Navigating Early Employee Resignation: Are We Obligated to Pay for Unserved Notice?

Hi, we have an employee in sales who resigned at will a week ago. During feedback sessions, he cited reasons such as a better salary and the desire to start his own business. We tried to show him growth opportunities and negotiated on salary for a week. We even offered him the expected salary, but he cited his own business reasons. In all these discussions, he mentioned that the company should try to relieve him as soon as possible so that he can make a decision after taking a break.

Resignation Details

This is from his resignation:

As discussed, please accept my formal resignation letter from xxxxxxxxx. I am tendering my resignation on xxxxxx and request to be relieved from my duties and responsibilities as soon as possible. I would request you to settle my accounts at the earliest.

xxxxx has been an amazing place to work and also a place for me to learn. Many thanks for giving me an opportunity to work on various campaigns, markets, and numerous projects during this time.

After a week of trying, when it all failed, we asked him to leave immediately. During the final exit process, he suddenly started saying that we need to pay him for the remaining unserved notice and that he is willing to come to the office if required. He had already spoiled the environment to the extent that two other members junior to him also resigned. We were in a crisis situation, and he then threatened us with labor law. The appointment letter states:

(ii) Upon confirmation, your services are liable to be terminated by xxxx after providing you one month's notice or payment of salary in lieu thereof. You shall also be bound to provide xxxxx with one month's notice prior to resignation, during which period you may have to actually work. The said notice period will not be adjustable either against privilege leave or forfeiture of salary.

(iii) If the exigencies of the work so require, xxxx may not relieve you earlier than the expiry of the entire period of notice. It shall, however, be open to xxxx to accept your resignation with effect from any date earlier than that offered by you in your resignation letter. xxxx, as such, is fully authorized to relieve you at any time during the notice period, and should xxxxx decide to do so, you shall be entitled to your gross salary in lieu of the remaining period of notice.

It is clearly mentioned that only if we choose, we may pay him for the remaining period, but otherwise, we can release him on any date. We are ready to pay until the date he served us. He says that he is willing to come to the office and work. We even suggested he work from home as an option to serve the notice, as we do not want him to come to the office and spread further negativity. He did not listen and thinks that it is his right, which we have taken from him.

Things did not end here; then his father, being a government employee, started threatening us with other law breaches not even related to the case.

Can someone suggest if they even have a case or not? Regards.

Employee Resignation and Notice Period Obligations

Since he is ready to work during the notice period and it is in the company's interest that he should be relieved earlier, the company is bound to pay the salary for the rest of the period. There are numerous case laws that state an employee can withdraw their resignation before the effective date, which is the date of relieving. Therefore, in cases where the employee is engaged in bargaining, influencing, or instigating others to follow him (I would like to use the word "instigation" because you have mentioned that two others have also submitted their resignations), it is preferable that he be relieved immediately by paying for the remainder of the notice period.

Regards,
Madhu.T.K

Have you heard of the term that is more often practiced - "Pay a Month" or "Serve a Month"? This statement is mutually beneficial to the employer and employee.

In the above situation, the organization is required to pay for the stipulated period. If the organization decides to relieve an employee regardless of their interest in serving the notice period, the organization must pay for the remaining period as the appointment terms were set by the company. It is conversely similar if the employee resigns beforehand.

Specifically, in a scenario where an employee resigns but the employer opts for the immediate termination of their services, the employer is obligated to provide notice pay. If the dues are not settled, the employee has the option to seek assistance from a labor officer.

Please let me know if you need further clarification or assistance.

Best regards

Thanks for your responses. I have read multiple other posts on CiteHR and found mixed responses on the topic. Many have referred to the fact that it all depends on the appointment letter which was signed in the end. In our case, the letter states clearly that it is at the company's option to pay someone for the remaining period if they choose to do so, but they can still relieve someone earlier and not pay anything for the remaining period.

The problem is multifaceted as this employee has some influence and may start a chain of events for the company, which will lead us to do this for all. We hence were trying to give him an option where he was told to work from home for the remaining days and submit the work to get paid (even for namesake), but this option should be only at the company's discretion to be provided to only selected employees and only if required.

I am confused about what and why the company should pay for the remaining period if he is not even working, and this is not a termination case. We would rather like to then in this case give a termination letter to him and pay him the balance rather than giving him proper relieving in this case. Please suggest.

I must also add that the employee is just trying to blackmail and take advantage of the situation where he is willing to work only from the office and has no genuine intentions of closing the matter in a professional manner. We have told him very clearly that if he wants, he may work from home, but he has to prove that he worked, and we don't mind paying the salary for the remaining period. He will not be allowed to enter the premises of the office anymore.

I think it was a good solution offered on behalf of the company, but the guy seems to not give up, and threatening management has further escalated the matter where now they want to give him a letter of termination and a bad reference in lieu if salary is needed to be paid.

I must ask you to refer to his resignation email in which he has not mentioned the last date or relieving date that he is seeking. It is also clearly mentioned in the resignation email asking us to relieve him at the earliest and settle his dues at the earliest.

Any suggestions or comments on these solutions or others are most welcome.

He is defying the employer to confront or deal with him. If his intention is to coerce or intimidate, then your option to work from home was a great choice. Yet, make sure you separate this person as soon as possible, as he could be a curmudgeon to other employees.

Steps to Handle the Situation

Ask him to provide you with a proper resignation letter and accept the resignation by quoting, "Resignation accepted with immediate effect dated _____" (an employer can do that). Settle his dues until the relieving date with a proper exit interview.

If he still threatens, you can tell him that the employer can consult a conciliation officer, which might keep him waiting a long time to get his final settlement done. I hope this satisfies your query.