I worked with a company for 15 months. As per appointment letter the notice period was 3 months. Since I gave only 1 months notice, the company has deducted 2 months Gross salary. Is it not illegal to cut gross salary? The company has paid me only basic salary in lieu of PL encashment. Should not the company deduct only the Basic salary for 2 months as notice pay? I understand allowances and perquisites are not counted as salary unless the person actually works and earns it. Hence incase of PL encashment or Notice pay cut, the salary means basic salary. Why the company then considers gross salary incase of notice pay?