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Dear All,
Looking forward for your advice on the following issue:
Our employment agreement has a notice period of one month from either side.
One of our employee submitted his resignation and was relieved before the expiry of the notice period as he had completed his project and no new work was allocated to him. He was willing to serve the full notice period but we did relieved him immediatly as there was no pending work from his end.
The employee is demanding notice pay in leiu of the remaining notice period as he was relived within 10 days.
Is the organisation liable to pay ???
After resignation is accepted , Can't the organisation relieve an employee in advance or late based on the nature of job & responsibilities ?
Thanx in advance.
Rekha

From India, Bangalore
dear Rekha
This organisation has to pay the notice period. Coz as per the appointment terms if wither party leaves before notice period , notice money has pay be the party breaching the clause. Please refer to your organisation's appointment terms.
In this case as organisation is releiving despite employee's interest to serve the notice period, organisation has to pay the notice period. The appointment terms were established by the organisation itself. If employee leaves without serving notice, organisations always asks the employee to pay notice period.
regards

From India, Chandigarh
Dear Rekha,
No, the Company is not liable to pay any notice pay. The one month notice period is applicable as follows:
1) If the Company terminates an employee then it must give either 1 months Notice or Payment in lieu of Notice.
2) If the employee resigns he must either gives one months notice or payment in lieu of notice.
In this case since the employee has resigned on his own, hence the Company can release him earlier than the Notice Period. The payment for short notice by the Company is applicable only in case of termination.
In the end, I would like to add that I hope he has resigned on his own and was not forced to resign by the Company??
Regards,
SC

From India, Thane
Dear Rekha,
I am not agreed with SC, Firstly, I want know the matter of his resignation in order to suggest something, what actually he wrote in his resignation. Presently as you told that employee is willing to complete the notice period period, in that case company traps in his own clauses. company has to pay the notice pay.
Faisal

From Pakistan, Karachi
Hi,
In case if the employee has tendered his resignation giving one months notice and the compnay has relieved him earlier then the company is liable to pay him the notice period salary. But if the employee has submitted his resignation without mentioning the notice period( i.e the employee has resigned with immediate effect) and the company has accepted the resignation as per the resignation letter date then the compnay can relieve the employee immediately without paying him the notice period compensation.
Either party has to state the period before resiging and terminating the service. It has to be mentioned in the resignation letter/termination letter the period from which the resgnation will come into effect.
S.K

From India, Jaipur
Rekhaa....there are only two ways to end the employment contract and thereby relation betwen employer and employee...Termination and Resignation. If someone resigns...he is expected to serve the notice and if someone is terminated then employer is expected to serve the notice. If they are not willing to serve the notice...they are expected to pay in lieu of notice period.
In employment....there is nothing called ....willingness to complete the notice period.
And some other member has specified...resignation is resignation....doesn't matter what is written in that.
So, company is not liable to pay...any amount towards the notice period. Because, it is a case of resignation and not termination.
Regards
Sanjeev Sharma

From India, Mumbai
Hi Friends,
Thanx for the responses.
Yes the resignation was own his own will. Its only that the employee did not have any task to complete, and wot will he do till the date of expiry of notice period ?
Why should the organisation pay for an idle employee for the sake of completion of notice period when has has tendered his resignation.
We all know"Idle Mind is Devil's Workshop" especially when he has put in his resignation.
From the responses i get a mixed opinion.
Can anybody tell me how does weigh in the eyes of law ?
Regards,
Rekha

From India, Bangalore
Rekhaa...
As we have discussed...the case of resignation...the onus is an employee to serve the complete notice period or pay in lieu of it and it is the discretion of company if they can relieve the person early.
In case of termination...it is the reverse.
So...even legally...the company is correct and is on safer side.
Regards
Sanjeev Sharma

From India, Mumbai
Dear Faisal,

It is not a question of agreeing or not agreeing but this is the stated position of law.

The whole concept is based on" If the Company asks you to leave they must give an official intimation one month prior to the date of severance of ties ."

The above was modified and the notice in lieu of pay was included to accomodate Closure and Restructing/Transfer of Undertaking. The notice pay was no doubt a good move as it served both the employer and the employee. The employer had the provision of cutting excess and inefficient and unwanted manpower with immediate effect, thus reducing the economic and time cost. It also helped the concerned employee as he received immediate money and was able to search for job elsewhere which would otherwise not have been possible due to him serving the notice period in Office. Staying in office after termination/retrenchment was embrassing and awkard for him and had a negative effect on the workforce.

The above was incorporated in our Labour Jusiprudence and was made a law under Industrial disputes Act,1947.This was a protection provided to our labour force which was poor with little or no financial security, with high incidence of exploitation. Since, the industry was in a nascent state the rate of labour turnover was also very low.

With the growth of industry, evolution of workforce, shifting from socialist economy to a global and open economy and emergence of large Private Players and Management Boom, the reverse of the above came into existence.

It would be worthy to mention here that there is no law in India( I dont know about Pakistan) which deals with Managerial Workforce and hence the letter of appointment is a contract.

In this light, we must treat it as any other contract. So, when an employee resigns voluntarily he is not entitled to notice pay from the Company. The Organisation is only liable when it terminates the Contract, but here the termination is brought about by the other party hence you cannot claim compensation if you terminate the Contract.

So, the onus of paying compensation lies with the party which terminates the Contract and not the other way round.

Regards,

SC

From India, Thane
Hi all,

I am from Malaysia. Seeing you all agreeing and disagreeing with each other, I'd like to share the practice and law here in Malaysia.

1. If an employee resigns out of his/her own will, he/she is required to serve out the notice period as stated in his/her appointment letter, otherwise payment in lieu of such notice period, to the company.

However, if the company would like to waive the notice period for whatever reason, the company is liable to pay the employee the notice period which he/she is supposed to serve. The reason is, were the company did not relieve the employee early, he/she would have served out the notice period as required.

2. If the company terminates an employee, the company is liable to serve the required notice period as stated in the employee's appointment letter, otherwise payment in lieu of such notice period, to the employee.

However, if an employee's contract of service is terminated on the ground of misconduct, no notice or payment in lieu of notice would be required to serve to the employee.

As mentioned by Rekha, "Idle Mind is Devil's Workshop", how true it is. But here in Malaysia, an employee has the right to lodge a complaint against the company if he/she was made redundant in his/her job, to ask for a compensation.

This is to protect the rights of the employees eventhough he/she resigns.

If a resigned employee is idling due to the completion of the project, it is the best practice to pay him/her the remaining notice period as a compensation, to relieve him/her earlier, rather than letting him coming into the office without anything to do for the day.

Remember, should the project/task not be completed, he/she would not have resigned in the first place or be idle during the notice period.

Anyhow, this is the practice in Malaysia if such case happened here. Just a sharing of thoughts. :)

Cheers,

Ashley

P/S: The laws and regulations regarding termination of contract of service could be found in Employment Act 1955 (Malaysia), Section 12 - Section 15.

From Malaysia, Kuala Lumpur

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