Dinesh Divekar
Business Mentor, Consultant And Trainer
Manager Human Resource
Working For Hospital
+1 Other

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Hello Dear Seniors & Respective HR Practitioners.
I need your suggestions, I work one of the Pvt. Ltd. company as a Manager HR, and we have to terminate one of our senior employee due to loss of projects & time management issues. We have three months notice period for all senior employees and as per appointment letter company is bound to pay three months salary in case of Immediate termination.
Here we have first agreed to pay him 3 month;s salary on his last day, but now my supervisor has asking that if, terminated employee gets a new job within three months then he has to pay back company or in fact company dose't need to pay him salary for three months.
What companies do in such cases? what are the practices?
Please help

Dear Milind,

Why companies introduce clause of "Notice Period"? Companies introduce this transit period because it becomes easy for them to arrange replacement in the given time span. It gives them breathing space. When company wants to remove employee for the business reasons, same becomes applicable to the employee also. Notice period pay maintains continuity in his/her monthly cash flow for the next 2-3 months.

Once the employee works till his/her Last Working Day (LWD), what happens after that cannot become either party's business. Your senior's heartburn is that terminated employee could get notice period pay and also salary from his future employer if his future employment overlaps with the notice period. Your senior wanted recovery of the notice period pay for the overlap period!

Nevertheless, if you wanted terminated employee to pay the notice period pay provided if he gets employment within the period for which he was paid, then you should have made such provisions in the appointment letter. However, even this clause can stand scrutiny of Indian Contract Act, 1872 that remains to be seen. Appointment letter is a contract between employer and employee. This contract is valid for a period of employment. Various courts have struck down post-employment clauses inserted in the appointment letter for the variety of the reasons.

Final comments: - When enterprise passes through rough weather such quaint ideas occur. Nevertheless, your senior's leadership lies in getting new projects and not concentrating on cutting corners. Business is all about identifying the risks and mitigating them if not eliminating them. To certain extent loss of business is because of lack of strategic foresight. At this stage, he can identify which turnaround strategy is suitable rather than wasting his time in such ungenerous thoughts!


Dinesh Divekar

Let me add a few points to what Mr. Divekar said. I feel that a "Notice Period is required for Handover/Takeover of responsibilities in an amicable atmosphere. It also allows and benefit both the Employer & Employee for a future re-bond. Breaking this amicability is not a "Good Corporate Governance" and should be avoided at all cost. It sure would uphold the hard-earned "Goodwill" of the Corporare.

When we are mentioning in the appointment that if employee resigns from the services of the organization he has to give notice or pay and vise versa if company is telling him to resign or terminate then company has to pay him notice period. As per the contract signed.
Generally in this case current employer should not bother about the employees future job, he has to follow whatever has been mentioned in Appointment letter, which clearly states that if "employer is terminating the service of employee from immediate effect then employee will be getting the salary as per his official notice period" Sometimes if the case is that employee's services has been terminated because of bad behavior or some illegal issues etc. then company is not liable to pay( conditioned "it should be mentioned in offer letter") . Now this is no where applicable that employer can get the NP salary back if employee will get an early job. because once the employee is out of the organisation then employment law will not come into subject. Rather than focusing on this unnecessary issue your boss should have shown concern to get new quality resource and make the effective recruitment strategy(that can give good fruits in future)
Garima Sengar

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