Hi Everyone,
I am working for a indian IT company. But currently I am in US with my spouse on Leave without pay. Due to some personal reasons I had to resign my job, so I submitted my resignation and my supervisor approved the same. Because I am not in a position to leave US i.e. going back to INDIA to serve the notice period of 3 months, I opted to buy out my notice period. To make a buy out my employer is asking me to pay 3 months gross salary which is coming around 2.5 lakhs which is very high amount. It includes Basic pay (~35000)+HRA(17350)+ Special Allowance(26000)/month.
My employer is not having policies clearly defined. No policy document is clearly saying about the buying out notice period. Also when my employer's HR team prepared FnF Statement, they did numerous mistakes on calculating amount and I had to highlight to correct the same. If I ask why do I need to pay 3 months gross pay, they are asking me to refer the following point from my offer letter. And no where it is specified as Gross salary. As per industry standard most of the companies asking to pay the basic salary to buy out the notice period.
In my offer letter point under Notice period says as follows.
""Notice Period: On confirmation your appointment with the Company will be subject to termination with 3 months notice or payment in lieu thereof. Should you desire to resign from the Company you shall provide the Company with a prior written notice of similar period of such resignation or payment in lieu thereof. However, in case any disciplinary proceedings are either contemplated or pending against you, the Company shall have the right not to accept your resignation. If you desire to resign from your services hereunder, you shall, not withstanding the provision with respect to payment in lieu of the notice as provided hereunder, make yourself available during all office hours, for such period from the date of tendering your resignation, as may be required by the company as its discretion order to ensure smooth transition.""
Please note that it says "payment in lieu thereof". Just payment. What does it really mean? No point says that payment is Gross. Just a payment.
Please advice how I can take it forward. I am able to pay money for buying out my notice period. But not the gross salary, because for the past 4 months I am on Leave without pay.
Expecting your responses.
Thanks,
Victor.
From United States, Denver
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I am working for a indian IT company. But currently I am in US with my spouse on Leave without pay. Due to some personal reasons I had to resign my job, so I submitted my resignation and my supervisor approved the same. Because I am not in a position to leave US i.e. going back to INDIA to serve the notice period of 3 months, I opted to buy out my notice period. To make a buy out my employer is asking me to pay 3 months gross salary which is coming around 2.5 lakhs which is very high amount. It includes Basic pay (~35000)+HRA(17350)+ Special Allowance(26000)/month.
My employer is not having policies clearly defined. No policy document is clearly saying about the buying out notice period. Also when my employer's HR team prepared FnF Statement, they did numerous mistakes on calculating amount and I had to highlight to correct the same. If I ask why do I need to pay 3 months gross pay, they are asking me to refer the following point from my offer letter. And no where it is specified as Gross salary. As per industry standard most of the companies asking to pay the basic salary to buy out the notice period.
In my offer letter point under Notice period says as follows.
""Notice Period: On confirmation your appointment with the Company will be subject to termination with 3 months notice or payment in lieu thereof. Should you desire to resign from the Company you shall provide the Company with a prior written notice of similar period of such resignation or payment in lieu thereof. However, in case any disciplinary proceedings are either contemplated or pending against you, the Company shall have the right not to accept your resignation. If you desire to resign from your services hereunder, you shall, not withstanding the provision with respect to payment in lieu of the notice as provided hereunder, make yourself available during all office hours, for such period from the date of tendering your resignation, as may be required by the company as its discretion order to ensure smooth transition.""
Please note that it says "payment in lieu thereof". Just payment. What does it really mean? No point says that payment is Gross. Just a payment.
Please advice how I can take it forward. I am able to pay money for buying out my notice period. But not the gross salary, because for the past 4 months I am on Leave without pay.
Expecting your responses.
Thanks,
Victor.
From United States, Denver
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Normally notice pay or the payment of salary in lieu of notice shall mean to include only Basic Salary and DA, if applicable. This shall be same if the employer wants to terminate the service of an employee. Since you do not fall under the definition of workman/ employee under labour laws pertaining to such kind of disputes (simply Industrial Disputes Act) a cross reference is not possible. In such circumstances it would be appreciable to refer to the certified Standing Orders of the company. In the absence of these, it shall be understood as Basic Salary only.
To support your stand you can say that if you had been eligible for gratuity, it should be basic salary only that could have been taken into account for calculating your gratuity. Similarly, if, on your leaving, you had encashed the balance of leave, it should have been done on your basic salary and not on gross salary. In the similar way, notice pay shall only mean basic salary for the required months (in your case three months)
Regards,
Madhu.T.K
From India, Kannur
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4465To support your stand you can say that if you had been eligible for gratuity, it should be basic salary only that could have been taken into account for calculating your gratuity. Similarly, if, on your leaving, you had encashed the balance of leave, it should have been done on your basic salary and not on gross salary. In the similar way, notice pay shall only mean basic salary for the required months (in your case three months)
Regards,
Madhu.T.K
From India, Kannur
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Dear Madhu,
I need your opinion. The employerment offer letter contains the clause " In case of resignation by employee or termination of employment by employer, three months notice or pay in lieu of notice has to be given".
Now the question is one employee has submitted his resignation by giving three months notice. The employer is willing to relieve him immediately. In this case, whether the employee is entilted for notice pay ?
My view is that employer insisted three months notice from employee. Now he is willing to waive it and does not want to insist on that.
If the employer calls the employee on a afternoon and tells him that his services are no more required, then the employee is entitled to get the notice pay.
I have seen some threads about "selling out or buying of notice period" Hence this request.
KCS Kutty
From India, Madras
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I need your opinion. The employerment offer letter contains the clause " In case of resignation by employee or termination of employment by employer, three months notice or pay in lieu of notice has to be given".
Now the question is one employee has submitted his resignation by giving three months notice. The employer is willing to relieve him immediately. In this case, whether the employee is entilted for notice pay ?
My view is that employer insisted three months notice from employee. Now he is willing to waive it and does not want to insist on that.
If the employer calls the employee on a afternoon and tells him that his services are no more required, then the employee is entitled to get the notice pay.
I have seen some threads about "selling out or buying of notice period" Hence this request.
KCS Kutty
From India, Madras
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dear mr kutty
in my opinion in this situation employer has to pay in lieu of notice.as per condition of appointment individual has planned his future course of action and accordingly given 3 month notice,if employer relieve him immdly than he has to pay in lieu of notice.
regards
js malik
From India, Delhi
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in my opinion in this situation employer has to pay in lieu of notice.as per condition of appointment individual has planned his future course of action and accordingly given 3 month notice,if employer relieve him immdly than he has to pay in lieu of notice.
regards
js malik
From India, Delhi
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Dear Malik,
I have a different opinion on it. When the termination of contract of employment has come from the employee in the form of resignation, it is upto the employer when to relieve him. As such, if he is willing to relieve the employee with immediate effect, then why should the employer pay notice pay to the employee ? It will be done on mutual agreement. If we take it in another view that if the employer serves three months' notice of termination of employment and the employee wants to leave with immediate effect, will the employer demands notice pay from the employee?
My understanding about notice period is that it is the maximum period which is required by the employer to get a substitute employee in the place of the employee who is leaving. If the employer finds an alternative, he can relieve the employee even without waiting for three months. Similarly, notice period from the employer's side is the maximum period that the employer gives to an employee to find out an alternative employment. If the employee under notice period gets an alternative employment, he is free to leave during such notice period without paying the employer any notice pay. Under both these circumstances, since the decision to leave or terminate, as the case may be, has already been taken, there seems to be nothing wrong in relieving at an early date.
Regards,
Madhu.T.K
From India, Kannur
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I have a different opinion on it. When the termination of contract of employment has come from the employee in the form of resignation, it is upto the employer when to relieve him. As such, if he is willing to relieve the employee with immediate effect, then why should the employer pay notice pay to the employee ? It will be done on mutual agreement. If we take it in another view that if the employer serves three months' notice of termination of employment and the employee wants to leave with immediate effect, will the employer demands notice pay from the employee?
My understanding about notice period is that it is the maximum period which is required by the employer to get a substitute employee in the place of the employee who is leaving. If the employer finds an alternative, he can relieve the employee even without waiting for three months. Similarly, notice period from the employer's side is the maximum period that the employer gives to an employee to find out an alternative employment. If the employee under notice period gets an alternative employment, he is free to leave during such notice period without paying the employer any notice pay. Under both these circumstances, since the decision to leave or terminate, as the case may be, has already been taken, there seems to be nothing wrong in relieving at an early date.
Regards,
Madhu.T.K
From India, Kannur
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Dear Malik Saheb and Madhu,
Thanks to both of you for the prompt reply.
I raised this issue since I have seen many posts on this issue.
No employer would like to relieve his employee, if he is a performing asset to the organisation, even in the days of adversity.
KCS Kutty
From India, Madras
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Thanks to both of you for the prompt reply.
I raised this issue since I have seen many posts on this issue.
No employer would like to relieve his employee, if he is a performing asset to the organisation, even in the days of adversity.
KCS Kutty
From India, Madras
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Dear All, My question from all of you is their any agreement or any format of Salary buy out. If you have could you plz share it with me. Thanks & regards Hemlata Sharma Asst. Manager HR
From India, Chandigarh
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From India, Chandigarh
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Dear Hemalata,
In my humble opinion, there is no prescribed format or any specific agreement formulated under the law for buying out salary. However, it depends on a case-to-case basis, depending on the clause mentioned in the offer letter issued to the potential candidate.
When an employer makes an offer of employment to his potential candidate to join the services as early as possible, which may result in paying a salary in lieu of notice period to the present employer by the potential candidate, the clause may be as follows:
"The Company would reimburse any shortfall in the notice period extended to your present employer, should it result in the payment of salary (mention whether Basic or Gross salary) in lieu of notice upon producing the receipt or any documentary proof of having paid the said amount."
However, simultaneously, you may also include one more clause of repayment of the reimbursed amount by the candidate, in case he leaves the Company within a stipulated time. Failing which it may result in a loss to the Company if the employee leaves within a short span.
The clause may be as follows:
"Whereas, should you leave the services of the Company within THREE Years (just indicative you may change according to your requirement) from the date of your joining, you shall be required to repay the amount so reimbursed in the following manner:
a) first year of your joining = 100% of the amount reimbursed
b) second year of your joining = 75% of the amount reimbursed
c) third year of your joining = 50% of the amount reimbursed
d) thereafter = Nil."
Kindly note: There is no need to have a separate letter drafted for this purpose; you may include the same in the Offer letter issued to the candidate.
Hope this meets your requirement.
Regards,
Sharath M. Kumar
12.11.2010
From India, Bangalore
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In my humble opinion, there is no prescribed format or any specific agreement formulated under the law for buying out salary. However, it depends on a case-to-case basis, depending on the clause mentioned in the offer letter issued to the potential candidate.
When an employer makes an offer of employment to his potential candidate to join the services as early as possible, which may result in paying a salary in lieu of notice period to the present employer by the potential candidate, the clause may be as follows:
"The Company would reimburse any shortfall in the notice period extended to your present employer, should it result in the payment of salary (mention whether Basic or Gross salary) in lieu of notice upon producing the receipt or any documentary proof of having paid the said amount."
However, simultaneously, you may also include one more clause of repayment of the reimbursed amount by the candidate, in case he leaves the Company within a stipulated time. Failing which it may result in a loss to the Company if the employee leaves within a short span.
The clause may be as follows:
"Whereas, should you leave the services of the Company within THREE Years (just indicative you may change according to your requirement) from the date of your joining, you shall be required to repay the amount so reimbursed in the following manner:
a) first year of your joining = 100% of the amount reimbursed
b) second year of your joining = 75% of the amount reimbursed
c) third year of your joining = 50% of the amount reimbursed
d) thereafter = Nil."
Kindly note: There is no need to have a separate letter drafted for this purpose; you may include the same in the Offer letter issued to the candidate.
Hope this meets your requirement.
Regards,
Sharath M. Kumar
12.11.2010
From India, Bangalore
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Very recently, I came across some Supreme Court verdicts which state that an employee has the right to withdraw his resignation before it becomes effective. Hence, I have developed a variant opinion about what I have already expressed.
In Union of India & Others vs Gopal Chandra Misra & Others, it was held that the general principle is that in the absence of a legal, contractual, or constitutional bar, a 'prospective' resignation can be withdrawn at any time before it becomes effective.
In Balram Gupta Vs Union of India & Anr., the principle laid down in the Gopal Chandra Misra case was summarized as follows: "A complete and effective act of resigning office is one that severs the link of the resignor with his office and terminates his tenure."
In Nand Keshwar Prasad Vs Indian Farmers Fertilizers Cooperative Ltd. & Ors., the Court reiterated that it is open to the employee concerned to withdraw a letter of resignation before the date indicated in the notice of voluntary retirement. It was also observed:
"It appears to us that the law is well settled by this Court in a number of decisions that unless controlled by conditions of service or statutory provisions, the retirement mentioned in the letter of resignation must take effect from the date mentioned therein, and such date cannot be advanced by accepting the resignation from an earlier date when the employee concerned did not intend to retire from such an earlier date."
In Power Finance Corporation Ltd. Vs Pramod Kumar Bhatia, the Apex Court went a step further and observed that "It is now a settled legal position that unless the employee is relieved of duty, after acceptance of the offer of voluntary retirement or resignation, the jural relationship of the employee and the employer does not come to an end."
Shambhu Murari Sinha versus Project & Development India & Another is yet another case that supports the above views.
It is to be understood that once an employee has submitted a resignation, his relieving date cannot be advanced because he has the option to withdraw the resignation before the effective date of his relieving. Therefore, if an employer wishes to relieve him earlier, notice pay should be given, treating it as termination of employment by the employer.
I would appreciate it if Mr. Mallik, Mr. Kutty, and others also share their thoughts on this.
Regards,
Madhu.T.K
From India, Kannur
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In Union of India & Others vs Gopal Chandra Misra & Others, it was held that the general principle is that in the absence of a legal, contractual, or constitutional bar, a 'prospective' resignation can be withdrawn at any time before it becomes effective.
In Balram Gupta Vs Union of India & Anr., the principle laid down in the Gopal Chandra Misra case was summarized as follows: "A complete and effective act of resigning office is one that severs the link of the resignor with his office and terminates his tenure."
In Nand Keshwar Prasad Vs Indian Farmers Fertilizers Cooperative Ltd. & Ors., the Court reiterated that it is open to the employee concerned to withdraw a letter of resignation before the date indicated in the notice of voluntary retirement. It was also observed:
"It appears to us that the law is well settled by this Court in a number of decisions that unless controlled by conditions of service or statutory provisions, the retirement mentioned in the letter of resignation must take effect from the date mentioned therein, and such date cannot be advanced by accepting the resignation from an earlier date when the employee concerned did not intend to retire from such an earlier date."
In Power Finance Corporation Ltd. Vs Pramod Kumar Bhatia, the Apex Court went a step further and observed that "It is now a settled legal position that unless the employee is relieved of duty, after acceptance of the offer of voluntary retirement or resignation, the jural relationship of the employee and the employer does not come to an end."
Shambhu Murari Sinha versus Project & Development India & Another is yet another case that supports the above views.
It is to be understood that once an employee has submitted a resignation, his relieving date cannot be advanced because he has the option to withdraw the resignation before the effective date of his relieving. Therefore, if an employer wishes to relieve him earlier, notice pay should be given, treating it as termination of employment by the employer.
I would appreciate it if Mr. Mallik, Mr. Kutty, and others also share their thoughts on this.
Regards,
Madhu.T.K
From India, Kannur
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Dear Mr. Madhu,
After reading both of your views, there is a strong point for all of us to understand that in the case of resignation or voluntary retirement from the services, an employee has to serve a notice period. The point here to be noted is whether the employee has requested early relieving from the services. If yes, then the employer is at liberty or has the discretion to relieve him on a much earlier date than the actual. If not, as cited by you in a couple of judgments given by the APEX Court, the employer cannot advance the date of relieving unless for want of two reasons, namely:
A. The employer has to pay the employee for the difference in the notice period resulting from early relieving.
B. In the case of any public sector employment (in some cases Private sector), as stated, the employee has every opportunity to withdraw his resignation before the effective date of relieving.
I am stressing this issue because I am facing a similar situation. I was employed as Manager - HR/IR in Syndicate Bank. My notice period is three months in case I put in my papers. I had resigned on 20th Sept '2010 and served the three months' notice to the employer which falls due on 18th Dec '10 without asking for early relieving. However, forcibly and without giving sufficient reason and notice, I have been abruptly relieved on 08th Nov '2010, without paying for the difference in the notice period.
The point to be noted here is that I have neither asked for early relieving nor does my offer letter contain a clause that upon serving such notice period, the Bank can relieve me at an earlier date without any compensation.
There are, once again, two points which I consider as points of argument to put forth my contention:
1. The clause of the notice period cannot be one-sided, where if the employee wants to leave the services, he has to serve a three-month notice, and the employer may relieve him at any time without compensation. It is oppressive in nature.
2. The employee is also losing monetarily as he is deprived of his earnings for such a period as he would be unemployed and cannot join his prospective employer if there is no mutual agreement.
I would be contesting my case on the above two grounds. What is your opinion?
Regards,
Sharath M. Kumar
From India, Bangalore
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After reading both of your views, there is a strong point for all of us to understand that in the case of resignation or voluntary retirement from the services, an employee has to serve a notice period. The point here to be noted is whether the employee has requested early relieving from the services. If yes, then the employer is at liberty or has the discretion to relieve him on a much earlier date than the actual. If not, as cited by you in a couple of judgments given by the APEX Court, the employer cannot advance the date of relieving unless for want of two reasons, namely:
A. The employer has to pay the employee for the difference in the notice period resulting from early relieving.
B. In the case of any public sector employment (in some cases Private sector), as stated, the employee has every opportunity to withdraw his resignation before the effective date of relieving.
I am stressing this issue because I am facing a similar situation. I was employed as Manager - HR/IR in Syndicate Bank. My notice period is three months in case I put in my papers. I had resigned on 20th Sept '2010 and served the three months' notice to the employer which falls due on 18th Dec '10 without asking for early relieving. However, forcibly and without giving sufficient reason and notice, I have been abruptly relieved on 08th Nov '2010, without paying for the difference in the notice period.
The point to be noted here is that I have neither asked for early relieving nor does my offer letter contain a clause that upon serving such notice period, the Bank can relieve me at an earlier date without any compensation.
There are, once again, two points which I consider as points of argument to put forth my contention:
1. The clause of the notice period cannot be one-sided, where if the employee wants to leave the services, he has to serve a three-month notice, and the employer may relieve him at any time without compensation. It is oppressive in nature.
2. The employee is also losing monetarily as he is deprived of his earnings for such a period as he would be unemployed and cannot join his prospective employer if there is no mutual agreement.
I would be contesting my case on the above two grounds. What is your opinion?
Regards,
Sharath M. Kumar
From India, Bangalore
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