echo82 Started The Discussion:
Hi all,

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?

Posted 17th June 2009 From Singapore, Singapore
Oh no, what i meant is that she has not been paid for her June’s salary yet as she’ll only be paid at month end only.:)
Posted 17th June 2009 From Singapore, Singapore
it means you owe her 18 days salary for the month of June that you will not pay to her + she will pay the company for rest of the days i.e $760 (if she does not have any paid leaves balance) otherwise she may also adjust her paid leaves towards her notice period. (if you have any such policy.)
Posted 17th June 2009 From India, Delhi
Thanks Riya,

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?

Posted 17th June 2009 From Singapore, Singapore
june is of 30 days no.. so i hv devided her monthly gross by 30 and multiply it with the remaining days i.e. 12 days.. (i guess i m rite) :)
Posted 17th June 2009 From India, Delhi
Yes her last day can be on 19th june if she pays the notice period to the company.
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.
Posted 17th June 2009 From India, Calicut
Dear ECHO,

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.

Best Regards
Sajid ansari-Delhi
Posted 17th June 2009 From India, Delhi
Mr. Sajid

Here i have one query... as the employee is supposed to pay one months pay but we have already paid her the salary for the last month where we have already paid her the allowances so she is not supposed to return those allowances to the company??
Posted 18th June 2009 From India, Delhi

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.
Posted 18th June 2009 From India, Delhi
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.
Posted 18th June 2009 From India, New Delhi
hi this is shimit here...
according to me her last day of working would be 19th of june cz she is submitting her resignation on 19th
She will have to 1900$ to the company and she cannot use her june month salary in that.....
this was all in think but if u hav sme thng u can reply me...!!!
Posted 18th June 2009 From India, Banga
Dear Sajid,
Pls clarify.
1). Why co. should recover only Basic + HR. why co. should not recovery gross salary. If co. recover gross salary than how is it illegal. do you have any case law regarding this.

2). Is is it necessary to adjust recovery with PL/CL.
Posted 18th June 2009 From India, Hyderabad
Dear Echo,

If She has resigned on 19th and has worked on the same day that means she will get 19 days salary with reimbursements for allowances. But as she has not served 1 month notice, she is required to pay 11 days gross salary. Else you should first go thru the Appointment letter issued to her regarding recovery in lieu of notice. If it states that an employee not serving notice period is required to pay 1 month's gross salary, then only 11 days gross salary is required to be paid by her.

But in that case allowances for 19 days/18 days whichever the case may be, are required to be paid to her by the Co.

You can make her Full & final Settlement and adjust the amount recoverable from the amount payable, the rest can be paid/recovered.

As far as Allowances/Reimbursements are concerned, these are privileges extended to the employee and are not part of her gross salary.

Amit Anand Gera
Amit Anand Gera

Posted 18th June 2009 From India, New Delhi
dear all, whether we take the gross pay or Basic pay for the notice pay as per labour law. regards, N.Ravikumar Chennai
Posted 18th June 2009 From India, Madras
In all the above discussions I find that the basic purpose of 'notice' is being defeated.It is meant for providing enough time for management to make alternate arrangements.It is not a case of recovering petty amount equivalent to one months salary.
These days people negotiate with the prospective management to pay the one months salary in lieu of notice & they agree to do so.Result being that the employees ditch the managements midway like in this case.
What I suggest is that the in-house rules should provide that the notice can never be adjusted against EL/PL due to an employee.Moreover encashment should also be available only while in service.
We have done it in many cases & it has withstood.
Rajeev Bhatt
Corporate Culture
Posted 18th June 2009

if any one completed 7 years of his services in the same company and due to some reason he is terminated from the service. I want to know co. is liable to pay gratuity? if yes/no then what basis?

Please help on this.


Posted 19th June 2009 From India, Mumbai
Yes he is very much liable to pay Grautity. As per Grautity Act the continous service of 5 years is required what ever be reason for leaving company whether it be termination, supernuation, pension execpt in case of fraud, misrepresentation, loss to the property of the employer etc.
Posted 19th June 2009 From ,
hi guys,
correct me if i am wrong.
i think this amout will go into employees F&F right. and if her payment comes $760 then and if she is not paying the NP then deduct this amount from her CTC or as per your co. policy and then amount which comes that she has to pay to the company.
Posted 19th June 2009 From India, Mumbai
As far as I know the full and final settlement is done taking into consideration the resigned employee's leave quota (i.e. any paid leave not taken) any kind of incentive etc. Hence this person's full and final settlement will not be obly 760$. It can be estimated after taking into account all other matters that the company has to pay her or she has to pay the company in any form.

Posted 19th June 2009 From India, Calcutta
Dear, Since allowances are paid for the current month and not in advance so it is more of reimbursement of the expenses incurred, so there is no question of return of the allowance. As regards the earlier query, I have a point to add, if the employee serves for another 12 days, i.e., June 30th, then she need not deposit any money. If she serves for part of the period, the recovery has to be proportionately reduced. KK Nair
Posted 20th June 2009


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