Notice Period Deduction for Resignation Due to Poor Performance: Fair or Not?

Dear Seniors,

There is a case: An employee, who has worked for an organization for more than 5 years, has been asked to resign due to his poor performance over the last 9 months. The organization has accepted the resignation and relieved him instantly. They subtracted one month's notice period from his full and final settlement as per the contract of employment. Now the question is: If the company asked for the resignation due to poor performance, then why was the notice period deducted?

As per my understanding, the employee should receive the salary in lieu of immediate relieving even though he has not been terminated. Looking forward to your precious suggestions.

Regards, MN KHAN

Employee Performance and Notice Period Considerations

If a company is considering an employee's performance as poor, then the question arises: In the past, the employee has performed well except in the last nine months. In such a case, the company should have a dialogue with the employee regarding their poor performance and should give them a chance for improvement, instead of asking for resignation.

In this situation, the employee has the full right to receive one month's notice period as salary in lieu of immediate relieving, as per the employment contract, rather than having one month's notice period deducted from their full and final settlement.

I echo Ganesh Chavan and Raj Kumar. Looking at the scale of recent such instances, maybe it's time the Moderators have a rethink about whether to name such companies in CiteHR. Human nature being what it is, many people make amends only when they realize their actions are noticed by the world and face the flak. But since such a step could be a double-edged sword, maybe some modus operandi needs to be evolved or found.

Self-Analysis and Moving Forward

Coming to the present case, frankly, I am not sure if there's anything that the employee can do, except:

• Do some self-analysis on the reasons why his performance went down in the past 9 months—not for anyone else's sake but for his own sake. This will ensure that he can make corrections where needed and such a situation is not repeated from his end at least. I think, like Ganesh Chavan mentioned, it should have been the company that ought to have facilitated such an exercise—but I also think the lack of such support should not prevent the employee from doing it on his own—for his own sake.

• Move on in life—I recollect what one Army officer said when I went for SSB interviews years ago: Just because you don't get selected here doesn't mean "this is the end of the world." It just means "you belong elsewhere." A very nice and positive way of putting rejection. I guess this fits aptly to this employee—maybe it's just that it took 5 years to realize this aspect.

All the Best.

Regards,
TS

Dear Seniors, Thanks for your valuable responses. However, my query still remains unanswered: If the company asked for the resignation due to poor performance, then why is the notice period deducted?

Regards, MN KHAN

There is ABSOLUTELY NO REASON why the notice period should be deducted. However, you have not mentioned if the issue was raised with HR and if so, what the response/reply was. Let's be brutally honest and realistic—there's absolutely no reason why many things happen, even though everyone knows they shouldn't.

Options to Consider

What would be the options then? One is to fight it out legally, even if it takes years to yield results. The next is to evaluate and weigh the benefits of fighting it out versus ignoring the situation and moving forward in life, after learning the lesson to be careful in the future.

There are no 'Right' or 'Wrong' decisions in such situations. One only needs to weigh the possible consequences and if he/she can handle them on a sustained basis, in terms of the associated cost, time, effort expended, and the psychological trauma.

All the Best.

Regards,
TS

Understanding Notice Period Deductions

If the company is terminating you, then no questions arise regarding any type of deduction on behalf of the notice period. If you are resigning, then it is your responsibility; otherwise, not. First of all, read your appointment letter carefully. If there is a provision mentioned for the notice period, whether terminated by the employer or by your own willingness, the notice period will be served. Otherwise, you can seek help from the labor department.

Notice Pay in Case of Dismissal

If a company dismisses a person for any reason, then the person will not need to pay the notice. If there is a rule for notice pay from the employee's side, then there is also the same rule for the employer. Therefore, the employer would have to pay the notice to the employee.

What the company has done is ethically wrong. However, you have to understand that technically they asked the employee to "resign." So effectively, it is the employee who has to serve the notice period since (officially, on paper) he is the one who initiated the severance process. Now the company has "graciously" waived off the notice period and let the employee leave with immediate effect. Therefore, they can argue that the notice period is not required.

I reiterate, the company is wrong in what it has done. But the employee's chances of winning this argument may be limited.

Best,
Deb

I think there is an ambiguity in your query. An employee worked for a company for 5 years. At a point in time, the company was not happy with his performance and asked him to resign. You state that they deducted 1 month's salary from the full and final settlement.

Clarification Needed

A. Did they deduct the salary for 1 month that the employee actually worked before he resigned?

B. OR did they deduct the salary for the notice period that the employee was not allowed to complete?

If it is A, there is no excuse, and the action is both wrong in law and in principle/ethics.

If it is B, they are free to relieve the employee immediately after resignation. It is the wish of the company. In terms of ethics, since they asked for resignation, they should have given him the salary. In terms of legality, their action is not out of line (I am sure there is no written request to the employee to resign).

A bit depends also on the resignation letter. Did he say he will complete notice pay? Or did he ask for immediate relieving?

Termination and Poor Performance

No employee can be terminated on the basis of poor performance. If forced resignation is a routine practice in the case of poor performance, this is not at all a good HR practice. This tool must be used only in extreme cases, and even if this tool is used, notice pay shall be paid by the company to the concerned employee.

Addressing Poor Performance

The problem of the so-called poor performance can be solved by personal counseling and providing proper training. In many cases, some good employees are also labeled as poor performers due to job ambiguity. Therefore, job clarity must be established, and clear communication of jobs and responsibilities must be provided to the employee. It is also necessary to check whether an employee is interested in performing that job. It is preferable for the employer to assess the employee's interest in performing a particular job and fitting into the culture before hiring.

Improving Employee Performance

Job rotation, changes in job profiles, proper training, and counseling can make a remarkable difference in an employee's performance. It is highly unjust if an employee is labeled as a poor performer only by superficial analysis. Unfortunately, many senior managers also do this.

Natural Justice in Employee Dismissal

Taking the case submitted in the forum, it is felt that as per natural justice, if an employee is dismissed for poor performance during the present, but no issues were raised during the past five years, there might be concerns. Of course, it is the assessment and evaluation of the manager/team leader, hence no postmortem now.

Responsibilities of HR in Settling Accounts

If an employee is asked to leave, it is the primary responsibility of the HR Manager/Company to settle the account with all the pending amounts payable to the employee. This includes gratuity for his past services for five years, any leave, especially earned/annual/privilege leave, bonus/incentive, and any other payments as per the company's policy.

The employee should not be harassed with any other assignments whatsoever while quitting the company.

Conditions Imposed on Employees

If any other conditions are stipulated to the employee by the company or by the HRD, it is intentional to aggravate the concerned employee.

Regards

Dear NK,

Understanding Resignation and Notice Periods

Employment is a contract that generally states it can be terminated by either party by giving one month's notice on either side or salary in lieu thereof. When you resign, it becomes difficult to determine whether you were asked to resign or did so voluntarily. The implementation of this clause is audited by the auditor.

Therefore, it is crucial that the resignation letter is worded properly.

Proper Wording of Resignation Letters

If you were asked to resign, you should have stated, "I am resigning with one month's notice and should be released upon its expiry." By clearly expressing this, the company would have released you immediately and paid one month's salary in lieu of notice, as they have shortened the notice period. If you resigned and requested immediate release without salary deduction, it indicates a forced resignation, which must be noted in any testimonial or future reference. Failing to do so undermines the purpose of requesting resignation. I trust you comprehend the importance of correctly wording a resignation letter.

Regards,
B R Grovedr

Scenarios for Notice Period During Probation and Confirmation

1. Employee is under probation/training during which period notice period is not required to be served by both parties:
- Resignation on the employee's own accord: Notice period not required/notice period money need not be paid.
- Resignation sought by the company: Notice period not required to be paid. Even if the employee wants to serve the notice period, the company can relieve without notice pay.

2. If the employee is confirmed OR as per the appointment letter, the notice period is required to be served to terminate services by either of the parties:
- Resignation on the employee's own accord: Notice period to be served/Notice period pay needs to be paid to the company.
- Resignation sought by the company: If the employee wants to serve the notice period, the company needs to pay if they want to relieve early. If the employee mentions "please relieve immediately" or indicates any such message, the employer can relieve the employee as requested by the employee but need not pay the notice period pay.

Regards

If the said person mentions in the resignation letter "resigned as per company's demand" duly acknowledged by the management, he can approach the concerned ACL for its redressal. If proof is not available, the company will treat this as a voluntary resignation and will recover one month's notice pay as per practice/contract.

Regards,
S Rao

I think there is an ambiguity in your query. An employee worked for a company for 5 years. At a point in time, the company was not happy with his performance and asked him to resign. You state that they deducted 1 month's salary from the full and final payment.

Clarification on Salary Deduction

A. Did they deduct the salary for the 1 month that the employee actually worked before he resigned?
B. OR did they deduct the salary for the notice period that the employee was not allowed to complete?

Here, the case is B: He has been asked to resign and agreed to serve the notice period of 1 month as per his contract of employment. Now, the organization has accepted his resignation with immediate effect and deducted the one-month notice period.

Attribution: https://www.citehr.com/460645-notice...#ixzz2UgBfc69Q

I second Debddatta. Ethically, the company could have paid the notice pay, but as it is not a termination, the company reserves the right to deduct the notice pay. A lot depends on the employee's resignation letter, which mentions the notice period. The employee stands a chance to get the salary if:

1. He can prove that he was ready to serve the notice period, but management demanded immediate relieving.
2. He has the termination in writing, as any verbal intimations do not hold true in the eyes of the law.

Furthermore, you might want to revisit the performance evaluation process in the company. Asking a 5-year-old employee to leave immediately due to a performance issue, especially based on the last 9 months, is strange.

Regards,
Hiral Mehta