The incorporation of notice clause for unilateral termination of employment by either party or Notice Covenant in the contract of employment is mainly for the purpose of gaining sufficient time for finding a suitable replacement by the employer so as to ensure the continuity of job performance and for finding a suitable alternative job by the employee to ensure his continuity of employment elsewhere respectively.
To my knowledge, Courts do not ordinarily enforce performance of contracts of a personal nature such as a contract of employment.
Therefore, such a clause is contractual by nature except in situations of discharge simpliciter, retrenchment by the employer. In such a situation of breach of contract by the employer, the employee can sue the employer for damages which is not normally limited to salary for the notice period alone. At the same time, in case of breach of contract by the employee by means of resignation or otherwise without serving the notice period stipulated, the employer can not have a decree from the Court asking specific performance of the covenant to the effect of compelling the employee to work for the entire notice period. On the other hand, the employer can claim liquidated damages only to the extent of notice period salary alone. In S.S.Shetty v. Bharat Nidhi LTD., ( AIR 2001 SC 3988 ), the hon'ble Supreme Court of India categorically held that in case of illegal termination of the contract of employment by the employee, at best reasonable damages can be granted and once there is a clause for termination of the contract by one month's notice, it can only be one month's salary which can be treated as reasonable damages.
Such a legal position would imply that the notice period fixed in the contract should be reasonable and have equal application to both the employer and the employee. What could be a reasonable period of notice depends upon so many factors like the job-position, length of service rendered by the employee in the organization, reason for exit etc. The practice followed in countries like the U.S.A, the U.K, Germany, Poland etc., comprises of notice period ranging from 15 days to 12 weeks i.e roughly at the rate of one week per year of service subject to a maximum of 12 weeks.
Your ultimate query is how to make the employees realize the necessity/importance of serving the entire notice period on their early exit. Here, I would like to emphasize that prior to the employees' realization of the need for serving the entire notice period before their exit, the employer should also contextually realize its importance. When there is a buy-out option, the employer should be magnanimous enough to permit the employee to exercise it without detriment to the work of the establishment. What I understand on the contrary is that many employers treat such an option mechanically and insist on serving the entire notice period on the excuse of exigencies of work and make the process of exit a nightmare by employing all pressure tactics. Even when some employees opt to buy-out on genuine health grounds, it is ruthlessly turned down by some employers. If the employer can simply terminate the contract by paying notice salary in lieu of notice, why not the employee? If at all the employer is able to understand the causes for and the effects of career stagnation and take positive remedial measures employee turn over would be very less and the exit of employees would not be an issue. Therefore, when an employee quits in pursuit of a better career which his employer can not provide, a progressive employer would make his exit peaceful with his blessings. After all, the world is round and they can meet again with a better employment relationship. I do not say that the reasons for exit shown by all the employees are always genuine or their failure to comply with such exit formalities has to be taken lightly. On the other hand, though nobody is indispensable, if the organization has got more people-orientation, such non-compliance would be averted to a larger extent.
21st July 2019 From India, Salem