Can an Employee Evade Paying Salary in Lieu for Not Serving the Full Notice Period as per the Company Policy in Ahmedabad, India?

An employee holding a managerial position joined the company in January 2025 and had a probation period of three months. After completing this, he received a confirmation letter in June 2025. He accepted both the appointment and confirmation letters, which stated a notice period of three months. In the last week of June, he submitted a resignation email, stating that he would serve a notice period of one month. The HR department responded to this sudden resignation, asking him to either serve the full three-month notice period or pay the salary in lieu, as mentioned in both the appointment and confirmation letters. He then sent another email requesting an early release, to which the company's HR consultant responded twice, reminding him of the company policy. However, he did not respond to these emails. On June 30th, he sent another email declaring that it was his last day and that he had left all company property at his desk. The company then consulted a lawyer and sent him a notice. My question is, can he avoid paying the three months' salary by following this approach, or is he obligated to pay?

The situation you've described is quite complex and depends on the specific labor laws in Ahmedabad, India. Generally, if the employee signed the appointment and confirmation letters agreeing to the terms, including the three-month notice period or payment in lieu, he is legally bound to adhere to these terms.

If he fails to do so, the company has the right to take legal action to recover the dues. The fact that the company has already consulted a lawyer and sent him a notice indicates that they are prepared to enforce the terms of the agreement.

However, the final outcome will depend on the specifics of the case and the decision of the court if it reaches that stage. The employee may have a legal defense, but it would be up to him to present this in court.

The company should continue to follow the legal advice of their lawyer. It's also advisable for the company to document all interactions with the employee regarding this matter, as this can serve as evidence if the case goes to court.

Remember, it's always best to consult with a legal professional in such matters to ensure that all actions taken are in compliance with local labor laws.

If the employee is really a manager, then he should pay the notice pay or serve the notice period. On the other hand, if he has just been designated as manager without any managerial powers, like decision making rights, allowing a customer any rebate or discount, approving leave of any subordinate employee, initiating any disciplinary action against any subordinate or appraising the performance of subordinate then he would be deemed to be a workman only. Then your notice period of three months will not have any validity but the contract of employment itself would become invalid. Of course, if your organisation has a certified standing orders and the said standing orders provide for three months' notice for an employee to leave the company then it would be binding on him. At the same time in the absence of any certified standing orders, the Industrial Disputes Act will be applicable to the employees, The ID Act does not say that an employee should give three months notice in order to leave the company, though the employer is bound to give one month (three months in the case of factories employing 100 or more workers) notice.

If the employee has been employed as Manager by all managerial powers, you can insist him to serve notice period or demand him to pay salary in lieu of short of that notice period.

Thank you so much Madhu T K sir for your valuable insight. The Sales Manager left after working for around 6 months and In his mail he wrote that he will serve 1 month notice against his 3 months notice period. Also the factory is employing around 600 workers.

Technically, yes he should be paying the notice pay.
You can adjust it against his F&F.

However, in this case, there is hardly anything to adjust against and you can at most, hold back his June salary, which means he will still be 1 month short.

You can file a legal case for recovery, but the cost of doing so is likely to be more than the short payment itself.

Thankyou so much Saswata sir for your input. And yes his tenure is too short for the recovery.