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Prad Sim (HR)     28 August 2013

Notice period buyout issue

Hello All,i,

I am in need of your expert advice regd. notice period buyout issue with my current employer.te

After serving my current employer for last 13 months, I am resigned from the position of Sr. HR Executive recently. My appointment letter has the following clause -

 

"After confirmation, your services are terminable at any time, except if the termination of your employment is for cause, with three months’ notice from your side and one month's notice or pay in lieu thereof from the company's side. You acknowledge that at least three month's advance notice by you is reasonable and necessary under such circumstances due to the commitments the company has made its clients by virtue of your employment, and etc. etc.. The company will be entitled to recover from you an amount equivalent to three month's gross salary in lieu of the notice period and to adjust any such amount due from you against any amounts which may be payable to you by the company."

 

I am serving 45 days of notice period instead of 90 days and okay to buy back the notice period.

 

Different components in my salary stack:

Monthly Allowance Category

            Basic

            HRA

            Special Allowance

            Executive Allowance

            Conveyance Allowance

 

Monthly Reimbursement Category

            Lunch Coupons

            Medical reimbursement

 

Statutory Payments

            PF

            Gratuity

 

Though it's written in my appointment letter that it should be gross salary, but I understand that's against labor law. So, while calculating the notice buy back period, which all components should be considered?

 

My joining date in the next organization is Sept 2nd, If you could please guide me on this, that will be much appreciated. Also, if the company doesn't agree to anything other than gross salary, what are the legal options available for me? Can they really held my experience and relieving letter?

 

Thanks in advance!



Learning

 2 Replies

Kumar Doab (FIN)     28 August 2013

Such maters are best resolved by applying goodwill, rapport, exceptional levels of persistence, persuasion, negotiation, reasoning skills. Skills can be acquired.

Employee should grant full opportunity to employer and at the same time build favorable and written record for use at appropriate time in appropriate forum.

You have posted that:

-----“with three months’ notice from your side and one month's notice or pay in lieu thereof from the company's side.”

Even if you have affixed your signatures the contract drawn and drafted by company does not promote equitable discretion and may get termed as arbitrary.

It is general law that whenever there is any ambiguity in terms of contract then benefit of doubt will given to party who doesn’t make the contract.

Of course company would scream that you have accepted the terms by your free will and it is bilateral agreement.

Any policy in the larger interest and beneficial to both employer and the employee has the sanction of law as otherwise it will be easily termed as arbitrary.

 

This arbitrary clause hampers your interest in securing another and better opportunity when it arises.

 

45 days period is more than sufficient for the employer to put his house in order, designate replacement ( internal/external) ensure handover of charge, complete exit formalities……………………

 

If the task/company property of the Employee that has resigned are not properly handed over due to which the Employer may suffer financial or any other loss and if the Employee is not interested to indemnify/compensate the employer then employer may ask Employee to serve full notice period.

You should structure and draft notice of resignation carefully and without fail conclude that no task/assignment is pending at your end (keep evidence) and routine work may be allotted that can be completed within and up to expiry of notice period/last date in office and to whom you should handover the charge/company property under proper acknowledgment.

If you are aware to who the charge is to be handed over (usually HOD or designated replacement) do that and obtain acknowledgment and NOC/NDC.

If the replacement is to be trained do that and obtain acknolwedgment.

Gross salary should mean; Monthly Allowance Category

Ideally notice pay should cover Basic+DA as employer would encash EL, disburse Gratuity, PF, OT etc at this rate………………..

---------“Can they really held my experience and relieving letter?”

Who can stop an adamant and recalcitrant employer?

Relieving letter signifies that nothing is pending at the end of employee.

If employee has no pending tasks, has affirmed to handover the charge, notice pay is to be adjusted in FNF statement, then there should be nothing left as pending……………at the end of employee………………..

If nothing is pending then all pendencies including but not limited to supply the service certificate, relieving letter is at the end of employer or its concerned HR personnel……………

Company has already stated in appointment letter that notice pay can be recovered/adjusted in FNF statement/settlement……………………

Let the company adjust and reduce the FNF amounts and show the recovery in FNF statement, and issue Form 16 accordingly.

Notice period is stated in job advertisement, service rules, service conditions/standing orders, appointment letter, employment contract, Shops and Establishments Act……………….

The service conditions stated in standing orders can not be negated in appointment letter and standing orders shall prevail upon appointment letter. If notice period in standing orders is 1 month it can not be 3 months in appointment letter.

If payment of Wages Act applies to the establishment, standing orders would apply.

Kerala has issued notification that standing orders shall apply to all commercial establishments.

In the absence of certified standing orders Model Standing Orders shall apply.

The notice period in standing Orders, Shops and Establishments Act is not more than 1 month.

If both are applicable to the establishment then can’t 90 days notice period be termed void?????

 

Exceptionally long notice period of 90 days is obviously for the benefit of employer.

e.g;

The Delhi Shops and Establishments Act, 1954

30. Notice of Dismissal: (b) Notice or wages in lieu thereof under section 30—When to be given?

A plain reading of section 30 of the Act would make it clear that whereas the notice of one month under sub-section (1) is for the benefit of the employee, the notice under sub- section (2) is for the benefit of the employer.

And

(a) Applicability of section 30

The protection of the provisions of the section is available to all persons who fall within the definition of the term “employee” as given in section 2(7) of the Act and who have put in three months’ continuous services.  In the absence of any standing orders or any contract between the employer  and  the  contesting  respondent  containing  any  particular  terms  or  conditions,  the conditions of service of the employee relating to his employment in an establishment at Delhi are covered by section 30(1) of Delhi Shops and Establishments Act…………………..

 

 

Sudhir Kumar, Advocate (Advocate)     01 September 2013

well advised by Mr Kumar Doab


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