Understanding Salary Payments During Employee Notice Periods

One of our employees resigned on August 1st, giving one month's notice. However, we accepted it with immediate effect. Are we liable to pay him salary until 30th August as he wanted to work, but we didn't allow him to.

Dear Samita,

If an employee has served his one-month notice period and it has been approved by HR, then the salary has to be stopped. The salary for his one-month notice period will be given to him at the time of Full and Final Settlement.

In the case where an employee has to serve a two-month notice period, his/her first month's salary is processed, and the salary for the second month is given in the full and final settlement.

Sirkumar, sir, has posted rightly, but there is one way for you to consider: whether he has mentioned his intention to work for the complete notice period in his resignation letter. If not, then you may not need to.

Mangesh Wakodkar
Aurangabad

Dear Samitha,

When an employee submits their resignation letter to complete their notice period, they must continue working until the notice period ends to be eligible for their notice period salary at the end of the month.

In some cases, most employees leave before completing their notice period. In such instances, they are only eligible for full and final settlement.

Regards,
Shankar

If the employee resigned and requested immediate relief, then probably he was stopped from work on August 1st itself. No work, no pay. However, without relieving him, if he continues to work until the last day, he is entitled to pay upon the expiry of one month or even beyond.

-Kumar S.

Dear,

If your employee wants to work for the complete notice period, but you don't want the same, then you have to pay him one month's salary or the period in advance.

Rajbir

Actually, from the legal perspective, the employee must be paid the full salary for the notice period he is willing to serve, unless provided otherwise by the appointment letter (many appointment letters are very well-crafted, giving the company the right to relieve him immediately). So, you need to have a look at your appointment letter for that.

However, from a humanitarian point of view, and considering future relationships (you do not know if he will join your client, for example), it makes sense not to withhold part of his salary. It's a decision you need to make on that part also.

Releasing an employee before the date specified in his letter of resignation will be treated as termination of the contract for which he should be entitled to notice pay.

In this situation, if the employee is already in the warning period and decides to resign and is willing to serve the notice period, but takes leaves during the notice period, the company makes the decision to relieve him from work before the notice period ends. Now, whether the company is required to provide payment including the notice period or only until the last working day of the employee is a question.

Regards,
SeemaK

A lot of companies try to save money by accepting the resignation letter with immediate effect! But this is not a correct thing to do - both legally and professionally.

If the employee has given notice as per the required terms of the appointment letter, then he must be allowed to complete his notice period. If the company accepts the resignation with immediate effect, it means that the company has terminated him before his contract was over and hence must pay him in lieu of the notice period that the company was required to give. So either way, the company has to pay the employee for the notice period.

Yes, Sanjeev sir, I agree with what you said. But what if the employee is already on a warning period? In such a case, does the company possess the right to remove him? So, now, does the company still have to pay for his notice period as well?

Ms. Samita,

It is the employee's desire to leave the services. You are not making that decision. Since it is his decision, he needs to fulfill the condition of serving the notice period, not you. Under the circumstances, you are doing him a favor by waiving the notice period; therefore, you do not need to pay him any notice period. He will be earning a salary in the new company where he is going to join. Only when you decide to terminate the services of an employee, you need to give notice as specified in the appointment order and pay in lieu of such notice period, not otherwise. I hope I have made the matter clear.

Best of luck.

Joga Rao Head - HR, IR & ADMIN