Dear members,
On one of the WA groups of HR, Administrator of the groups has raised a topic for discussion. Today's topic is on "Positive and Negative Aspects of the Notice Period Clause in the Appointment Letter". He has asked the following questions:
Is the clause of notice period in the appointment letter used arbitrarily or judiciously?
Is the clause of notice period used as a weapon for holding relieving letter, experience letter and F&F settlement or vendetta at play if the employee fails to serve the same partially or completely (except in abandoned cases) to the company?
Is it not the truth that the clause of notice period is misused under the pretext of redundancy by the company for terminating services of employee with immediate effect by paying salary in lieu of notice period?
Is the clause of notice period used for the convenience of the company even if it is not required in some cases?
I have given the replies to the above questions and these are below:
+++++
Dear Rajaram,
Replies to your questions are as below:
Q. 1 Is the clause of notice period in the appointment letter used arbitrarily or judiciously?
Reply: - Judiciousness or arbitrariness is a matter of interpretation. To know whether the use of judicious or arbitrary, we need to know the terms mentioned in the appoint letter.
Those who started their career in mid-nineties or earlier, will remember that the concept of notice period was reserved only for the managers. Junior level employees could quit the company with just few days notice. However, in the post-liberalisation era, business started growing and it also created the scarcity of the talent. To tide over the talent shortage, companies started increasing notice period. Earlier it was 30 days, then it was 60 days and now in most of the companies it is 90 days. This long notice period gives elbow room to the current employer not just to search better candidate but to manoeuvre in order to retain an exiting employee. They may promise increase in pay or promotion or additional perks.
Q. 2 Is the clause of notice period used as a weapon for holding relieving letter, experience letter and F&F settlement or vendetta at play if the employee fails to serve the same partially or completely (except in abandoned cases) to the company?
Reply: - Appointment Letter is a contract between the employer and and employee. Both the sides must abide with the terms mentioned in the appointment letter. Now what if employees abandons the duties at his/her will? It upsets the operations of the company. To tide over this capriciousness, companies hold the F & F. It need not be construed as vendetta but it is an action to maintain culture of discipline in the company. By withholding F & F, companies send a signal to other employees that what fate they can meet if they abandon their job whimsically. Yes this is a weapon, nevertheless, it has to be used only against defaulters. It's misuse could boom rang on the company.
Q. 3 Is it not the truth that the clause of notice period is misused under the pretext of redundancy by the company for terminating services of employee with immediate effect by paying salary in lieu of notice period?
Reply: - Modern businesses are different than the businesses of the 20th century. In many companies the work is project based. Now what if the project is completed and the employees who worked in the project could not be absorbed in some other job? What to do in this case? If they allowed to continue their employment without significant work, then the company will turn from business organisation to a charity organisation. To sustain competition, company has to retain only the relevant and exact manpower. To get rid of the excess flab, companies use the clause of the notice period.
Q. 4 Is the clause of notice period used for the convenience of the company even if it is not required in some cases?
Reply: - There is a skill shortage at all the levels. There is a shortage of right talent at all the levels. Against this backdrop, which are the designations that do not require notice period? It is not easy to get even quick replacement of office boy! Therefore, there is no question of removing clause of notice period. Notice period is *fait accompli* and it is going to stay till a situation arises where innumerable candidates chase far fewer jobs!
Final comments: - While designing the exit clauses, employers should take note that these are equal for both the sides. The contract should not be tilted towards them. Secondly, in many companies there are long-serving employees. When they had joined some 20-25 years ago, the notice period was just 15 days. Now the current trend demands notice period of 90 days. Many companies have started extending the notice period. However, changing the conditions of employment somewhere in between is illegal. There is a ruling to this effect by the Delhi High Court.
Thanks,
Dinesh Divekar
On one of the WA groups of HR, Administrator of the groups has raised a topic for discussion. Today's topic is on "Positive and Negative Aspects of the Notice Period Clause in the Appointment Letter". He has asked the following questions:
Is the clause of notice period in the appointment letter used arbitrarily or judiciously?
Is the clause of notice period used as a weapon for holding relieving letter, experience letter and F&F settlement or vendetta at play if the employee fails to serve the same partially or completely (except in abandoned cases) to the company?
Is it not the truth that the clause of notice period is misused under the pretext of redundancy by the company for terminating services of employee with immediate effect by paying salary in lieu of notice period?
Is the clause of notice period used for the convenience of the company even if it is not required in some cases?
I have given the replies to the above questions and these are below:
+++++
Dear Rajaram,
Replies to your questions are as below:
Q. 1 Is the clause of notice period in the appointment letter used arbitrarily or judiciously?
Reply: - Judiciousness or arbitrariness is a matter of interpretation. To know whether the use of judicious or arbitrary, we need to know the terms mentioned in the appoint letter.
Those who started their career in mid-nineties or earlier, will remember that the concept of notice period was reserved only for the managers. Junior level employees could quit the company with just few days notice. However, in the post-liberalisation era, business started growing and it also created the scarcity of the talent. To tide over the talent shortage, companies started increasing notice period. Earlier it was 30 days, then it was 60 days and now in most of the companies it is 90 days. This long notice period gives elbow room to the current employer not just to search better candidate but to manoeuvre in order to retain an exiting employee. They may promise increase in pay or promotion or additional perks.
Q. 2 Is the clause of notice period used as a weapon for holding relieving letter, experience letter and F&F settlement or vendetta at play if the employee fails to serve the same partially or completely (except in abandoned cases) to the company?
Reply: - Appointment Letter is a contract between the employer and and employee. Both the sides must abide with the terms mentioned in the appointment letter. Now what if employees abandons the duties at his/her will? It upsets the operations of the company. To tide over this capriciousness, companies hold the F & F. It need not be construed as vendetta but it is an action to maintain culture of discipline in the company. By withholding F & F, companies send a signal to other employees that what fate they can meet if they abandon their job whimsically. Yes this is a weapon, nevertheless, it has to be used only against defaulters. It's misuse could boom rang on the company.
Q. 3 Is it not the truth that the clause of notice period is misused under the pretext of redundancy by the company for terminating services of employee with immediate effect by paying salary in lieu of notice period?
Reply: - Modern businesses are different than the businesses of the 20th century. In many companies the work is project based. Now what if the project is completed and the employees who worked in the project could not be absorbed in some other job? What to do in this case? If they allowed to continue their employment without significant work, then the company will turn from business organisation to a charity organisation. To sustain competition, company has to retain only the relevant and exact manpower. To get rid of the excess flab, companies use the clause of the notice period.
Q. 4 Is the clause of notice period used for the convenience of the company even if it is not required in some cases?
Reply: - There is a skill shortage at all the levels. There is a shortage of right talent at all the levels. Against this backdrop, which are the designations that do not require notice period? It is not easy to get even quick replacement of office boy! Therefore, there is no question of removing clause of notice period. Notice period is *fait accompli* and it is going to stay till a situation arises where innumerable candidates chase far fewer jobs!
Final comments: - While designing the exit clauses, employers should take note that these are equal for both the sides. The contract should not be tilted towards them. Secondly, in many companies there are long-serving employees. When they had joined some 20-25 years ago, the notice period was just 15 days. Now the current trend demands notice period of 90 days. Many companies have started extending the notice period. However, changing the conditions of employment somewhere in between is illegal. There is a ruling to this effect by the Delhi High Court.
Thanks,
Dinesh Divekar