I agree to Mr. Sunil Joshi's contention that it is more of a cultural issue than a legal issue. This is because normally, the appointment letter has a clause that the employee will have to serve a specified notice period before resigning from the job. Employer has also an obligation to give a similar notice to the employee before terminating his/her service. In both the cases, cash settlement in lieu of notice period can also be specified.
Looking at the logic, the notice by the employee is to enable the employer to arrange for a replacement for the employee who is resigning, which may be either by the way of recruiting a new person or by training a new person. However, if the employer already has an employee who is trained on the job that is being carried out by the departing employee, the employer may dispense with the notice period, and make it look like they are doing the employee a favour, right? Please remember that their obligation is only to relieve the employee within the notice period, and not to extend the notice period arbitrarily, which would then become illegal. But if the employer says, " we know you are supposed to give us two months' notice, but we are waiving off the notice period and are relieving you of your duties with immediate effect", would it become a breach of terms of employment? Hardly illegal, but certainly unfair, because the employee will probably be unable to support himself and his family for the rest of the planned notice period, since the employer would not be paying him any salary during the said period.
After all, not many employers consider the departing employees as their good will ambassadors, but are generally full of vengeance towards anyone resigning, given the alarming rate of attrition most of the industries are facing today.
More thoughts on this are welcome.