Understanding Notice Pay: Is It Based on Gross or Basic Salary When Resigning or Terminated?

Dear All,

Please confirm if one month notice pay stands for one month's gross salary or basic salary. For example, if an employee resigns without assigning any notice period, do they have to pay one month's basic or gross salary in lieu of the notice period?

In the case of company termination, what will the company pay, basic or...? The appointment letter states one month's gross salary as notice pay.

Furthermore, is there any rule regarding exchanging earned leave with the notice period?

Regards,
Manish

Hi Manish,

Usually, basic pay is considered, but please check what you have mentioned in the appointment letter. Every company has its own policy, but typically, the company covers the basic amount in lieu of the notice period. If an employee leaves without notice pay, then you can recover the amount as per the appointment letter. Whether to take basic pay or gross salary in lieu of notice depends on the HR policy. Leave may be adjusted, but please check the HR manual.

There is no law regarding taking the basic amount or gross amount in lieu of notice; it is entirely based on company policy.

Thank you,
Surrender Sangh

Dear Surendar,

I am working as an executive with a private limited firm. In my offer letter, the company mentioned, "The notice period for getting relieved will be 2 months or 2 months' salary in lieu of the notice period." In my Appointment letter, it states, "Your monthly package will be Rs. 15,000/-; all statutory deductions will be made from this package."

On my pay slips, I receive the following format:

1. Basic pay: xxx
2. Dearness allowance: xxx
3. HRA: xxx
4. CCA: xxx
5. Conveyance allowance: xxx
6. Medical allowance: xxx
__________________
Gross pay (total from 1 to 6): xxxx

Employer's contribution to PF: xx
Employer's contribution to FPF: xx
Employer's contribution to ESI: xx
__________________
CTC (gross pay + above three): XXXX

Monthly, my take-home pay is Gross - (Employee Cont. EPF + ESI), where I receive around Rs. 12,400/-. Now, I wish to move from this company within 2-3 days. What is the amount I am supposed to pay the company as per the above conditions?

Thank you,
Govinda

Dear Srinivas,

As per your appointment order, your gross pay is 15000. Therefore, while calculating the notice pay, the amount of gross-conveyance allowance is usually applicable.

If we follow today's date:
Notice Period - 60 days
Days served: 3 days (if you want to get relieved in 2/3 days)
Amount to be Paid: 15000 - Transport Allowance / 30 = pay for 1 day
Amount to be recovered: pay for 1 day * (60 - 3) days

But again, it depends on the company policy; some calculate based on the basic, and some on the gross monthly pay. Please check the same with your HR.

Hi All,

Can anyone tell me what topics come under Talent Management and Development?

Regards,
Ranganath G