Is My Company Right to Demand Two Months' Gross Salary for a Quick Resignation? Need Advice!

I discussed my resignation with my manager yesterday. Today, I received confirmation that I can be relieved in a week's time by paying two months' gross salary (claimed to be company policy). I replied, stating I would check the conditions in the offer letter and revert. However, there is no mention of the employee resigning; the two months' salary payoff is mentioned only in the case of employee termination. I understand that only the basic salary needs to be paid in such circumstances. Asking for the gross salary is too demanding by the company. Please help.

One needs to know the exact wording of the termination/separation clause in your appointment letter/confirmation letter before one can tender proper advice. Employment, being a contract of employment, "existing practices" and "custom" in the company have NO value. However, employers can (and many of them often do) act arbitrarily as most employees have no time or inclination to put up a fight. It is another story if the employee who wants to leave is a "workman" under the Industrial Disputes Act 1947.

If you care to share details, many on the forum will tender correct advice!

Regards,
Samvedan
July 18, 2011

Thank you for your response. Please find the details regarding the resignation clauses mentioned in the offer letter attached.

Regards

It is clear from the information provided by you that you are under an obligation to give TWO months' NOTICE if you resign from employment. During the notice period, you have no right to take leave without express permission.

The company MAY, at its SOLE DISCRETION, relieve you earlier. The resignation becomes effective from the date of receipt by the company. Therefore, if the company agrees, let's say, ten days after you submitted your resignation, to relieve you early, it will pay you for the ten days you have worked but insist on you buying out the notice period. The company has agreed in your case to your buying out the notice period. Then the company has asserted its right to terminate your employment. We need not go into that at this stage.

From the facts given, it is clear that the company CAN (if it so decides) relieve you earlier than the due period, in which case you have to buy out the entire notice period, and the company will pay you for the period you have worked after submitting the resignation.

As you are a party to these provisions of the contract of employment, you have to abide by them.

The company is apparently acting within the contract.

Now, you must make a decision that is most applicable to your situation.

Regards,
Samvedan

July 19, 2011