All You Need to Know About Notice Periods


When an employee has resigned from the services, one of the most important time periods employers and employees have to go through is the Notice Periods. Notice periods are quite ambiguous in terms of length of notice periods, leave or benefits eligibility for employees serving their notice periods.

Notice periods are crucial periods during which employers must take important  steps to ensure that the exiting employee is handing over all responsibilities to his/her successor and the transition is smooth.

How do you decide on the length of the notice period?

The length of the notice period is usually mentioned in the employment contract at the time of joining. The length is usually different for confirmed employees and employees on probation.

Probationary employees have a shorter notice period as compared to per permanent employees. Athough there isn’t any specified time period , notice periods usually last for 30 Days for permanent employees and 15 days for employees of probation .

It is also observed that notice period lengths change according to industry. IT industry or the Banking industry usually has employees serve 90 Days of notice as well.

What is the “notice period buyout option”?

Otherwise known as salary in lieu of notice, this is where your hiring organization will “buyout” the employee from his old employer by making a certain payment for the notice period not served .

For example – If an employee has a notice period of 30 Days and is unable to serve this entire period as the new hiring organization has set an immediate joining date, an employee has to pay the 30 Day salary in lieu of the notice period not served .

This amount is mentioned as “Recovery Amount” in the Full & Final Settlement Statement that the employee receives on his last working day. This amount is then reimbursed to the employee by the new hiring organization at the time of joining.

Mostly companies buy out employees’ notice periods so that the employee can join them at the earliest.

Are the employees on Notice Periods eligible for Leaves?

The purpose of a notice period is for a smooth transition and smooth handing over process. Usually employees on notice periods are encouraged to not take any privileged leaves. Privileged Leaves are en cashed in their full & final settlement statement.