th of July?
b) How much does she needs to pay to the co.?
c) If she worked till the 18th, meaning she hasn't been paid her June's salary yet, can she use this amount to offset the compensation that she needs to pay to the co.?
d) If yes, how much more has she got to top up?
I think she has 4 days of leave but it's subject to whether the co. allows her to use it to offset her notice as it's written in her letter of appointment that "the decision to allow offsetting of accumulated annual leave against the termination notice period shall be made by the company."
Can i check how did u get the figure of $760?
ie the notice period till 18th July. corresponding to a months salary
If she has worked till 18th of June the remaining amount after adjusting the June months salary she might be required to make payment of $760 ( 1900/30*12 = 760).
But if she have any End of service benefit she can adjust this amount with notice period.
If she already worked till 18 days of June and she has given resignation on 19the June then she should work until 18th of July as per legal contracts.
If she does not want to work beyond this then employer can deduct the amount equivalent to her one months salary.
If she already worked till 18 ,then you can keep her whole salary and rest 12 days salary can be adjust by the following ways:
1)If she left some PL/Cl please adjust
2)If she can give the 12 days salary but it Basic+DA(allowances should not be recovered such as HRA,Conveyence,Food,Telephone,Laundary,Business promotion,Bonus,graturity of other types ingrediant of CTC).
You can only recovered 12 days salary which is equivalent of her 12 days Basic+DA only,otherwise it would be illigal becuase company provide allowance to the employee for their happiness or sack of the organisatiion.
I perceive,if she has worked till 18th of june and she is resigning on 19th June by serving the company with the notice period of one month (18th July) then she would ben entitled for the full and final documents.
If not, then she has to pay the salary of another 12 days to the company, but she will be eligible to adjust all the paid leaves.
As she has worked till 18th of June only, so her last Working day will be 18th whether she submitted resignation on 19th.
As she has to serve 1 month notice period, which she has not served, so you can ask for the complete recovery of 1 month. (Gross salary). However, if discussed, you can compensate salary of her working till 18th, and ask her to submit amount of remaining 12 days notice. Her balance paid leave can also be adjusted with the remaining notice period. But HR must ensure that all the dues of a resigned person are cleared.
Her encashed leave amount( if there), incentive(if any), etc amount will add to her F&F (Full and Final Settlement Cheque)that is given later after the resignation process of an employee.
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