Can Employees Use Leave to Shorten Their Notice Period? Seeking Advice on Handling Resignations During a Critical Project

Hi seniors,

I am facing a difficult situation at present. We are a small software development firm in a transition phase from product-based to project-based. Recently, we have secured a prestigious foreign project and have assigned the best employees to it. The project's duration is 4 months. Prior to assigning the developers, we held face-to-face discussions with everyone, openly inquiring about their future plans with the company. We have a standard notice period of 3 months and made it clear that if they choose to resign, they must serve the full 3 months, especially for this specific project. This conversation took place just a month ago.

Today, two of these employees have submitted their resignations, requesting a release date of 5th September 2008, which is less than a month away.

Normally, we release employees as soon as possible, as we believe there is no value in convincing someone to stay if they have decided to leave. However, considering the current project commitments, we have asked them to honor the full notice period. They have 40 days of leave remaining, and in our company, all leave is considered privilege leave.

Is it acceptable for them to offset their notice period with the remaining leave days, even though we do not have a written policy about adjusting leave with the notice period? During the final settlement, we compensate for the basic salary of the remaining leave days. Please advise if we can require them to complete the entire notice period to meet the project deadline. Are there any laws that address this situation?

I am in need of suggestions promptly. Thank you in advance for your guidance.

Hi,

You can ask them to serve the entire notice period as per the terms of appointment. They cannot ask you to adjust the leaves. Please send a letter to them in reply to their resignations and ask them to complete the notice period. Please make it very clear that you will not relieve them or clear their dues unless they comply.

Umesh Sharma

Dear sunetrab10,

I have replied earlier on this issue. Let me clarify once again what the legally correct approach is.

First of all, let's see what provision is in the appointment letter for the notice period:

Is the clause regarding the notice period from either side or pay in lieu of the notice period clearly mentioned? This clause is generally incorporated in every appointment letter.

Therefore, I presume this clause is applicable in your case too. In this situation, the employee may request notice pay in lieu of the notice period, and management has to resolve it amicably, not authoritatively. The employee is free from the liability to serve the company by offering notice pay in lieu of the notice period, and the employer cannot force the employee beyond a reasonable and legitimate relieving period. In that case, the employee has the legal right to file a suit for his claim for damages or loss due to the delay in relieving occurred to an employee.

In India, we have typical tendencies to press employees for "might is right" by withholding dues to put pressure on the employee to continue, which has no legal validity and is not legally correct or does not have legal defense at the loss of opportunities to employees who have resigned for better opportunities.

You may request the employee, as a mutual agreement, to resolve the issue by building trust and confidence that he should continue for the period of your request because employees cannot be treated like bonded laborers.

Regards,

Sawant

Hi Sawant,

Let me clarify certain things. As I mentioned in my post, we believe in releasing employees as soon as possible. In many cases, despite having a notice period of 3 months, we have released them within a month without any salary deduction. So, there is no point in thinking that employees are treated as bonded laborers, at least not at our company. The question of notice period adjustment arose, as I had mentioned earlier, due to the criticality of the resource. Below is the rule we have in this regard:

"From the date of confirmation, being a permanent employee, you or the Company may terminate your service at any time by giving 90 days notice or basic salary in lieu thereof. However, due to exigencies of business, the Company may, at its sole discretion, reject the salary in lieu of notice and ask you to serve the entire or part of the notice period. You shall not be deemed to have been relieved of your services except upon the issue of a letter by the Company to that effect."

So, keeping that clause in mind, we can surely deny adjusting the salary in lieu of notice. The question then arises whether they can mention their release date as 5th September (giving the resignation on 18th August) or if they can adjust the remaining days with leaves in hand.

Thanks,

Sunetra

Hi there,

Thanks for your comments and exhibiting notice period clause. This entails me to view the whole issue in the context of labor laws.

I would like to advise in this case that it would be better if you sought legal opinion from experts.

As a true IR and HR working professional, in my 17 years of experience, I have learned many things, and one of them is that we often include many clauses in appointment letters/employment agreements without proper endorsement by the Labor Commissioner. We admit that knowingly adding many invalid clauses, as we are aware that union leaders may not be knowledgeable enough on certain issues. This is done to please our management and maintain pressure on labor forces or unions. However, when these clauses are challenged in court, they are often deemed vitiated due to unfair labor practices or a colorable exercise of power.

The issue with your 90-day notice period is questionable as no employee can realistically wait for 90 days. Employment practices do not allow a prospective employer to wait for such a long period to fill a vacancy. A 30-day notice period from the date of the interview is generally acceptable as a waiting period to join a new organization. Employees may lose opportunities if they are forced to adhere to a 90-day clause, making it unfair. This clause holds no legal validity in the eyes of the law. For your satisfaction, you may consider seeking legal opinion from labor law experts, especially those who practice at the high court level and are well-versed in judgment history and interpretations.

Regards,

Sawant

Thank you, Sawant, for your valuable suggestions. If you could provide me with references to some labor law experts, it would be greatly appreciated.

Thanks again,
Sunetra

Hi there,

Thank you all for this post.

My situation is the same as above. I am working on an international project for the organization. I also have a notice period of 90 days. I have been with this organization for the past year and have accrued 30 days of privilege leave. I would like to adjust this leave against my notice period. There is no specific clause in the employee handbook regarding the adjustment of privilege leave.

Please assist me. If they ask me to serve the full 90-day notice, can I request to use my privilege leave instead? If they deny my request, what actions can I take? I am willing to pay for the shortened notice period.

Thanks in advance.

Regards,
Manish

EL/PL can be adjusted for a shortfall in the notice period, and this practice is prevalent in many organizations.

Thank you for your reply.

In my appointment letter, the following is the clause:

"Leave: 30 days per year.

Encashment of unavailed leave will be at the discretion of the management.

Separation: Your services with the company can be terminated with a 90-day notice on either side. However, the company has the right to terminate your services at any time without giving any notice whatsoever, by paying you an amount equivalent to 90 days' salary in lieu of notice.

In case the company accepts your request to relieve you of your work services with the company at a shorter notice, then the company will be entitled to deduct from the final settlement amount, the remuneration attributable to the notice period waived by the company. The remuneration for this purpose shall be the basic salary, management allowance, and other allowances as mentioned in 1, 2, and 3 above."

I am worried that if I resign, HR may disallow my leave and ask me to serve the full 90-day notice period without adjusting my leave or encashing it.

Please assist me on how to proceed. Can they challenge me in court if I refuse to pay or serve my notice period?

What documents should I have during the full and final settlement?

If they insist on a 90-day notice period, can I refuse and pay for a shorter notice period? I am concerned about the legal implications.

Please reply and guide me as I am unsure about labor laws and HR policies/rights.

Thank you in advance.

Regards,
Manish

Thank you for your comment; it really adds to my knowledge. I have a small doubt regarding the calculation of the last date of an employee to be confirmed after utilizing his leaves. Will the employee still be on the company's payroll until the last date if we use his leaves to shorten the notice period?

For example, an employee has 10 days of leave due and wishes to be relieved on 31 Jan, but the notice period stipulates the last date as 10 Feb. If we utilize his leaves to reduce the notice period, what would be his last working day?

Regards,
Vinay