Insights on Notice Period Policy and Employee Rights in Separation

Dear All,

Some MNCs have a 3-month notice policy for separation. Is it a good policy?

Thanks,
Jivan

Notice periods vary from company to company. Most companies have a one-month notice period. Not only multinational corporations (MNCs), but even Indian companies like ICICI Infotech, have a three-month notice period.

Thank you.

Very true, Peer Saab. It varies from company to company. It totally depends on company policy.

Notice periods should be equal from both sides. That is, if the notice required to be served by an employee to separate (to leave) is three months, then the notice that should be served on the employee to retrench should also be three months.

It is common for freshers to need to serve or be served only one month's notice, whereas those employed in high-profile positions need to serve or be served three months' notice. This is because it is easier to replace a job that requires less experience, while it is more challenging to replace a job that requires highly experienced personnel. Since the purpose of notice is to provide the employer with sufficient time for replacement or to allow the employee enough time to find an alternative job, the above policy holds significance and logic. However, some companies (including Indigenous Companies) insist on three months' notice from the employee's side, while they terminate employees without notice, citing "you were on probation." This is incorrect.

Regards,

Madhu.T.K

Legally, and as per the Industrial Disputes Act, an employer is supposed to give notice or pay notice pay in lieu of notice. However, there is no law that states an employee should give notice before leaving.

For an employee, it is more of a moral responsibility to inform their employer in advance of their departure. Even if there is a specific clause in the appointment order insisting that an employee must give notice or pay in lieu before leaving, arrangements are often made to waive this requirement. Many employers do demand notice pay from employees by threatening that no relieving order will be issued, PF forms will not be forwarded, and similar consequences. While the issuance of a service certificate and relieving order is the employer's right, the employer cannot withhold PF forms submitted by the employee.

I am confident that in India, no employer has ever taken legal action against an employee to recover notice pay.

Regards,
Madhu.T.K

Yes, Madhu, you are correct. I don't think any companies have done that. At least they will threaten an employee with legal letters or so. I also agree that 3 months' notice from the employee and 1 month's notice from the employer are absolutely not fair. All working-class colleagues, if united, can make this change by not accepting any offer that has this disparity. A very difficult proposition, but somewhere, somehow, somebody has to start this.

In fact, this should also be clearly mentioned in the labor act, as we currently have in the Saudi Labor Act. An act that stands as an example to our Indian Labor Act. I will post the same for the study of our HR fraternity.

Ukmitra

"issuance of service certificate and relieving order is employer's right"

Thanks, Madhu, for your very informative response. One more query related to this. Take an example. In a company, the notice period from both the employer and employee side is 2 months. Ideally, if the employer wants to terminate/release an employee, it will offer the basic salary of two months and release him/her immediately. Similarly, if an employee wants to quit immediately and places his resignation and is ready to pay the two-month notice, does he have a legal right to get a relieving letter/Service certificate with immediate effect? I am asking this since in my company usually the employer holds this right but employees do not. If an employee resigns and even if he is ready to pay for the remaining notice period, the relieving right remains with the employer, and consequently, the employee often loses the new opportunity.

The practice of holding an employee despite his offer to pay two months' salary in lieu of notice is unfair and should not be entertained. By that act of the employer, if an employee loses a good opportunity, the employer may be bound to indemnify. However, the initiative should come from the employee since there cannot be any general awareness in this regard among the employers.

Regards,
Madhu.T.K