Employee Resignation: Should They Get Paid for a 3-Month Notice Period They Offered to Serve?

Dear All,

If an employee submits their resignation on 21 July 2024 and management accepts and relieves them on 22 July 2024, but the employee is willing to serve their notice period, what should be done? The notice period, as per the appointment letter, is 3 months, and the employee is demanding notice period payment. Is the employee eligible for a three-month notice period payment? If yes, should it be based on the basic salary or the gross salary?

Notice Period and Compensation

Putting a three-month notice period as a condition of service itself is wrong and illegal. However, having done so, the employee should be compensated for early relieving. The salary for the purpose of paying notice pay should be the total salary and not just the basic pay.

Naturally, if the employee is being relieved early without notice, what component of the salary would qualify for that? Is it basic pay alone? If you only consider basic pay, then you should also only pay basic pay as compensation.

Generally, "advance notice of one (or 2 or 3) months" is the norm in the case of quitting, resignation, or termination, etc. This means that the employee submitting their resignation is supposed to work for those months before being relieved finally. Therefore, having worked during the "notice period," the employee is entitled to their gross salary.

On the other hand, if the employer accepts the resignation and is prepared to relieve the employee, then the employee must be paid the salary for the period/months of the notice period as stated in the appointment letter or terms and conditions mutually agreed upon. This is what is happening in the case you cited. Therefore, if the employee is relieved immediately, they are entitled to notice pay for the (un-served) days they were not asked to work and earn.