Confused About Proportionate Compensation for Notice Period? Let's Discuss What It Includes

Hi, I am working with a Japan-based MNC as an engineer. Now, I am getting a better offer to switch my firm. However, my new employer is asking me to join within 10 days, for which I need to pay the company as per the notice period. But in the handbook and salary agreement, it's written that I need to pay proportionate compensation for each month. What does this proportionate compensation include?

From your statement, it is clear that you have received a better offer elsewhere and need to join the new company within 10 days. In this regard, you must provide notice to your current employer as per the terms of your appointment or make a payment in lieu of notice, allowing you to start working for the new employer.

In such a scenario, the new employer must compensate the existing employer on your behalf to facilitate your early release from their service. I believe this amount should be deducted proportionately from your monthly salary by your new employer, i.e., monthly. Therefore, the amount would be adjusted accordingly.

Please seek clarification from the HR department of your new employer regarding the above matters and take appropriate action.

Regards,

I understand what you say, but I want to know just in case I am to pay all the compensation to my current employer, then how much would that compensation be? In other words, which components of my salary would I have to pay?

Warm Regards,
Kashish

If you give a notice period of one month and wish to be relieved from your current employer after working for only 10 days, you will need to pay 20 days' salary in lieu of the unserved notice period. Alternatively, you can ask your present employer to adjust any unavailed earned leave balance in your credit to cover the shortfall in the notice period.

You are required to pay your gross salary for the shortfall in the notice period.

Regards

Are you sure you have understood the rules correctly? Please note that one can't take for granted the Notice Period Buyout mechanism/option in the HR Policies. The company—practically, the Reporting Boss—has to agree to it, even though the option is mentioned. Please make sure of this point before you resign or give your acceptance to the new offer. Else, there's every chance that you will land in trouble. Please see some recent threads in CiteHR of such scenarios using the 'research' facility at the top of this page.

All the best.

Regards,
TS

The point made in your so-called handbook and salary agreement is not clear at all. Kindly consult your HR regarding the notice period you have to give to your present employer. For example, if the notice period is three months and you are resigning immediately, you have to pay the salary in lieu of your notice period. If you give notice, serve for a month, and then leave the present employer, you have to pay two months' salary in lieu of the remaining notice period.

Hope this is clear. Please confirm the position with the HR of your present employer and act according to their advice.

Regards,
R P Ramanathan, Advocate and HR Consultant, Coimbatore
Mob. [Phone Number Removed For Privacy Reasons]