Is Notice Pay Required if an Employee Resigns Immediately Due to Poor Performance?

I have a question: If an employee is not performing, and the company decides to ask for the employee's resignation with immediate effect, and the resignation is accepted, relieving the employee on the same day, is the employer supposed to pay one month's notice pay to the employee?

Yeah, pooh, actually, the resignation is forced by the employer upon the employee. The employee, even though he submits a resignation letter, his heart does not tell him to resign. So, you have two options:

1. Take the resignation and relieve after 1 month so that the employee gets paid for 1 month and continues to work during that time.

2. Take the resignation and relieve immediately, and give 1 month's salary.

By the way, why do you want relieving on the same day? Is the employee insisting or are you insisting?

It totally depends on the terms and conditions of your service contract, i.e., the appointment letter.

Yeah, actually, the resignation is forced by the employer upon the employee. Even though the employee submits a resignation letter, his heart does not tell him to resign. So you have two options:

1. Take the resignation and relieve the employee after 1 month, so that the employee gets paid for 1 month and continues working.
2. Take the resignation and relieve immediately, giving 1 month's salary.

By the way, why do you want the relieving to be on the same day? Is the employee insisting or are you insisting?

Thanks for your reply. What if an employee resigns and wants to be relieved on the same day? In such a case, does the employer have to pay 1 month's notice pay to the employee, or does the employee pay the employer? As you have mentioned in point no. 2, to take the resignation and relieve immediately and give 1 month's salary to the employee, is the employee resigning and us making the employee resign one and the same, and will the rules and regulations be the same? Please confirm.

This has two options, but you have not clarified whether the employee resigned or was sacked.

Scenario 1: Employee Resignation

If it is the case of the employee resigning and wanting to be relieved on the same day, then there is no need to pay the last month's salary as it can be compensated towards the notice period. Otherwise, if the employee has earned leave and your organization offers encashable earned leaves, then the employee should be paid their last month's salary, and the earned leaves can be considered towards the notice period compensation.

Scenario 2: Employee Termination

In the second scenario, if the organization terminates the employee, then the organization has to pay the salary as well as one or two months' salary in advance, as per the organization's policies. The one or two months' advance depends on the notice period of the organization.

Handling Employee Resignation: Immediate Relieving or Notice Period

Please listen to the facts: The employee is a low performer. The employee submits a resignation without any force or pressure from the employer and demands immediate relieving.

Then:

1. Relieve immediately if the company does not want the employee and can manage until a new person joins.
2. Do not relieve; ask for a 1-month notice period if the employee is doing important work, or relieve with the employee paying money to the company.

You are not providing me with the exact situation.

I think it completely depends on your management. If that person is important for the organization, you may ask for a 1-month notice; otherwise, you may compensate.

Employee Resignation Process

Now, the employee wants to resign from their position. As a precaution, you may have the employee sign a document stating that there are no dues from either party, the employee or the employer.

I hope this helps you resolve the matter and alleviate any confusion.

Regards,

Dear Nukani,

Considerations for Employee Termination

You will have to see two things:

1. You cannot terminate an employee for underperformance. Termination can be done only in cases of indiscipline, subject to a domestic enquiry and as per the employment standing orders. However, you can retrench the employee for underperformance with a notice period or notice pay in lieu of the notice period. The notice period depends on the company policy. However, for workmen, it is for 3 months. The employee can be terminated within a day provided you settle his dues within 48 hours of his termination.

2. The underperformer should not submit any resignation, as resignation amounts to a voluntary wish to separate from the organization. If an employee submits the resignation, the employee has to serve the notice period or pay the notice pay in lieu of the notice period. In the case of resignation, the employer need not pay any compensation.

For more clarifications, call the undersigned on [Phone Number Removed For Privacy Reasons].

Regards,
Mahesh M

Yes, it varies from one organization to another, and it mainly depends on the terms of the employment contract as stated in the appointment letter.

Regards,
Pramod

Hello all, here I am sharing my experience. Whenever management asks an employee to leave the organization immediately, the employer should give the employee the current month's salary plus an extra month's salary (Notice Period Salary from the employer's side). If we are relieving him so early, it won't be possible for him to find a new job soon. As a courtesy, we should give him one month's salary extra.

Regards,
Amruta

After going through the comments of all my friends, I would suggest another way: general counseling and briefing the employee about their underperformance, trying to make them realize that the company wants to keep them. Ask for a tenure within which they promise improvement and put forth your terms and conditions. This approach in HRD has transformed weak performers into strong ones, as sometimes situations work against people even if they are intelligent and smart. Therefore, a chance should be given to all.

Regards,
Mohamad Aasif Kawoosa
Senior Manager
Human Resource Development
NutriHealth Systems (P) Ltd.

Termination Process and Compensation Queries

Is it possible to terminate the service of an employee by notice, or by 30 days' pay, or by 90 days' pay? Suppose he doesn't agree, then what is the process? Workers who are adamant will not leave the company without taking the matter to the labor court. Is there any procedure or compensation that allows for termination without involving the labor court?

Best regards,
Sanjiv

If an employee shows willingness to leave the organization on an immediate basis and submits their resignation in such a way that they do not want to continue, the employer is not liable to pay any notice period. It completely depends on the employee's wishes.

If the employee objects to being terminated from services, then the employer needs to pay the notice period as per the appointment letter clause.

Please ensure that all settlements are cleared on the same day or within one day.

Regards

As Joshraj stated, it seems that the organization has forced the employee to submit his resignation against his will. In this case, there will be no question of notice period pay from the employer. On the other hand, if the employee resigns willingly, then he would be required to pay the notice period pay. However, the management may choose not to enforce this due to their involvement in the situation.

Regards,
S. Sethupathy, Erode

Dear All,

Resignation of Underperforming Employees in India

There are many companies in India that ask for the resignation of underperforming employees. Many scrupulous employees resign under pressure. Is it not fair to give them one month's notice pay? One month of notice pay is just a small amount for the company, but if they ask an employee to leave without any compensation, what will be the company's image? How will the employee react if faced with such a situation? There should be a balance. While rules may dictate certain actions, a humane approach should be considered before terminating an employee. If you find yourself in such a situation, how would you feel? The departing employee may hold resentment towards the company for the perceived unfair treatment.

Regards,
Pon

As an HR professional, if an employee resigns and requests relieving on the same day, what would you do? You would ask for the notice period, right? So, how would you handle the situation if the employer insists on immediate relieving? In my opinion, I am certain that you would need to either provide one month's salary in lieu of notice or allow the employee to work for that one month as the notice period.

Regards,
Srikanth
[Phone Number Removed For Privacy Reasons]
Hyderabad

[QUOTE=Nukani;1602413]Thanks for your reply. What if an employee resigns and wants to be relieved on the same day? In such a case, does the employer have to pay one month's notice pay to the employee, or does the employee pay the employer? As you mentioned in point no. 2, take resignation and relieve immediately and give one month's salary to the employee. Is it the same when the employee resigns, and when we make the employee resign, and will the rules and regulations be the same? Please confirm.

If you are very particular about relieving the employee on the same day, pay one month's notice pay and relieve them. Again, notice pay here means Basic and D.A. only, not the Gross Salary. But this is applicable if the appointment order is issued with the term notice pay mentioning one month on either side.

Thanks,

N. RANGARAJAN
Vice President HR

If you are very particular about relieving the employee on the same day, pay one month's notice pay and relieve them on the same day. Notice pay here means it includes Basic and D.A. only, not the Gross salary. However, this is applicable only when the appointment order is issued with the term of notice pay as one month's notice pay on either side.

Regards,
N. Rangarajan, MA, BL
Vice President-HR

Thank you everyone for your comments and suggestions. If an employee has already been counseled for performance issues a month ago and was put under observation after a discussion, do we still need to pay him notice pay?

Yes, you need to pay him one month's notice pay and one half-month salary as compensation until the employee gets a job. 

Dear Nukani, please refer to your question: if the company decided to accept the resignation of an employee with immediate effect. In this scenario, the employee is being resigned from their employment forcefully, as required by the company. Therefore, the company is obligated to provide one month's notice pay as compensation.

Regards,
Pramod

The best practice is to issue a show cause notice to the employee, asking for the reasons for their low performance. If they still do not perform well, then you can ask them for resignation, with the notice period mentioned in the appointment letter. During that notice period, they can search for a new job for themselves as well as receive their salary. It can either take immediate effect with no salary or as per the notice period, but they should receive all the relevant documents.

It depends on the terms in the appointment letter. However, it would be humanitarian to provide notice pay because the employee will need at least one month to find a new job. They have to survive during that month and repay their debts.