How Should We Handle Salary Calculations When Notice Period Ends on a Holiday?

We have an employee who resigned last December, and his pay was calculated until his last working day on 30 December, not 31st Dec (a company-approved holiday). As per our company's trend, we used to calculate pay until the day of release, even if it falls on a holiday. Now, the new management wants to change this practice by asking employees to resign so that their last working day falls on any day in the workweek (Mon - Fri).

To provide further context, we are a Kolkata-based IT company with a decent HR policy, and this issue has caused a disagreement between HR and Management.

Please suggest what we should do as another employee has resigned, and his notice period runs out on Good Friday.

I appreciate any help. Thank you in advance.

Changes in Exit Policy Notification

Such changes in the exit policy need to be informed to all employees. This change hardly results in a one-day financial effect.

I personally feel that if the last day of notice is a holiday, payment should not be restricted.

Regards

If the Last Working Day (LWD) is on a holiday (any holiday as per company policy), then payment has to be made. If the LWD is to be on a working day, then you need to issue a letter relieving the employee of service on the working day (before the notice period stated by HR policy or after).

Hope this helps.

Usually, the payment of full and final settlement and the last working day are defined based on the relieving letter issued to the employee. However, management cannot issue a relieving letter stating that "You will be relieved from the company from the closing hour of 31.12.XX" as that day is a holiday. If the management still issues the relieving letter with 31.12.XX, then you will have to pay for that day as well. I hope this logic helps.

In all these cases referred to, it is logical to conclude taking the "Date of relief" as the criterion as per the relieving letter issued to the exiting employee. Sometimes the date of the letter and the date of relief could be different. For example, a person can be treated as relieved on Sunday (31st) as the month closes on that, allowing the rest day as a paid holiday. For all practical purposes, he will be treated as relieved on the previous working day, i.e., the 30th Saturday, but the letter could be dated 30th, the last working day of that week on which the exiting employee hands over his charge and takes his NDC. It's not wrong to treat it this way. The only thing required here is that the letter of relief should be properly worded so that any confusion can be avoided.

This logic can be extended to a retiring employee. Suppose an employee retires on 31.12.2015, which is a declared holiday, whereas he is entitled to a full month's salary. Just because the last day happens to be a weekly or declared holiday, he should not be deprived of the wages. However, in the case of a person who resigns and is relieved on a particular day but the next day happens to be a declared holiday, the establishment can use its discretion regarding whether or not to allow a paid holiday. This cannot be claimed as a right because he has been relieved the previous day, and on the day of the holiday, he/she is no longer an employee.

Release from employment as a result of termination by any party is effective from the date mentioned in the employer's relevant order. Usually, no employer will want to make a payment to an employee for a day (if it is a holiday) when they have not worked. This management decision cannot be contested. I would advise you not to spend your time and energy concerning one day's wages or pay, and instead focus on other matters.

Regards,
S.K. Johri

The last date of work may be mentioned as 30.12.XX in his relieving letter or his service certificate. However, in his full and final settlement, the salary for the holiday, i.e., 31.12.XX, should be paid.