Confused About Salary in Lieu of Notice in My New Job Offer – What Does It Really Mean?

I am working in a software company in India. I received a new offer letter last week from another company, and they mentioned in the terms and conditions:

"You will be on probation for a period of four months from the date of joining, which may be extended if considered necessary by the company, at its discretion or based upon your overall performance during the probation period.

During the probationary period, your service can be terminated with one month's notice or salary in lieu of such notice, on either side.

Upon successful completion of your probation, you will be advised in writing of your confirmation as a regular employee of the company.

On confirmation, your services can be terminated upon three months’ notice or three months’ salary in lieu of such notice, strictly based on XXXX Pvt. Ltd. management’s decision."

Understanding Salary in Lieu of Notice

What is meant by three months of salary in lieu of such notice? I couldn't understand this. Does it mean we need to pay the whole CTC amount for three months or just the basic pay for the remaining days?

Kindly give an update on this.

Since it is strictly based on XXXX (company) decision, we cannot advise you properly. Normally, either gross salary, which includes salary and allowances, or Basic + Dearness Allowance (if any), will be considered as salary for this purpose. For better understanding, you should contact the HR/personnel department of the company and get it clarified.

Madhu.T.K

I assume your problem is only with the last item, which is three months' notice or amount in lieu of the same. Primarily, it means that in case they terminate you, they will pay you three months' notice (full salary) if they do not want you to serve the notice period. Nobody is going to pay you CTC. CTC is a concept that comprises the total cost and not the amount you receive.

In case you wish to leave, I am not sure whether they will accept an amount in lieu of the notice period because there is nothing stated to that effect in the terms you have quoted. Following the logic, the term should be the same for both sides. But in reality, companies often choose which interpretation is convenient for them.

Hi Madhu,

Thanks for your update. I had a discussion with HR, and he simply told me that we need to pay CTC rather than basic pay. As you said, the gross salary we have to pay.

One question: Why is the company still holding a 3-month notice period policy for experienced professionals?

Just because when an experienced person leaves, the company would require at least 3 months to find an equally experienced replacement.

Madhu.T.K

Hi Giri, Here, one point regarding the notice period is: some employees, to get the job, will try all they can and make promises. However, after serving for some time, when they get a better offer, they immediately try to move on, causing problems for both themselves and the company. This is because the company cannot find a replacement quickly to take over.

It is in the employees' best interest to carefully review all terms and conditions of their appointment and ensure they follow them before accepting a new offer to avoid damaging relationships.

Regarding the Three Months' Notice Period

It can be either Basic + DA or Gross salary and cannot be CTC, as already mentioned by Saswata Banerjee. Some companies have fixed policies on this issue, while others do not establish rules that could lead to HR problems later on.

Good luck to you in finding a timely solution.

Regards