Notice Period Deductions: Should It Come from Basic or Gross Pay for Long-term Employees?

I want to understand the general rule regarding the notice period when settling the Full and Final for a permanent employee (with more than 5 years of service) who has resigned without providing any notice period. My question is, do we deduct the notice period pay from the basic pay or the gross pay?

Thanks & regards,
Vinay

Notice pay should be deducted from the gross pay. It can be deducted or even waived off if the concerned manager approves.

Many companies pay out final settlements based on basic salary, but during the deduction process, they calculate deductions based on Gross Pay. Is this justified? Please clarify.

Regards,
K. Srinivas Rao
HR

When an employer terminates an employee without notice, the employer has to pay the salary in lieu of notice. However, when an employee leaves without notice, the employer can insist on the employee working the notice period before calculating or paying the full and final settlement. There is normally no provision for the employee to pay the salary in lieu of notice.

In certain organizations, the employer deducts the salary in lieu of notice from the full and final settlement. This is a situation of "Teri bhi chup, meri bhi chup" where no one complains. The employee is eager to join a new organization, so they accept it or simply tolerate it.

Regards,
Vibhakar Ramtirthkar.