I have a different perception based on the purpose of notice on exit in the realm of employment. Here in this thread, the contract of employment between the employer and the employee is a Fixed Term Contract of Service for a period of 5 years terminable by 3 months notice on either side. Now, the exit or foreclosure of the contract before the completion of the 5 years is at the instance of the employer for which a notice of three months has been given by the employer for the obvious reason that the employer does not want to pay salary in lieu of notice. Thus the process of termination of the contract for 5 years of service stands started after 3 years by the employer through the issuance of a prior notice of 3 months. It means that the employer would continue the employee on his service only for a period of 3 months and he would be paid salary if he works or if he finds an alternative employment during the notice period, he can go out by foregoing his service for the remaining period as well as salary based on the principle of no work-no salary. Therefore, my answers to the queries are as follows:
1) If the organization relieves the employee at his request on the 20th day of the 3 month notice already issued, it need not pay him salary for the remaining 2 months and 10 days as the foreclosure of the contract of employment between them gets concluded by acting upon the request of the employee on the 20th day itself.
2) His request for early relief can not be construed as resignation so as to buy out the remaining notice period. Even in the absence of such request for early relief, any way, the organization is going to terminate his services as per the exit clause. Such a move of the employee consequent on the intention of the employer to foreclose the contract can not be treated as a new offer validating acceptance from the employer so as to compel him to make a buy-out of the remaining notice period. Similarly nor such a move can entitle the employer to compel him serve the entire notice period when the employee is prepared to forego the salary for the period. The objective behind notice of termination is primarily and predominantly to get the other party duly informed and get prepared to arrange for alternatives only and not to garner any unusual monetary gains.