In A Contractual Assignment, Is A Notice Period Mandatory?

Dear Seniors,

I am a new member and I have a query for all of you. Suppose one is employed on a contractual basis, and in the appointment letter, it is mentioned that the contract may be renewed after one year on a mutual basis, and he will be paid a "remuneration" per month (gross) of X Rs.

When receiving his salary, he is given a voucher to sign off on while receiving the said "remuneration," where it is stated as "being the service charge for the month of X," and he has to sign that off.

His question is, is the term "service charge" applicable in such contractual assignments/employments? In the case where the employee has to receive the remuneration as "service charge," is the entire contract valid, and is he bound to serve a notice period of 30 days? What if he refuses to serve the notice period, considering there is no exit clause regarding the notice period stating that failure to serve it would result in the salary/payment for that period being put on hold, forfeited, or adjusted against the notice period? Or is the letter of appointment ambiguous by nature?

Please guide me as this is my question to all of you. The letter of appointment belongs to me. The scanned copy is attached herewith.

Best Regards,
Debashis Roy

Dear Mr. Debasish,

If it is mentioned in the contract letter to serve a notice period, then you have to abide by it. Salary and remuneration are two different things. As per my knowledge, a service charge is not charged from employees based on the employment contract.

Your attachment file containing the letter is very small in size, making it not clearly visible. I suggest you discuss this matter clearly with your employer.

Regards,
Shaikh

Fixed-Term Contract, as it is called, is a permitted kind of employment. However, it should not be a tool to deter any rights of an employee under the labor enactments. Therefore, if an employee under a Fixed-Term Contract is given benefits like Provident Fund (PF), Employee State Insurance (ESI), etc., there is nothing wrong with such an appointment. On the other hand, by labeling a "service charge" as "remuneration," the individual should not be considered as "employed," and that relationship will not be accepted. Even if the letter of appointment describes it as such, the remuneration will be treated as salary only. Otherwise, there should be proof to show that the individual is a consultant and is being paid a fee for their professional skills. If this is the case, they will have to issue a bill which should also include a service tax.

Regarding the termination of a Fixed-Term Contract, if the letter specifies so, you can insist on notice if the employee is leaving before the agreed-upon end date. Simultaneously, if you wish to terminate the employee's contract, you should also provide the same notice or pay salary in lieu of notice.

Regards,

Madhu.T.K