Prakash8487
5

Hi All,
Last week i came across the situation. one employee joining our company. He wants to buy out his notice period and want to take a rest for 1 month, when he asked me possible options i said " you have to pay basic salary to your previous employer."
His previous employer wants him to a pay gross salary of a month. Interesting Part is they do leave encashment on basic pay
I would like to know is there any law related to buy out option.
regards
PD

From India, Pune
tajsateesh
1637

Hello PD,
There's no Law that applies to Notice Period Buy-out.
Every Company have their own set of Rules & Policies.....like you mentioned, some have the basic as the Reference & others the Gross CTC.
W.r.t. the Leave Encashment on the Basic pay, here too it varies from Company to Company.
However, since you say that this individual is the JOIN YOUR Company, suggest pl be cautious.
There's something odd in his stand that he wants to take rest for 1 month.....is YOUR Company paying the Buyout amount or is HE bearing the cost?
This is a telltale sign for the guy to try for other Offers in that 1 month & 'USE' your Offer as a backup or for leverage--hope you get the point. Not that it will happen, but the possibility is high.
Ask him to join as soon as he gets relieved.
Rgds,
TS

From India, Hyderabad
Prakash8487
5

Hi TS,
He himself buying out notice period and i do understand your point .
But still is it ethically / legally right for company "X" to do Leave encashment on basic and buy- out stiff on gross.
regards
PD

From India, Pune
psdhingra
387

Dear Prakash,
Buy out notice period and leave encashment are two separate issues to be dealt with separately. In this connection, comparison can be made only with what the company would have paid in lieu of notice period in case it terminates an employee not that what the company pays for leave encashment.
However, about buying out of notice period, unless specifically mentioned in the terms of offer/appointment order the buy out can be made only at basic salary rate by the employee as well as the company. So far as leave encashment is concerned, the employee is encashing his leave that has been earned by him for the duty period he rendered and is payable on gross salary basis. So, in both the cases the company is wrong in its policy.

From India, Delhi
JohnnyWalks
1

There is no law. Companies just act cheap and gouge employees who want to leave.
Unless the company spent huge amount on some specialized training.
Nobody needs to pay anyone if it's a routine work.

From India, Bangalore
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