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Understanding What are notice periods in India?

Introduction
purpose
Employee leave
Buyout
Leaving without
Reasons
Notice Period
Long Notice Periods
Salary
Withdrawn
Recommended
FAQs
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notice periods in India

Introduction

When you join any company/ firm as a full-time employee, the executive from the HR department will make you sign the terms of contract. Tucked away in the many clauses of the contract is your ‘Notice Period’. Simply put, the notice period is the duration you must continue working for the organization after you officially inform them of your intention to resign from the organization.

The reverse is also true. If the organization wishes to terminate your services, they cannot ask you to leave immediately. (Laws put in place by the government forbid them from doing so.) They need to give you a notice about the termination of your services and you will be expected to leave only after serving out that notice period.

However, be informed that any organization reserves the right to fire you on the spot if you are proven to indulge in gross misconduct that jeopardizes the interests of the organization.

What purpose does the Notice Period Serve?

No company or firm can function without its employees. Irrespective of whether the company / firm is a small, medium or large scale in size, employees leaving the organization for greener pastures and finding replacements for such employees is a regular occurrence and the natural order of things. For the HR department of large organisations and MNCs (multi-national companies) who handle thousands of employees, this is a daily reality.

To ensure that this reality doesn’t affect the functioning of an organization, multiple measures are put in place. And the biggest measure is always the notice period. The notice period allows the HR team to find a suitable replacement for the employee. Once the replacement employee is finalized, the incumbent employee who plans to leave the organization is expected to proceed with ‘knowledge transfer’ to the new employee. This ensures that when the employee finally leaves the organization, the expected work continues smoothly.

Can an Employee leave without serving the Notice Period?

You can leave without serving the notice period only if you take the option of a notice-period buyout. If you leave your employment without giving any notice, then it’s technically a breach of the employment contract and can potentially land you in legal trouble. 

Notice Period Buyout

Most companies insert a clause in the terms of employment contract whereby they can opt to buy out their notice period if they do not wish to serve out the entire duration of the notice period. The ‘Notice Period’ buyout involves a payment to the organization for the number of days of the notice period included in the buy-out. The employee’s salary for those many days needs to be given as payment. 

If you happen to be an employee with a specific or niche skillsets, there will be organizations willing to hire you and give up a higher package. If the position they offer you needs to be filled immediately and your notice period proves to be an impediment, then the hiring organization itself will make an offer to your current employer for notice period buyout.

You need to be careful though. Some cunning companies have ‘non-negotiable’ notice periods with no option for a buyout! This might result in you missing excellent job opportunities in other organizations as the notice period buyout is no longer an option. To avoid such a trap, the duration of the notice period and option for its buyout must be one of terms you negotiate when joining a new organization.

Leaving without serving the Notice Period or Opting for Notice Buyout

Don’t ever attempt such an act. It will prove to be highly or fatally damaging blow to your career! Reputed organizations with a good work ethic and policies in place use the notice period to process your resignation and find a replacement for you. If required, you can negotiate with HR to have your notice period reduced. Optionally, you can use your unutilized leaves to reduce the notice period duration.

Reasons why serving the Notice Period is critical

How long is Notice Period In India?

A host of factors influence the length of the notice period. It varies across different countries and industry sectors. The US, UK, Singapore, Hong Kong, Ireland, Mexico, etc. have the shortest (one to two weeks) statutory notice period unlike India where the laws framed by the Ministry of Labour allows a maximum notice period of 3 months.

The general rule of thumb is that you need to serve a week’s notice period for every year you have worked for that organization with the max permissible notice period being 12 weeks (3 months).

In India, if you are a junior level employee, you may have to serve a notice period anywhere in the range of 1 week to a month. For senior level employees who are not that easy to replace, it can range anywhere from a month up to max 3 months.

The Notoriously Long Notice Periods in Banking and IT Companies

In India, the banking and IT sectors are infamous for making their employees serve long notice periods. Depending on their respective experience levels, employees have to serve varying lengths of the notice periods.

The giants in the IT sector, (Tata Consultancy Services, Wipro, Capgemini, Infosys, Tech Mahindra, Cognizant, IBM, HCL etc.) have adopted long notice periods as part of their employment policies and set off the trend of long notice periods that has permeated into other industry sectors.

Salary Received during Notice Period

Your employer must pay you the same salary that you received before putting in your papers. You are entitled receive this full-time salary till your last working day.

Legal Recourse when the Notice Period Offer is Withdrawn

Unscrupulous companies can often resort to firing employees without giving them any notice. Companies are required to give adequate notice to employees as stated in the employment contract before relieving them of their duties.

If your employer fires you for no fault of your without giving you the option to serve your notice period or a severance package, you can approach the Court of Law for redressal. To do so, having all the documents / email correspondence for proof is critical. Indian courts have been known to award punitive damages and compensation to employees with the courage to take on such wily organizations.

If you ever face such a situation, be bold and approach the court of law rather than get intimidated with the tactics by unscrupulous organizations. Nothing scares them as much as legal notices for misconduct and the associated damage to their reputations on social media.

Recommended Reading

To familiarize yourself with the tasks, do and don’ts while serving out the notice period, we recommend you read our blog: Navigating your Notice Period.

FAQs

Q1: What is a Notice Period?

A1: It's the duration an employee must work after resigning or being terminated.

Q2: Why is the Notice Period important?

A2: It allows for a smooth transition and replacement of departing employees.

Q3: Can an Employee leave without serving Notice?

A3: Generally no, unless they opt for a notice-period buyout.

Q4: What are the consequences of leaving without notice?

A4: Legal trouble, loss of documents, unpaid dues, and difficulty finding new employment.

Q5: How long is the Notice Period in India?

A5: Typically one week per year worked, with a maximum of 3 months, but it varies by industry.

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