Notice Period Dilemma: How Much Should You Pay if You Skip Serving It?

Hi,

The appointment letter includes a clause regarding the notice period. Both parties are required to serve the notice period or provide payment if they wish to terminate their contract. For instance, if an employee's salary comprises a basic salary of 4000/-, HRA of 2000/-, conveyance allowance of 1000/-, and other allowances totaling 3000/-, making a total of 10,000/-. The notice period specified is one month. If the employee chooses to pay in lieu of serving the notice period, the question arises as to what amount they should pay. Should it be only the basic salary, the basic salary plus HRA, or the entire salary?

Thank you.

Dear,

There is no law as such. It is up to you to make policy on this. Basically, it is a give and take situation - if you remove someone, how much you will pay. At the same moment when someone leaves and wants to pay notice pay, you deduct accordingly.

Thank you,
J. S. Malik