Notice Period Waived: Should Employers Still Pay If They Release Employees Early?

Team, I would like to discuss a small situation in one of the organizations I worked and would really like to have your views on the employee and employer course of action.

As per the Employment Contract/Appointment letter in this xyz company, either party has to give 3 months' notice while terminating/ending the contract or salary in lieu of the period not served.

Situation: Employee resigns and he is ready to serve the 3 months notice as per the contract and as per the resignation letter. The organization decides to accept his resignation and waive off the balance notice period. While relieving him from services with immediate effect, is it still mandatory for the organization/employer to pay him for the notice period? As the employee was ready to serve the notice but the organization didn't allow him to do so!

Which clause should we refer to for the same as per the Indian Contract Act?

Please suggest.

Regards

The employee has submitted a resignation. Then, why should the company pay him notice pay? It is for the employee to pay it, and as an understanding, or perhaps the employer has a substitute employee, the employer relieved him. While relieving, the employer is not bound to pay any notice pay. Had it been like the employer terminating the service of the employee with immediate effect, then the employer should pay 3 months' notice pay.

Regards,
Madhu.T.K

As per the contract, the employee has to give 3 months' notice before resigning. The employer is free to relieve him immediately without adhering to the notice period. The employee is not eligible for any notice pay from the employer.

If the employer wanted to terminate the services of the employee, the employer has to give three months' notice or notice pay. Normally, notice pay is given, and the employee is relieved immediately by the employer.

If the employer agrees to release the employee earlier than the stipulated notice period, the employee will be paid only until the date of relieving, not up to the end of the notice period. Please check the conditions of the appointment letter.

Dear,

The employer doesn't need to pay for the notice period as the onus of separation doesn't fall on him. Since the separation was initiated by the employee, the employer has every right to release him with immediate effect without giving any notice period pay. There is absolutely no second thought about it.

Regards

Re: Notice Period Payout

In my humble opinion, the situation is slightly different.

1. The employee, in all fairness, gave 3 months' notice after convincing his prospective employers that he needs to give 3 months' notice to his current employer, and accordingly, they would have given him a joining time.

2. Please do not expect him to go back to the prospective employer and say he wishes to join from tomorrow, for which they may not be amenable. Imagine the loss of face he would encounter with the new management, and for all we know, they may not want him before 3 months.

2a. He may be planning to go abroad after 3 months, so why should he lose out on his remuneration?

3. If the employee concerned has specifically mentioned in his letter of resignation that he wishes to be relieved after the expiry of his notice period, the employer is bound to pay him for the notice period. I think there are case laws to this effect (vaguely remember).

4. Ideally, it would be to check with the employee whether he is okay with early release and/or is he in any way at a loss for such an action of the Management.

5. Management cannot have the best of both worlds; thereafter, don't crib that employees do not serve notice periods. For the sake of equanimity, at least give a fair chance. One is dealing with human beings and treat them as one if we all want prospering industries. Fair play is the keyword.

S_rajaram

It seems to be genuine when the employee has given one month's notice, whereas the employer intends to relieve him before the notice period ends. He shall be compensated for his loss because an employee on the notice period has every right to withdraw his resignation before the due date. This was decided in Shambhu Murari Sinha Vs. Project & Development India Ltd, where it was held that "unless controlled by the conditions of service or statutory provisions, the retirement mentioned in the letter of resignation must take effect from the date mentioned therein. Such date cannot be advanced by accepting the resignation from an earlier date when the employee did not intend to retire from such an earlier date."

Therefore, it may be interpreted that if an employee submits his resignation and requests one month's time before being relieved, but the employer wants to advance the relieving date, it shall be done after paying the employee the notice pay from the employer's side. A text of the aforementioned case is attached for reference.

Regards,

Madhu.T.K

Subject: Notice Period Payout

Thank you very much, Mr. Madhu, for quoting all the relevant judgments of the Supreme Court, where it has been clearly laid out that:

a) The employee can withdraw the resignation prior to the notice period being over, unless the terms of service or statutory provisions clearly state otherwise.

b) The salary for the entire notice period is payable to the employee even in case the employer relieves him earlier.

Mr. Madhu, this has been very elucidating. I would also request you to kindly share your views on "CONTRACT SPECIFIED DIFFERENT NOTICE PERIOD FOR EMPLOYER AND EMPLOYEE" dated 29th October 2010.

Regards,
S. Rajaram

Under normal circumstances, the notice period should be the same for the employee and the employer.

Regards,

Madhu. T. K.