Notice Period Buyout Costs: How Should They Be Categorized in Your Budget?

Notice period buyout expense

The notice period buyout cost for the candidate will fall under the expenses category related to staffing or recruitment. Typically, this expense is accounted for in the HR or recruitment budget, depending on the organization's financial structure and policies.

Reimbursement process for new employees

As for providing reimbursement to the new employee, the process usually involves submitting valid receipts or expense reports for eligible expenses incurred during the onboarding or relocation process. Reimbursement procedures and policies may vary by company, so it's advisable to refer to the HR department or the employee handbook for specific guidelines on reimbursement claims.

Notice period buyout is, in most companies, treated as part of "Recruitment Expenses." As it is to onboard talent on the fast track, it is given treatment as TA Expenses, and the budget is taken under the Hiring Manager's Budget in many big companies, which is most appropriate.

Such reimbursements need to be handled with care, as in many cases, they are paid along with the first-month salary, and once received, the talent quits or leaves the job abruptly. It is important to have clear documentation stating that the reimbursement will be done in three parts/instalments: one along with the 2nd-month salary, the next in the 4th-month salary, and the last in the 6th-month salary. If someone leaves the service within one year, the said reimbursement will be deducted up to 75%, etc.