Is It Fair for Companies to Enforce a 3-Month Notice Period While Employees Can't Pay in Lieu?

Dear all:

I solicit your input/validation on the clause regarding resignation vs. notice period.

The present terms of appointment state: "Your services are liable to be terminated by either party giving the other party three months' notice in writing. The Management, however, may dispense with your services by giving 3 months' salary (Basic + DA + VDA) in lieu of notice. During the said period of notice, no leave of any nature shall be allowed."

Is the clause legally valid? Because, as per this clause, the employee does not have the option to leave the services by giving 3 months' salary. They must necessarily work for 3 months, whereas the company can do so. My contention is that the exit option should be equal for both parties.

If an employee is leaving for better prospects and the prospective employer insists that the employee must join in a month's time or else lose the chance, can the company in which they are working still insist on the 3-month term and not allow them to adjust the short notice period against their accrued PL or payment? If the present company does not relieve them without serving 3 months, can the employee proceed legally against the company, stating that their better prospects are being stalled by the organization?

If you have similar cases, kindly share them. Please also clarify the above.

With thanks and regards,
K Venkat

Present terms of appointment state, "Your services are liable to be terminated by either party giving to the other party three months' notice in writing. The Management, however, may dispense with your services by giving 3 months' salary (Basic + DA + VDA) in lieu of notice. During the said period of notice, no leave of whatsoever nature shall be allowed."

These two are different statements. The first statement states that either party should give a 3-month notice. The second statement states that if you want to get relieved immediately, then you have to pay a 3-month notice period based on (Basic + DA + VDA). The third statement states that you cannot take any leave. Suppose you are putting in your papers on the 1st, and your last day is the 15th; then, in these 15 days, you can't take any kind of leave.

jyoti.k
jkhajurkar@yahoo.com

The clause shall not stand the scrutiny of law if challenged in court. It has to be equal for both sides.

AS

Hi Sabarivenkat,

Your contention is absolutely correct. The exit option should be equal; otherwise, it will fail under judicial scrutiny. Since the employer has already included the notice pay in lieu of the notice period, an employee should also be able to avail the option to pay in lieu of the notice period. Normally, the accrued PL/EL is also adjusted against the notice period since the calculation of notice pay and encashment of PL/EL are the same.

The condition on leave during the notice period can be assumed to be organization-specific, and the company might be justified in declining leave during the notice period.

Regards,
Gautam

Thank you very much everyone for shedding light on the sanctity of the resignation clause and validating my interpretation. If you could share some thoughts on another point I raised:

== quote ====

If an employee is leaving for better prospects and the prospective employer insists that the employee must join in a month's time or else lose the opportunity, can the current company still insist on the employee serving the 3-month notice period without allowing adjustment of the short notice period against accrued PL or payment?

If the current company does not release the employee without the full 3-month notice served, can the employee take legal action against the company, arguing that his better prospects are being hindered by the organization?

=== unquote ===

I would greatly appreciate your validation and comments, please.

Regards,
Venkat