Navigating Notice Period Conflicts: Who Should Pay When Asked to Leave Early?

Respected Seniors,

As per the company's appointment letter, the notice period is 15 days for 6 months, 30 days for 1 year and above one year of service; it is 60 days, or else the first party has to pay for the balance days to the second party (both employer and employee).

Now, one of our employees was asked to submit resignation because his performance was not well. He has already completed more than one year here. As advised, he has also given resignation with two months' notice, but the management has asked him to leave within 30 days and informed him that no salary will be deducted for the balance 30 days, and he will be exempted from this.

However, the employee is now asking that if he has to leave within 30 days, then he needs to be paid the notice period amount from the company for the balance 30 days.

We tried to help him by giving exemption in deduction and also by not giving a termination letter, but due to his negative attitude, the higher management has now decided that he has to leave within 30 days, and we will also be deducting the salary for the balance 30 days. The employee is neither ready to leave nor ready to pay for the balance 30 days and, in reverse, is asking us to pay him for the balance 30 days.

Please suggest who is correct and what the next actions we have to take. The employee has given the resignation letter with 60 days' notice on 5th December 2009, meaning the 30 days will be completing on 5th January 2009.

Seniors, please suggest and help us to resolve this issue.

Thanks in advance.

Hi Ramdev,

When the employer is not interested in the employee and wants to relieve him within 30 days, he must make the payment for the next 30 days as per the terms of the appointment letter.

As you mentioned, if either party wishes to part ways, they must provide a 2-month notice from either side. In this situation, where the employer is not interested in the employee, he should adhere to the terms and conditions of the appointment letter. The employer should settle the account by making a payment of 2 months and relieve the employee immediately. There is no need to accept a 30-day notice from the employee.

Furthermore, why consider termination when the employer is not interested and has advised the employee to resign? The employee has complied with the employer's decision and resigned without contesting it.

There is no need to complicate matters. It is best to relieve the employee by providing 2 months' notice pay and moving on. Alternatively, since the employee has already given a 2-month notice period, allow him to work for the remaining period and make the necessary payment.

Mohan Rao
Manager HR

Dear Mr. Ramdev,

The company has to pay him two months' salary (his last two months) even if you ask him to leave one month early, according to me.

Siddharth

Hi Ramdev,

Greetings!

As per your appointment terms and conditions, I feel your organization should pay him another 30 days' salary. If the employer is not interested in the employee, there is no point in escalating the situation. In short, pay him 60 days' salary and release him. This action will definitely create a positive impact on other employees' minds.

Regards,
Ram
Email: ramkpoddar82@gmail.com

Hi Ramdev,

The employer will have to pay one month's salary to the employee as per the terms of the agreement. If you are paying one month's salary, please ask him to provide you with a letter requesting early release by giving the notice period pay. If you do not obtain a letter from him, this action would be considered as forced termination.

Regards

Dear All,

In my opinion, one has to satisfy two conditions - one in terms of appointment and secondly what has transpired between the management and the employee. Irrespective of the notice mentioned by an employee, if the appointment terms clearly state a one-month period, it is obligatory on the part of the company to reply, giving facts as they appear in the appointment regarding the notice period and accordingly accept. No employee can insist on an extension beyond one month in this particular case or otherwise, nor does he have the right to claim compensation for the balance period.

I hope this will clarify any doubts that exist.

Regards,
Bharat

Dear Rama,

If the appointment letter indicates that either party can terminate the contract with a 2 months' notice or salary in lieu of notice, then it is an obligation of the employee (wishing to resign) to serve a 2-month notice or pay the amount in lieu of notice to the employer. Similarly, the employer should pay the notice period if the employee is asked to resign from the company.

Regards,
Rajesh

The concept of a notice period is fair to both the employer and the employee. It gives an employer a grace period to take handover from the outgoing employee. In the case where the employee is unwilling to serve notice, it results in a loss for the company. In such instances, the company can choose to "waive or recover" notice period compensation from the employee by making a recovery from his F&F.

Similarly, a notice period provides an employee with a grace period to find an alternative arrangement in case the employer asks him to leave. Depending on the terms of the COE, if the employer does not allow the employee to serve the full notice period, the employee can claim notice period compensation (as it results in a loss of salary for him during that duration), and the employer is liable to pay.

Regarding termination, it poses bigger legal hassles for the employer than for the employee, especially in cases of non-performance since it is usually challenging to prove.

1. Were the performance issues of this person highlighted to him in writing?
2. Was he put on a PIP with a fixed timeframe for review?
3. Was he assigned a mentor during this period?
4. Was his performance reviewed after the fixed duration as per the PIP?

If the answer to any of the above questions is no, then it is not just insane (how will you prove non-performance without documented proof) but also unfair (as it shows that he wasn't given a chance to improve) to consider termination.

Hope this helps.

A good reply that discusses what should be done. A slight difference of opinion, which I hope you will accept. The legal hassle for an employee is more significant than for the organization. You know the employee would be without a job, already under stress, wondering about finances, and going through the hardships of court - that's a bit too much to take. Employers generally, in good faith, do not like to bring termination into the picture as it affects the employee's career elsewhere. They typically ask the employee to resign voluntarily. Wisdom suggests that when you are not wanted, you should leave because proving non-performance is not difficult for the employer, who can always issue a letter changing the employee's role citing organizational requirements. If the employee resigns, giving three months' notice, the employer can relieve them early by paying for the remaining period. If there are no performance issues and the employee resigns voluntarily, then they must pay the notice period amount if they wish to leave before completing the notice period. Once the employee resigns voluntarily, the employer can relieve them early without making any payment. This is typically how the clauses in appointment letters are structured.

The concept of the notice period is fair to both the employer and the employee. It provides the employer with a grace period to take over from the outgoing employee. In cases where the employee is unwilling to serve the notice, it results in a loss for the company, and in such instances, the company can "waive or recover" the notice period compensation from the employee through their Full and Final settlement.

Similarly, the notice period provides the employee with a grace period to secure an alternative arrangement in case the employer asks them to leave. Depending on the terms of the Contract of Employment (COE), if the employer does not allow the employee to serve the full notice period, the employee can claim notice period compensation (as it results in a loss of salary for the employee during that duration), and the employer is liable to pay.

Regarding termination, it leads to more significant legal hassles for the employer than for the employee, especially in cases of non-performance since it is usually challenging to prove.

1. Were the performance issues of this person highlighted to him in writing?
2. Was he put on a Performance Improvement Plan (PIP) with a fixed timeframe for review?
3. Was he assigned a mentor during this period?
4. Was his performance reviewed after the fixed duration as per the PIP?

If the answer to any of the above questions is no, then it is not only challenging (how will you prove non-performance without documented evidence) but also unfair (it indicates that the individual was not given a chance to improve) to consider termination.

Hope this helps.

Dear Friends,

In this discussion, two questions have come forth. One is on Notice pay and the other is on Show cause notice for absenteeism.

1. Employers should be very cautious when selecting an employee because it is painful for both the employee and the employer to face such circumstances. In an ideal situation, the employee should give their best to contribute to the growth of the organization, and at the same time, the organization should provide sufficient training and time for employees to adjust to new skills and job responsibilities. In the current situation, if the organization truly feels that the employee is a wrong fit for their culture or function, then the organization may ask the employee to leave, but it must exercise fairness and equity. The organization must uphold ethics before expecting the same from its employees. If an employee is asked to leave, they should be released immediately with two months' pay in lieu of the notice period. If the employee serves one month's notice, they should be paid one month's pay in lieu of the remaining notice period before being relieved on the 5th of January 2010.

2. Each organization has a set of rules and procedures in the form of an HR manual to govern such situations. As a general and rational approach, the employee must be given a fair chance to be heard under the principle of natural justice. An employee may be absent for genuine reasons beyond their control, such as sickness or urgent and unavoidable situations at home or with family. Therefore, it is advisable to send a notice for absenteeism with or without a show cause notice. If it is determined that the absenteeism was willful or without sufficient reason, lighter punishment may be imposed initially, with severity increasing for habitual offenders. In cases where someone is found to be uncorrectable, the last resort of termination from services may be exercised. However, I believe that any responsible employee in need will correct themselves after receiving proper counseling and mentoring.

Nirmal

Well, the employee will have to be given the compensation as per the regulations, i.e., the remaining 30 days of payment if you terminate him. Points to be considered:

1) Was he a confirmed employee? In case his appointment letter specifies that in case of termination or resignation he/she will have to give a month's notice, if it does say that, then you will have to pay him.

2) In case you are asking him to leave due to his negative attitude, you need to have documented proof of the same. The same goes for his performance.

3) In case of performance, did you inform him from time to time and have documented his appraisal on his performance? If not, then the employee might get the benefit of the doubt if he goes to the labor commissioner.

4) Suggested remedy: check what his deductions are as per the company's regulations and pay him off if you don't have any documentation.

Mail me if you need any more assistance at arvind.raikar@gmail.com. I have had to deal with such things in the past.

Hi all,

Thanks to all my respected seniors for their valuable suggestions. I have presented the same to my higher authorities, and they have finally agreed with these suggestions. It has been decided to let the employee serve his two-month notice period as stated by him in his resignation email.

Once again, thanks to all of you. This is the way where people like us get all the required suggestions and help from experts all over the country when we hardly need it.