Confused About Notice Period Payment: Gross or Basic Salary? Need Your Advice!

Dear All, Looking for your precious advice on the matter below. I was working at a company where it is mandatory to provide a notice period of 3 months or the salary in lieu of the same. I did not serve even a single day of notice as I received a very good offer from another company, and they were not willing to give me any time. Now, the company is asking me to provide them with the 3 months' gross salary. However, on the appointment letter, only the word "salary" is mentioned, without specifying whether it is Gross or Basic. So, could you please advise me on what I am liable to pay them as per the law?

Thanks in advance,
Parul

Understanding Salary Components for Notice Pay

Unless otherwise specified in the Standing Orders of the company or in the appointment order issued to you, "salary" typically means gross salary, which is the amount agreed upon as payable if you had worked for a full month. You can exclude reimbursements and annual components from it.

There are different interpretations of salary, and with regard to notice pay, it shall only include Basic salary and dearness allowance. However, the salary as per the terms of appointment is what salary means for all purposes because it is the salary agreed upon by the company and the one you have accepted upon joining. Therefore, pay it and solve the issue.

Regards, Madhu.T.K