How Should I Set Up Pay and Rules for Employees in Their Notice Period?

Dear All,

Recently, I have joined as an HR Manager in a company. Previously, they used to give salary as usual to employees who are in the Notice Period. However, now they are asking me to establish rules and regulations, as well as the pay structure (whether Basic or HRA, etc.) for employees serving in the Notice Period.

Please assist me in creating the pay structure and rules and regulations.

Thanks and Regards,
Sravanthi

Please note that employees serving the notice period are eligible for salary until the date of relieving as per the appointment letter. Salary cannot be reduced during the notice period. Please let me know why the salary has to be reduced during the notice period.

Normally, only Basic is included because when the point comes for Leave Encasement, Basic is considered. In that case, for the shortfall of Notice Period, Basic has to be considered.

Regards, Y.R. Shirke

In my opinion, there is no scope to reduce the salary even during the notice period. If an employee is serving during the notice period, then he is entitled to get the same salary to which he was entitled to during his normal course of work.

Notice period is served in accordance with the terms of employment. Hence, no deduction of salary on account of the same can be made.

Dear Sravanthi, the members above have given you a correct reply. My question to you is: as an HR Manager, do you believe it is justifiable to reduce an existing salary when an employee is fully dedicated to completing tasks or transitioning work smoothly to a new candidate? Is this action a punishment or a reward for their service to the company?

Furthermore, what if an employee only serves a notice period for 1-2 hours daily until the end of their notice period—would that be sufficient? If an employee dedicates 8 hours a day, they should receive appropriate wages or salary as mutually agreed upon during their appointment or subsequent increments, up until their last day of service.

Thank you.

Sravanthy,

Your question is not clear. So far as I have understood, you meant to say that those employees who are serving the notice period should be paid basic salary only and not the allowances? Please confirm.

In my opinion, there is no scope to reduce the salary even during the notice period. If an employee is serving during the notice period, then he is entitled to get the same salary to which he was entitled during his normal course of work.

Normally, there should not be any reduction in salary for the notice period service, as it is considered a normal working period until the employee's last day of work in the establishment. If there is any adjustment needed for the earned leave accumulated by the employee during the notice period, it should be calculated based on Basic + DA only.

Dear Agniputhran,

I am not in agreement with your statement, "If there is any adjustment with the earned leave accumulated by the employee for the notice period, then it has to be taken as Basic + DA only." It purely depends on the encashment policy of the company, which would have been circulated at the employee's joining the company or mutually agreed upon thereafter. There is no rule that states the EL/PL needs to be encashed only on Basic + DA. Few companies encash on Gross pay as well.

Clarification on Salary Calculation During Notice Period

It seems there is confusion in the question about whether during the notice period, the reduced salary is calculated only on Basic to be paid or not. Like all other periods, the salaries are to be calculated on Basic, DA, HRA, Con. Allowance & Spl. Allowance, which is called Gross Salary or net salary excluding PF, ESI, and other allowances.

Similarly, PL encashment is to be calculated on Gross salary and not on Basic alone. If an employee has 30 days of accumulated PL for encashment, he has to be paid one month Gross Salary as if he has worked during the month and earned the salary for one month. Paying only on Basic will deny his full entitlement. There has already been a discussion on the subject, and I hope senior members may correct if there are any changes.

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Date: 29.4.17