Confused About Notice Period Payment: Should I Pay Gross or Basic Salary?

I have been working at a private IT company and willing to pay in lieu of the notice period of one month and one month of service. In the appointment letter, they mentioned the need for a two-month notice or payment of gross salary for two months. However, in CiteHr, many articles mention that the payment in lieu of notice will be based on the basic salary. Can you please help me find the correct way? Do I pay the gross salary or the basic salary?

Notice of Exit or Termination of Employment

Notice of exit or termination of employment and payment in lieu of such notice, in general, is one of the conditions of the contract of employment. As such, what is mentioned in that particular clause has to be complied with by the party taking recourse to it for the purpose of terminating the contract of employment. I am not aware of any rule, either by way of convention of practice or by any statute, categorically laying down that it shall be the basic salary alone.

Deep down, the concept of notice in the matter of termination of employment is to enable the other party to make alternative arrangements. For reasons of situational compulsion, payment in lieu thereof is envisaged.

"Do I pay gross salary or basic salary?"

What does your appointment order specify? You willingly accepted it while joining, so why are you now looking to check whether it is basic pay and not gross pay?

"I have been working at a private IT company and am willing to pay in lieu of the notice period of one month and one month's service."

Again, refer back to your appointment order. What does it say - is it a 2-month notice or 2 months' gross pay? If you want any changes at the time of exit, you have to negotiate with the employer. There is no legal way out for you.

In addition to what the seniors said above, I would like to ask whether your appointment letter defined what salary is or whether the clause on separation states that salary means basic salary only for the purpose of notice pay. If not, then by going by the common interpretation, what you receive every month as salary from the company without deductions for the services rendered by you will constitute salary for the purpose of notice pay. These differences need to be sorted out across the table to avoid misunderstanding and to ensure a smooth exit.

Regards,
B. Saikumar