Notice Period Shortfall: Is It Based on Basic or Gross Salary? Seeking Industry Insights

Hi All, I wanted some clarity on recovering a shortfall in the notice period. Is the shortfall calculated based on the basic salary or gross salary? What is the industry practice for the same?

Regards, Afrin Kanga

Industry practice for recovery from gross salary

Industry practice is recovery to be made from gross salary.

Alternative to recovering shortfall in notice period

But why do you want to recover the shortfall in the notice period? Instead, you can ask the employee to surrender their earned leave to adjust the shortfall in the notice period.

The recovery of the notice period is based on the policy of the company. In most cases, companies recover the notice period on the basic pay.

Thanks

Recovery of notice period salary is based on the contract of employment. It is always specified in the contract of employment whether the recovery will be made on the basic salary or gross salary.

Regards, Bharat Gera

It is generally calculated with gross pay. However, you need to check the terms and conditions clauses mentioned in the appointment letter before executing.

Regards, Kannan R

Generally, it is seen in any job offer letter or offer of appointment under the separation clause (Notice of Termination) that "you shall be serving ___ months' notice to the company, should you seek separation from the company or ___ months' salary in lieu of the notice period."

This is a general clause; whether it is one month's notice or one month's salary OR three months' notice or salary depends on the company and the position. Thus, it is written as salary, and salary need not be basic salary alone; it often includes DA, HRA, etc.

Therefore, it is not wrong to say that the shortfall in the notice period is calculated based on the full monthly salary and not just on the basic salary.