Notice Period Changes: How Do They Affect Long-Time Employees and Buyout Options?

As per our company policies, a notice of two calendar months is required by either side for discontinuing the service or payment of two months' salary in lieu of notice. This has been recently changed, and earlier it was a one-month notice period. Our salary structure is divided into four parts, namely:

1. Basic
2. House Rent Allowances
3. Medical Allowances
4. Other Allowances

Questions Regarding Notice Period Changes

Now, my questions are:

1. What would be the policy for old employees who have been earlier issued with an appointment letter containing only a one-month notice period clause?
2. If the employees are willing to buy the notice period, will it be a full month's gross salary or only pay without allowances?

1. Unless you issue a fresh appointment order with one month's notice, their old order stands valid.

2. The full month's gross salary has to be recovered.

Thank you.

Policy for Old Employees with Previous Notice Period Clause

What would be the policy for old employees who have been issued an appointment letter with only a one-month notice period clause?

ANS: Usually, an amendment to the appointment letter is mailed to all such employees, giving the new/changed policy. Acceptance from each employee is not needed. Some employees may not agree to the changes. In such cases, show them the HR Policy Book, which states that any change in HR policy will be applicable to all, hoping you have taken the precaution to include such a clause.

Notice Period Buyout Policy

If the employees are willing to buy the notice period, will it be a full month's gross salary or only pay without allowances?

ANS: It's up to your company. Some companies consider only the basic salary, while others consider the gross salary. Regarding the notice period buyout policy, I hope you have taken the precaution to add the phrase 'at the sole discretion of the company.' If not, it would become tough for you to plan exits affecting the work, as most employees would like to leave as soon as possible to start receiving the enhanced salary from their new employers earlier.

All the best.

Regards,
TS