Notice Period Salary: When Will You Get Paid During Your Final Month?

When will the salary be paid to an employee who is serving his notice period? For example, a person resigns on 15th August and is on a 30-day notice period. Now, when will he be paid the salary for the month of August, and when will the F&F be given to him? Please clarify.

Notice period is paid on the basic salary, calculated on a pro-rata basis. In this case, kindly clarify the date of resignation, the duration of the notice period, and how much notice has been given. Then we can decide on the salary for the month of August.

Swetank

Once the employee completed his notice period, his salary has to be paid along with F & F Settlement.

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Dear Vpriya,

The notice period for leaving the service depends on the organization. Generally, the notice period is one month from any given date of tendering his/her resignation and ends on completion of 30 days from the date of submission of resignation.

Most corporate sectors nowadays demand a three-month notice period for leaving the service voluntarily. This is to allow time to search for a new employee to fill the vacancy. This clause is stipulated in the appointment letter itself. In turn, the employer also must give a notice period or salary equal to the notice period if they desire to terminate the employee. The notice period must be of equal ratio as per the law. If the employer gives one month of notice period and requests the employee to give three months of notice period, it is illegal and stands as a null and void agreement between the parties.

The salary must be paid in full, i.e., Basic + D.A and other allowances as the employee was drawing as of the date of submitting the resignation, plus their full and final settlement amounts, i.e., Leave with wages for the balance leave, Gratuity if the employee completes five years or more of service in the organization, and Bonus at 8.33% up to the date of leaving the service during the year. If the employee wishes to quit immediately, they have to pay one month's notice period salary, which includes the total the employee was drawing as of the date of quitting the services.

As you said, if the employee submits his resignation with a one-month notice period in the middle of the month, he has to be paid his full-month salary for the month of August, as usual, along with other employees. The balance of 15 days' salary is to be paid along with his full and final payments.

Mohan Rao

Manager HR

Hi,

There are two possibilities in the scenario described above:

1. Serves full Notice Period
2. Serves Incomplete Notice

1. If the employee serves his/her full notice period, the salary can be released at the end of the month or it can also be given along with FNF, depending on the Company Policies.

2. If the employee serves an incomplete notice period, then the salary of the last month will be given in the FnF or may not be paid, depending on the terms of the Appointment letter or employee agreement.

Regards,
SF

Hi,

We follow the process of moving the resigned employees under stoppay category. Subsequently, on the final day of work, settlement forms will get processed, and the amount will be released. There is no strict guidance on this subject and may vary from company to company.

Regards,
Mohan

Dear Vpriya,

There is no single practice in the industry. In my opinion, it is better to disclose the salary of the employee and include it in the full and final settlement. This provides an opportunity for the employer to recover any outstanding dues upon the employee's exit.

It is always advisable to inform the employee in writing about this arrangement as soon as his/her resignation is accepted. Failure to do so may put the employee in a difficult situation, as he may not have sufficient funds to pay EMIs, which typically come due at the beginning of the month.

Regards,
Ashok

Hey Vpriya,

Resigned date = 15 Aug
Last working date = 14 Sep
Salary for Aug - Has to be paid in full
On 13/14 Sep - Employee's full and final settlement is paid.
Catch - If you are an employer, you need to be cautious. Staff may not come to work after 31 Aug (or whenever he gets his salary) if his F&F stake is not high.

30 days... is a notice period... within which you can terminate his service if not required. You don't have to wait till 30 days and deal with him. Just settle his case till his last working date, whichever you decide. But if he is a senior personnel, there is no option since handover will take time.

Few companies usually hold the entire salary for Aug until the last working day, and I don't agree with this practice, particularly if the subject is a good employee.

Regards, Ukmitra

Hi Vpriya,
Firstly, the notice clause has to be part of the agreement/appointment letter/explicitly stated in documents that govern employment conditions. Assuming that is there, I agree with Mitra, the first option is to relieve him at the earliest if not critical. Else it is 30 days (normally).
With regards to the F&F, it is best done on the last day itself, but the danger is that if any outstanding is due and not reported immediately, then you have nothing to fall back on in terms of recovery. Completing the F&F with the next salary cycle can be considered.
Regards,
Capt Tapas

Hi all, wonderful to see all the different perspectives. Thanks a ton.

I thought I would elaborate a bit more. Our company has a 30-day notice period for all confirmed employees. We usually pay the employee's salary in full even while on the notice period. However, in this case, the risk factor is high if the employee doesn't turn up to serve the full notice period after receiving the salary, particularly if we have to recover various loans, etc., from him. Hence, we are contemplating various options to cover the risk for us as an employer.

We have almost decided that we will release 50% of his salary while on the notice period and release the rest along with F&F on his last working day. We are working out the feasibility, so this way we also cover the risk to an extent, and the employee also doesn't have to wait for his salary for an unduly long period, considering his commitments.

Your thoughts on this are welcome.

1. When a Person is Working he has to be Paid for that.
2. I am sure when he has given the resignation he never runs away.
3. He intimates you well in advance that he is leaving the Job.
4. He still continues to Work & employee of the Organisation.
5. Why u want stop the payment for the person who is your employee, just because he has given the Resignation Notice.
6. Pay him the Salary for the whole of August
7. The balance 15 days payment along with other with dues can be paid as Full & Final Settlement
8. He is for his Career Prospects
9. Give Him a Smooth Transition
10. Put Ourselves in his Shoes…

Hi,

The moment someone gives notice, all payments come to a halt, and F & F settlement is done. So, Worked Till = August. Notice given = on 30th August for 1 month. F & F = On the last working day, notice pay + August salary to be given. It is easier to handle all resignations in this way. No need to be emotional, as per company policy you can mention to all, in the employee handbook, that the moment one puts in resignation, all payments will be stopped, and F & F settlement will be done on the last working day. This is just as per policy and not any other intention to trouble people. So one can manage his finance accordingly.

Thanks,
Geeta

Hi vpriya,

Once an employee tenders his/her resignation, all dues payable to him become part of the full and final settlement, including the pay for the notice period. The full and final settlement should be ready on the last working day before the office closes.

With regards,
R.K. Singh

Madam Priya,

Notice periods differ from company to company. It can be one month or three months depending on the terms and conditions of the employment. During the notice period, the employee should either be present and serve, or if the employee wishes to leave the service with immediate effect, the gross emoluments equivalent to the notice period should be deposited with the employer before the last date of employment.

The notice period salary should be paid either on the last date of employment or at the end of the month.

Regards,
Madhwa

Hi Priya,

Nowadays, all employees are well aware of the notice period. They submit their resignation letter after the closing day of the account for salary. They only submit the letter when you can't stop the salary from being credited to their account. Typically, we calculate from the 26th to the 25th of every month. This way, we can disburse the salary on or before the 1st.

Thank you.

Hi vpriya,

I think you have to pay his August salary on time and can settle any full and final dues in the next month's salary. Some subjects in the organization are very sensitive, and salary is one of them. So, I believe you should release his salary as early as possible. This maintains our organization's reputation in the market.

Regards,
Sandeep More

Yes, Sandeep, the organization's reputation is at stake. As I mentioned before, it's crucial to be fair to both the employees and the employer.
Whatever is said and done, there are instances where individuals abscond without serving their notice period. I'm sure you all have encountered such situations. Hence, we need to have contingencies for such risks while also treating employees with respect.

Hi Priya,

Notice pay can be paid within 45 (max) days also but through F&F Settlement. Since his contribution has to be settled in statutory payments, mainly PF. It depends; some companies make recovery and shortfall of the notice period. All these are calculated based on the basic component in the salary.

Regards,
Gopal

Hi dear,

Please find the attachment. If you have any doubts about this, please feel free to contact me.

Thanks,
Lawrence K
97890 63375

Thanks to all for providing clarity on the matter. If the notice period is 3 months and the employee is currently serving the notice period, please clarify if it is legal to withhold his payment for the 3-month notice period, as well as an additional 45 days for Full and Final settlement (totaling 4.5 months), despite the employee continuing to work during this period. All responses are greatly appreciated.

Holding someone's salary is not legal at all, even at a basic humanity level. In cases where more than 1 month should be paid as a notice period, continue to give the salary on time; don't hold it until the last date for F&F.

Hi All,

Please let me know if there is an F&F case in the month of August, which has 31 days. How many days should we consider for pro-rata basis calculation - 30 days or 31 days, and why?