Hi Everyone,
I am working for a indian IT company. But currently I am in US with my spouse on Leave without pay. Due to some personal reasons I had to resign my job, so I submitted my resignation and my supervisor approved the same. Because I am not in a position to leave US i.e. going back to INDIA to serve the notice period of 3 months, I opted to buy out my notice period. To make a buy out my employer is asking me to pay 3 months gross salary which is coming around 2.5 lakhs which is very high amount. It includes Basic pay (~35000)+HRA(17350)+ Special Allowance(26000)/month.
My employer is not having policies clearly defined. No policy document is clearly saying about the buying out notice period. Also when my employer's HR team prepared FnF Statement, they did numerous mistakes on calculating amount and I had to highlight to correct the same. If I ask why do I need to pay 3 months gross pay, they are asking me to refer the following point from my offer letter. And no where it is specified as Gross salary. As per industry standard most of the companies asking to pay the basic salary to buy out the notice period.
In my offer letter point under Notice period says as follows.
""Notice Period: On confirmation your appointment with the Company will be subject to termination with 3 months notice or payment in lieu thereof. Should you desire to resign from the Company you shall provide the Company with a prior written notice of similar period of such resignation or payment in lieu thereof. However, in case any disciplinary proceedings are either contemplated or pending against you, the Company shall have the right not to accept your resignation. If you desire to resign from your services hereunder, you shall, not withstanding the provision with respect to payment in lieu of the notice as provided hereunder, make yourself available during all office hours, for such period from the date of tendering your resignation, as may be required by the company as its discretion order to ensure smooth transition.""
Please note that it says "payment in lieu thereof". Just payment. What does it really mean? No point says that payment is Gross. Just a payment.
Please advice how I can take it forward. I am able to pay money for buying out my notice period. But not the gross salary, because for the past 4 months I am on Leave without pay.
Expecting your responses.
Thanks,
Victor.
From United States, Denver
I am working for a indian IT company. But currently I am in US with my spouse on Leave without pay. Due to some personal reasons I had to resign my job, so I submitted my resignation and my supervisor approved the same. Because I am not in a position to leave US i.e. going back to INDIA to serve the notice period of 3 months, I opted to buy out my notice period. To make a buy out my employer is asking me to pay 3 months gross salary which is coming around 2.5 lakhs which is very high amount. It includes Basic pay (~35000)+HRA(17350)+ Special Allowance(26000)/month.
My employer is not having policies clearly defined. No policy document is clearly saying about the buying out notice period. Also when my employer's HR team prepared FnF Statement, they did numerous mistakes on calculating amount and I had to highlight to correct the same. If I ask why do I need to pay 3 months gross pay, they are asking me to refer the following point from my offer letter. And no where it is specified as Gross salary. As per industry standard most of the companies asking to pay the basic salary to buy out the notice period.
In my offer letter point under Notice period says as follows.
""Notice Period: On confirmation your appointment with the Company will be subject to termination with 3 months notice or payment in lieu thereof. Should you desire to resign from the Company you shall provide the Company with a prior written notice of similar period of such resignation or payment in lieu thereof. However, in case any disciplinary proceedings are either contemplated or pending against you, the Company shall have the right not to accept your resignation. If you desire to resign from your services hereunder, you shall, not withstanding the provision with respect to payment in lieu of the notice as provided hereunder, make yourself available during all office hours, for such period from the date of tendering your resignation, as may be required by the company as its discretion order to ensure smooth transition.""
Please note that it says "payment in lieu thereof". Just payment. What does it really mean? No point says that payment is Gross. Just a payment.
Please advice how I can take it forward. I am able to pay money for buying out my notice period. But not the gross salary, because for the past 4 months I am on Leave without pay.
Expecting your responses.
Thanks,
Victor.
From United States, Denver
Normally notice pay or the payment of salary in lieu of notice shall mean to include only Basic Salary and DA, if applicable. This shall be same if the employer wants to terminate the service of an employee. Since you do not fall under the definition of workman/ employee under labour laws pertaining to such kind of disputes (simply Industrial Disputes Act) a cross reference is not possible. In such circumstances it would be appreciable to refer to the certified Standing Orders of the company. In the absence of these, it shall be understood as Basic Salary only.
To support your stand you can say that if you had been eligible for gratuity, it should be basic salary only that could have been taken into account for calculating your gratuity. Similarly, if, on your leaving, you had encashed the balance of leave, it should have been done on your basic salary and not on gross salary. In the similar way, notice pay shall only mean basic salary for the required months (in your case three months)
Regards,
Madhu.T.K
From India, Kannur
4193To support your stand you can say that if you had been eligible for gratuity, it should be basic salary only that could have been taken into account for calculating your gratuity. Similarly, if, on your leaving, you had encashed the balance of leave, it should have been done on your basic salary and not on gross salary. In the similar way, notice pay shall only mean basic salary for the required months (in your case three months)
Regards,
Madhu.T.K
From India, Kannur
Dear Madhu,
I need your opinion. The employerment offer letter contains the clause " In case of resignation by employee or termination of employment by employer, three months notice or pay in lieu of notice has to be given".
Now the question is one employee has submitted his resignation by giving three months notice. The employer is willing to relieve him immediately. In this case, whether the employee is entilted for notice pay ?
My view is that employer insisted three months notice from employee. Now he is willing to waive it and does not want to insist on that.
If the employer calls the employee on a afternoon and tells him that his services are no more required, then the employee is entitled to get the notice pay.
I have seen some threads about "selling out or buying of notice period" Hence this request.
KCS Kutty
From India, Madras
I need your opinion. The employerment offer letter contains the clause " In case of resignation by employee or termination of employment by employer, three months notice or pay in lieu of notice has to be given".
Now the question is one employee has submitted his resignation by giving three months notice. The employer is willing to relieve him immediately. In this case, whether the employee is entilted for notice pay ?
My view is that employer insisted three months notice from employee. Now he is willing to waive it and does not want to insist on that.
If the employer calls the employee on a afternoon and tells him that his services are no more required, then the employee is entitled to get the notice pay.
I have seen some threads about "selling out or buying of notice period" Hence this request.
KCS Kutty
From India, Madras
dear mr kutty
in my opinion in this situation employer has to pay in lieu of notice.as per condition of appointment individual has planned his future course of action and accordingly given 3 month notice,if employer relieve him immdly than he has to pay in lieu of notice.
regards
js malik
From India, Delhi
in my opinion in this situation employer has to pay in lieu of notice.as per condition of appointment individual has planned his future course of action and accordingly given 3 month notice,if employer relieve him immdly than he has to pay in lieu of notice.
regards
js malik
From India, Delhi
Dear Malik,
I have a different opinion on it. When the termination of contract of employment has come from the employee in the form of resignation, it is upto the employer when to relieve him. As such, if he is willing to relieve the employee with immediate effect, then why should the employer pay notice pay to the employee ? It will be done on mutual agreement. If we take it in another view that if the employer serves three months' notice of termination of employment and the employee wants to leave with immediate effect, will the employer demands notice pay from the employee?
My understanding about notice period is that it is the maximum period which is required by the employer to get a substitute employee in the place of the employee who is leaving. If the employer finds an alternative, he can relieve the employee even without waiting for three months. Similarly, notice period from the employer's side is the maximum period that the employer gives to an employee to find out an alternative employment. If the employee under notice period gets an alternative employment, he is free to leave during such notice period without paying the employer any notice pay. Under both these circumstances, since the decision to leave or terminate, as the case may be, has already been taken, there seems to be nothing wrong in relieving at an early date.
Regards,
Madhu.T.K
From India, Kannur
I have a different opinion on it. When the termination of contract of employment has come from the employee in the form of resignation, it is upto the employer when to relieve him. As such, if he is willing to relieve the employee with immediate effect, then why should the employer pay notice pay to the employee ? It will be done on mutual agreement. If we take it in another view that if the employer serves three months' notice of termination of employment and the employee wants to leave with immediate effect, will the employer demands notice pay from the employee?
My understanding about notice period is that it is the maximum period which is required by the employer to get a substitute employee in the place of the employee who is leaving. If the employer finds an alternative, he can relieve the employee even without waiting for three months. Similarly, notice period from the employer's side is the maximum period that the employer gives to an employee to find out an alternative employment. If the employee under notice period gets an alternative employment, he is free to leave during such notice period without paying the employer any notice pay. Under both these circumstances, since the decision to leave or terminate, as the case may be, has already been taken, there seems to be nothing wrong in relieving at an early date.
Regards,
Madhu.T.K
From India, Kannur
Dear Malik Saheb and Madhu,
Thanks to both of you for the prompt reply.
I raised this issue since I have seen many posts on this issue.
No employer would like to relieve his employee, if he is a performing asset to the organisation, even in the days of adversity.
KCS Kutty
From India, Madras
Thanks to both of you for the prompt reply.
I raised this issue since I have seen many posts on this issue.
No employer would like to relieve his employee, if he is a performing asset to the organisation, even in the days of adversity.
KCS Kutty
From India, Madras
Dear All, My question from all of you is their any agreement or any format of Salary buy out. If you have could you plz share it with me. Thanks & regards Hemlata Sharma Asst. Manager HR
From India, Chandigarh
From India, Chandigarh
Dear Hemalata,
In my humble opinion, there is no prescribed format or any specific agreement formulated under the law for buying out salary. However, it depends on case to case based on the clause mentioned in the offer letter issued to the potential candidate.
When a employer makes offer of employment to his potential candidate to join the services as early as possible which may result in paying of salary in lieu of notice period to the present employer by the potential candidate, the clause may be as follows:
" The Company would reimburse any shortfall in the notice period extended to your present employer, should it result in payment of salary (mention whether Basic or Gross salary) in lieu of notice upon producing the receipt or any documentary proof of having paid the said amount"
However, simultaneously you may also include one more clause of re-payment of the reimbursed amount by the candidate, in case, if he leaves the Company within a stipulated time. Failing which it may result in loss to Company if the employee leaves within short span.
The clause may be as follows:
" Whereas, should you leave the services of the Company within THREE Years (Just indicative you may change according to your requirement)from the date of your joining, you shall be required to re-pay the amount so reimbursed in the following manner
a) first year of your joining = 100% of the amount reimbursed
b) second year of your joining = 75% of the amount reimbursed
c) third year of your joining = 50% of the amount reimbursed
d) thereafter = Nil."
Kindly note: There is no need to have a separate letter drafted for this purpose, you may include the same in the Offer letter issued to the candidate.
Hope this meets your requirement.
Regards,
Sharath.M.Kumar
12.11.2010
From India, Bangalore
In my humble opinion, there is no prescribed format or any specific agreement formulated under the law for buying out salary. However, it depends on case to case based on the clause mentioned in the offer letter issued to the potential candidate.
When a employer makes offer of employment to his potential candidate to join the services as early as possible which may result in paying of salary in lieu of notice period to the present employer by the potential candidate, the clause may be as follows:
" The Company would reimburse any shortfall in the notice period extended to your present employer, should it result in payment of salary (mention whether Basic or Gross salary) in lieu of notice upon producing the receipt or any documentary proof of having paid the said amount"
However, simultaneously you may also include one more clause of re-payment of the reimbursed amount by the candidate, in case, if he leaves the Company within a stipulated time. Failing which it may result in loss to Company if the employee leaves within short span.
The clause may be as follows:
" Whereas, should you leave the services of the Company within THREE Years (Just indicative you may change according to your requirement)from the date of your joining, you shall be required to re-pay the amount so reimbursed in the following manner
a) first year of your joining = 100% of the amount reimbursed
b) second year of your joining = 75% of the amount reimbursed
c) third year of your joining = 50% of the amount reimbursed
d) thereafter = Nil."
Kindly note: There is no need to have a separate letter drafted for this purpose, you may include the same in the Offer letter issued to the candidate.
Hope this meets your requirement.
Regards,
Sharath.M.Kumar
12.11.2010
From India, Bangalore
Very recently I came across to refer to some of the Supreme Court verdicts which tells that an employee has the right to withdraw his resignation before it becomes effective. Hence I have developed a variant opinion about what I have already expressed.
In Union of India & Others vs Gopal Chandra Misra & Others it was held that the general principle is that in the absence of a legal, contractual or constitutional bar, a 'prospective' resignation can be withdrawn at any time before it becomes effective.
In Balram Gupta Vs Union of India & Anr. the principle laid down in Gopal Chandra Misra case was summarised as follows:- "A complete and effective act of resigning office is one which severs the link of the resignor with his office and terminates his tenure."
In Nand Keshwar Prasad Vs Indian Farmers Fertilizers Cooperative Ltd. & Ors., the Court reiterated that it is open to the employee concerned to withdraw letter of resignation before the date indicated in the notice of voluntary retirement. It was also observed therein:
"it appears to us that the law is well settled by this Court in a number of decisions that unless controlled by condition of service or the statutory provisions, the retirement mentioned in the letter of resignation must take effect from the date mentioned therein and such date cannot be advanced by accepting the resignation from an earlier date when the employee concerned did not intend to retire from such earlier date."
In Power Finance Corporation Ltd. Vs Pramod Kumar Bhatia the Apex Court went a step further and observed that "It is now settled legal position that unless the employee is relieved of the duty, after acceptance of the offer of voluntary retirement or resignation, jural relationship of the employee and the employer does not come to an end."
Shambhu Murari Sinha versus Project & Development India & Another is yet another case which supports the above views.
As such it is to be understood that once an employee has submitted resignation his relieving date can not be ADVANCED because it is opened to him to take back the resignation before the effective date of his relieving. As such, if an employer wants to relieve him at an earlier date then he should be given notice pay treating it as termination of employment by the employer.
I shall be glad if Mr. Mallik, Mr. Kutty and others also put their thoughts in it.
Regards,
Madhu.T.K
From India, Kannur
In Union of India & Others vs Gopal Chandra Misra & Others it was held that the general principle is that in the absence of a legal, contractual or constitutional bar, a 'prospective' resignation can be withdrawn at any time before it becomes effective.
In Balram Gupta Vs Union of India & Anr. the principle laid down in Gopal Chandra Misra case was summarised as follows:- "A complete and effective act of resigning office is one which severs the link of the resignor with his office and terminates his tenure."
In Nand Keshwar Prasad Vs Indian Farmers Fertilizers Cooperative Ltd. & Ors., the Court reiterated that it is open to the employee concerned to withdraw letter of resignation before the date indicated in the notice of voluntary retirement. It was also observed therein:
"it appears to us that the law is well settled by this Court in a number of decisions that unless controlled by condition of service or the statutory provisions, the retirement mentioned in the letter of resignation must take effect from the date mentioned therein and such date cannot be advanced by accepting the resignation from an earlier date when the employee concerned did not intend to retire from such earlier date."
In Power Finance Corporation Ltd. Vs Pramod Kumar Bhatia the Apex Court went a step further and observed that "It is now settled legal position that unless the employee is relieved of the duty, after acceptance of the offer of voluntary retirement or resignation, jural relationship of the employee and the employer does not come to an end."
Shambhu Murari Sinha versus Project & Development India & Another is yet another case which supports the above views.
As such it is to be understood that once an employee has submitted resignation his relieving date can not be ADVANCED because it is opened to him to take back the resignation before the effective date of his relieving. As such, if an employer wants to relieve him at an earlier date then he should be given notice pay treating it as termination of employment by the employer.
I shall be glad if Mr. Mallik, Mr. Kutty and others also put their thoughts in it.
Regards,
Madhu.T.K
From India, Kannur
Dear Mr.Madhu,
After reading your both the views, there is a strong point for all of us to understand that in case of resignation or voluntary retirement from the services, employee has to serve notice period. The point here to be noted is that, whether the employee has requested for an early relieving from the services. If yes, then the employer is at the liberty to or has a discretion to relieve him on much earlier date than the actual. If not, as cited by you in couple of judgements given by the APEX Court, employer cannot advance the date of relieving unless for want of two reasons viz.,
A. Employer has to pay to the employee for the difference in the notice period resulting from an early relieving.
B. In case of any public sector employment (in some cases Private sector), as stated, the employee has every opportunity to withdraw his resignation before the effective date of relieving.
I am stressing on this issue, because, i am facing a similar situation. I was employed as Manager - HR/IR in Syndicate Bank. My notice period is three months in case if i put my papers. I had resigned on 20th Sept'2010 and served three months notice to the employer which falls due on 18th Dec'10 and not asked for early relieving. But forcibly without giving sufficient reason and notice, i have been relieved on 08th Nov'2010 abruptly without paying for the difference in notice period.
The point here to be noted is that, i have neither asked for early relieving nor my offer letter contains clause that upon serving such notice period, Bank can relieve me at an earlier date without any compensation.
There are once again two points which i consider as point of argument and to put forth my contention.
1. The clause of notice period cannot be one sided that if the employee wants to leave the services, he has to serve three months notice and the employer may relieve him at any time without compensation. It is Oppressive in nature.
2. The employee is also loosing monetarily as he is deprived of his earning for such period as he would be unemployed and cannot join his prospective employer if there is no mutual agreement.
I would be contesting my case on the above two grounds. What is you opinion.
Regards,
Sharath.M.Kumar
From India, Bangalore
After reading your both the views, there is a strong point for all of us to understand that in case of resignation or voluntary retirement from the services, employee has to serve notice period. The point here to be noted is that, whether the employee has requested for an early relieving from the services. If yes, then the employer is at the liberty to or has a discretion to relieve him on much earlier date than the actual. If not, as cited by you in couple of judgements given by the APEX Court, employer cannot advance the date of relieving unless for want of two reasons viz.,
A. Employer has to pay to the employee for the difference in the notice period resulting from an early relieving.
B. In case of any public sector employment (in some cases Private sector), as stated, the employee has every opportunity to withdraw his resignation before the effective date of relieving.
I am stressing on this issue, because, i am facing a similar situation. I was employed as Manager - HR/IR in Syndicate Bank. My notice period is three months in case if i put my papers. I had resigned on 20th Sept'2010 and served three months notice to the employer which falls due on 18th Dec'10 and not asked for early relieving. But forcibly without giving sufficient reason and notice, i have been relieved on 08th Nov'2010 abruptly without paying for the difference in notice period.
The point here to be noted is that, i have neither asked for early relieving nor my offer letter contains clause that upon serving such notice period, Bank can relieve me at an earlier date without any compensation.
There are once again two points which i consider as point of argument and to put forth my contention.
1. The clause of notice period cannot be one sided that if the employee wants to leave the services, he has to serve three months notice and the employer may relieve him at any time without compensation. It is Oppressive in nature.
2. The employee is also loosing monetarily as he is deprived of his earning for such period as he would be unemployed and cannot join his prospective employer if there is no mutual agreement.
I would be contesting my case on the above two grounds. What is you opinion.
Regards,
Sharath.M.Kumar
From India, Bangalore
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