Can Employers Unilaterally Extend Notice Periods? Seeking Advice on Legal Implications

Dear All,

An appointment letter used to be a binding legal contract between an employer and an employee, specifying the main terms of the contract, including the notice period. I want to confirm: can a company unilaterally increase the notice period on its own by sending a circular to all its employees? If so, what is the significance of such a legal contract, known as an appointment letter, between the two parties?

The issue at hand is that my friend joined a company three years ago, and the appointment letter stipulated a 30-day notice period on either side or payment in lieu thereof. However, in April 2009, their HR department sent an email to all employees stating that the notice period had been increased to 90 days on either side or payment in lieu thereof.

Now, my friend wishes to resign with a 30-day notice, but the company is demanding payment for the shortfall period of 60 days, which he is refusing to pay.

Please advise on who is correct in this situation and what course of action should be taken.

Regards,
Bediraj

A contract between an employer and an employee is not legal in some cases. The company can unilaterally increase the notice period at its own discretion. The company may ask him to pay salary for the shortfall period of 60 days, which is correct.

Hi Arjun,

Please advise your friend not to provoke termination. He should refrain from disobeying orders and causing issues in a cunning manner.

Regards,
Arjun

Bediraj,

I do not know which state you belong to, but as per the Bombay Shops and Establishment Act, the notice period cannot be more than one month, which is sufficient. However, our legal machinery responsible for this has loopholes, and no action is taken unless somebody complains about it, which is again a lengthy process. Ask your friend to leave the organization on good terms.

Anjali

Dear Bediraj,

Yes, a company can increase the notice period by way of a circular for management cadre employees. If any employee does not agree to this increase, he may raise the same in writing, and whatever is agreed between the company and the particular employee stands valid. This is as per the service contract, but it does not take place in the practical world.

The next point is when an employee keeps on working even after receiving the circular and does not raise any objection, then it is deemed that the employee has accepted the same.

Regards,
SC

Did your friend sign or accept the circular regarding the increase of the notice period? Please ask your friend how they received information on the 90-day notice period. If they didn't sign, then a one-month notice period is sufficient; otherwise, the company has the legal right to withhold salary or other wages or take any action against the employee.

Best Regards,

Sajid

QUESTION--My friend joined one company three years back. The appointment letter said that the notice period is of 30 days either side or payment in lieu thereof. However,six months ago, in April 2009 , their HR send a mail to all employees stating that the notice period has been increased to 90 days either side or payment in liew thereof.

My friend wants to resign with a 30 days ntoice and his company is asking him to pay salary for the shortfall period of 60 days which ihe is refusing to pay.

Please tell who is correct and what is to be done in the case.

ANSWER—The terms set out in the appointment letter constitute a binding contract between the employee and the employer. The terms of contract can be modified with mutual consent. They were proposed to be modified by the company in April 2009. Your friend agreed to such proposal by accepting / not protesting. He has continued in service for more than 6 months afterwards. He cannot now turn back and say that the change is not binding. The company is correct.

Legally,it is open for your friend to contest the company's decision in a court. He does not have bright chances of succeeding. Even if he succeeds, the company will certainly go in appeal to higher court. Your friend will not gain anything by litigation.

-- M C Gupta

MD (Medicine), LL.M.

Ex-Professor

Practising advocate

6 January 2010

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Thank you all for your opinions. The case belongs to Delhi. He resigned yesterday in protest. The intimation was sent through email to all the employees of the company (Group Id), and he is saying that somehow he has not received that email communication but heard the same from other colleagues. Let's see what happens.

Again, thank you all.

Regards,
Bediraj

Hi,

The answer provided by Mr. Gupta is correct. In actuality, this issue does not fall under the purview of the ID Act. Therefore, the agreement between the employee and employer could encompass anything. Once the employee agrees to work based on the agreed contract, it cannot be voided in court. Consequently, the employer can revise the terms by altering or modifying their policies.

Regards

Yes, it is in the hands of the company to unilaterally increase the term of employment. Generally, the appointment letter contains a clause regarding this, stating that the employee will adhere to all the terms and conditions of employment. This clause covers unilateral changes.

Thanks and regards,
Vinod Singh

Dear Bediraj,

In this regard, I would like to share with you that every employee, when joining any organization, receives an appointment letter with certain conditions of employment. If the appointment letter states that the notice period will be one month on either side, it will be binding for both the employee and the employer.

Furthermore, it is important to note that the management reserves the right to amend any service clause for existing employees with prior notice to all concerned employees. In your friend's case, the management made such an amendment, and no objections were raised by the employees at that time. This clearly indicates that the amended clause was accepted by the employees involved, making it applicable to your friend as well.

Considering the legal aspect of the matter, I must emphasize that seeking legal relief through the court may not be fruitful for him.

Thank you,
Paramjit

Notice period is governed by labor laws that emanate from universal labor conventions. In my country, Cameroon, the notice period is based upon your longevity and category. Under normal circumstances, all have to comply with these norms, and in case of any modification, it shall be bilateral (employee-employer).

Dear Bediraj,

At the time of appointment, if you have signed the employment contract as a token of acceptance of the terms and conditions and if there is any subsequent change in the specified terms of the contract, the management has to issue an amendment incorporating the new term and obtain your signature as acceptance. If not, there is no need for you to comply with the instructions issued via bulletins.

Yours sincerely,
Usuf Ali
Chennai

I fully agree with Mr. M C Gupta. If your friend has not raised any points after receiving the information on the notice period, then he needs to be served as per company rules. Alternatively, he can negotiate with the company if he has good terms.

Regards,
Neeraj