Understanding Notice Periods: What Does the Indian Labour Act Say About Minimum Duration?

Dear Friends, I have a small concern regarding defining the duration of the notice period for certain cadres of employees. Management doesn't want to provide a 30-day notice period. In this case, please let me know what would be the minimum duration of the notice period as per the Indian Labour Act. (Please mention the exact terminologies outlined in the Labour Act).

Concerns:

1. Is it mandatory to provide the notice period to employees?
2. If so, what would be the minimum duration?
3. Does an organization have the privilege to provide an offer letter stating a notice period is not required?
4. Alternatively, can we opt for a one-week notice period?

Thanks & Regards,
Karthik

Notice Periods and Labour Law Compliance

Notice periods are fixed considering the time required to find a replacement. It is purely a management prerogative. Therefore, you can even have different notice periods for different categories of employees. It may be three months for managerial personnel or one month for worker category employees. There can be no notice period for trainees or those under probation.

Now, coming to the notice period under Labour Law, we should follow the Industrial Disputes Act and/or the Industrial Employment (Standing Orders) Act. In the Industrial Disputes Act, mention has been made of the notice required to be given to workers in case the employer wants to terminate the workers. It is one month for an establishment employing not more than 100 employees and three months for an establishment employing more than 100 employees. The Act also stipulates that at least two months' notice should be given to close down an establishment.

The above notice periods are applicable only to workers who do not have any supervisory or managerial powers. Moreover, the Act is silent about the notice that a worker should give to the employer if the former wants to leave. That means a workman can easily walk out of a company without giving any notice to the employer, but the employer cannot send him out without giving notice or paying salary in lieu of notice.

Now, for employees who are not protected by the ID Act, there can be a notice period of any duration with one condition: the duration should be the same from both sides. If you are confident that you will get a replacement for an employee who leaves without informing and without notice, you can very well have a clause stating that the contract of employment is terminable without any notice. However, this would always be very risky.

Even in the case of workers, there has been a tendency to have a notice period policy by including the same in the Standing Orders of the company. You cannot have a notice period from the employer that is less than 30 days or 90 days, as the case may be, but you can have a notice period from the workers' side since the ID Act has no mention of it. If the workers agree, it will become a binding order.

Regards, Madhu.T.K

Mr. Madhu,

In the case of a PSU, is the notice period mandatory as per the appointment order upon termination on VRS? Can a PSU release an officer on VRS without paying the notice period salary of 80 days (within 10 days of applying)?

Thank you.

Continuing with Madhu's comment, there are certain acts like the Shops and Establishment Acts which state that one month's notice is necessary after ninety days of work. It all depends on the nature of the business, the enactment under which it will be covered, the nature of duty of a particular employee, attrition rate, appointment terms and conditions like trainee, fixed-term contract, probationer, confirmed, and the suitable time required to replace an employee. It's a mixed subject of labor law and HR policies.

Normally, it is advisable to have a different set of rules for the notice period for employees at different levels.

Regards, Anurag Lakhotia
Lexlabour.com

Mr. Madhu,

The Notice period was payable on VRS as per Govt guidelines. VRS Guidelines | and a Supreme Court verdict http://indiankanoon.org/doc/32226972/.

However, a PSU did not discuss the notice period in the VRS scheme (which is contrary to the guidelines). Not paying the notice period is in violation of the appointment order and the company's rules.

In such a case, what is the remedy for the employee?