Navigating Resignation Notice: How to Handle Short Notice and Pay Calculations in HR?

Dear all,

I am working as Asst Manager HR in a Pharma Company. According to our appointment letter, if any employee desires to tender resignation, he has to give 3 months' notice or pay in lieu of the notice period.

Now, please clarify the following:

1. If, suppose, he has given one month's notice, does the company want to pay that one month's salary? Or can it be adjusted and ask him to pay two (3-1) months' salary as he has not given notice for 3 months (in fact, he gave only one month's notice)?

2. How can this pay in lieu of notice be calculated? In the above example, the person's gross is $15,000 per month and $7,000 per month basic. Will it be calculated on basic or gross?

Please suggest. This is very urgent.

Thanks,
Neelima

Dear Neelima,

If an employee has given only one month's notice, then two months' worth of salary should be deducted from their earnings, and you can adjust their one month's salary accordingly.

Now, the amount to be deducted is not specified in the law; it depends on your practice. If you remove someone, whether you pay in full or basic is a matter of give and take. If you pay in full, then deduct the full amount; if you pay on a basic scale, then deduct based on that.

Thank you,
J. S. Malik

Since the notice period is 3 months and the employee has given one month's notice only, the effective short period is 2 months. So, he needs to pay 2 months' gross salary, provided he has served the one-month notice period completely. It's calculated on gross salary and not on basic.

Dear Member,

All terminal benefits and compensation thereof are based only on basic wages, and there is no statutory provision to calculate on Gross wages. However, if you have specific terms and conditions and the same has acceptance from both sides, you have to calculate the notice pay according to your specific terms and conditions; otherwise, the normal rule will apply.

Regards,
Murugavel.B

Neelima,

In effect, the employee will need to pay for the shortfall in 2 months' notice. The same shall be calculated on the basis of Gross salary.

Hope this helps.
Suja