Notice Period Dilemma: Should We Deduct 70 Days or Until Appointment Expiry?

Appointment and Notice Period Clause

An employee at the managerial level is being issued an appointment with a period of 3 years. The appointment letter consists of a clause of a 3-month notice period or salary in lieu of the clause.

Yearly appraisals have been awarded to him for the last two years, along with other employees; therefore, he cannot be considered a probationary employee.

He has tendered his resignation and has served only a notice period of 20 days.

Query on Notice Period Deduction

Now, his full and final settlement is to be processed. I have a query on the following:

1. Should the notice period to be deducted be 70 days, or should it be up to his date of expiry of the appointment period?

In my view, he was aware of the notice period clause, but there was no intimation from his side to the company regarding the renewal of his appointment period. The company was in the process of renewing his appointment period, but in the meantime, he had served his resignation. Being in a managerial position and having served only a notice period of 20 days, a notice period of 70 days must be deducted instead of the deduction of the expiry of the appointment period.

Please provide valuable inputs on the above.

Dear Sandeep, This is a Fixed-Term Contract of Employment for a period of three years only, with a notice clause of 3 months on either side and provision for further extension based on the consent of either side.

Your statement that the employee tendered his resignation and only served a notice period of 20 days indicates that exactly 20 days before the expiry of 3 years, he tendered his resignation for reasons best known to himself.

Strictly legal interpretation of the contract is that resignation even a single day short of 3 years' service requires total compliance with the notice clause on the employee's part. But would it sound reasonable on the part of the management is the pertinent question when it is intent on the renewal of the contract further. Had the management informed of their intention to renew the contract at least while he submitted his resignation, perhaps he would have withdrawn his resignation in anticipation of his further continuance or insisted on the acceptance of his resignation despite his obligation to fulfill the notice covenant in full.

Therefore, it is a decision left to the sole discretion of the management.