Understanding Notice Periods

Well, a few days became I was going through a new ruling passed by Gujarat government for not serving a notice period applicable as per the employment agreement. New rule says that any employee leaving the company without serving a notice period will have to pay additional 18% GST along with the payable salary. This made me realize and pen my thoughts on how many of us actually take notice period seriously. My new blog is all about understanding the notice periods.

WHAT IS A NOTICE PERIOD?

When an employee joins any company as a full-time employee, the HR makes him/her sign a contract that has a clause of ‘Notice Period’. Simply put the notice period is the duration an employee must continue working for the company after he/she has officially informed the company of his/her intention to resign from the organisation.

On the other hand, if the company wishes to terminate an employee, they cannot ask them to leave immediately as per the laws put in place by the government. They need to give an employee a notice about the termination of his/her services and will be expected to leave only after serving the notice period. (Unless it is on the grounds of gross misconduct that has major impact on the interest of the organization).

IMPORTANCE OF THE NOTICE PERIOD:

No company can function without employees. Irrespective of the size of the company employees leave for better prospects and finding replacement for them is a regular reality for the HR department. To ensure that this reality does not affect the smooth functioning of the company, multiple measures are put in place. NOTICE PERIOD being the biggest measure helps HR buy a time to find suitable replacement for the leaving employee and timely transfer of knowledge is made possible to ensure work is carried out smoothly.

DURATION OF NOTICE PERIOD:

A host of factors influence the length of notice period. It varies across different countries and industries. Countries like UK, US, Singapore, Mexico, Ireland, Hong Kong have the shortest (1 to 2 weeks) statutory notice period. In India, as per the laws framed by the Ministry of Labour it allows a maximum notice period of 3 months. The general rule of thumb is that, on a junior level employee may have to serve a notice period anywhere in the range of 1 week to a month. For senior level it can range from a month to 3 months as finding replacement at senior level is tough and difficult.

POSSIBILITY OF EMPLOYEE LEAVING WITHOUT SERVING A NOTICE PERIOD:

The next thought that arises is Can an employee leave without serving a notice period?

Yes! Employee can leave without serving a notice period only if you take an option of a notice-period buy out. Technically and potentially leaving without serving a notice period can land an employee in legal trouble as this is considered a breach of the employment contract.

The ‘Notice-period’ Buyout is the clause many companies include in the employment agreement whereby the employee can opt to buy out the notice period if they don’t wish to serve the entire duration of the notice period. It involves payment to the company or firm for the number of days of the notice period included in the buy-out. The employee will have to forego his/her salary in lieu of the duration of the notice period not served.

REASONS TO SERVE THE NOTICE PERIOD:

There are many reasons why an employee should serve the notice duration for e.g. when an employee resigns from the company, the documents that prove you worked for the company are provided by the HR. This time frame of the notice period is utilized by the HR to process and get those documents ready. If an employee leaves without serving the notice period, you will never get these documents and there is no proof of your work experience.

Pending salary, dues, compensation for unutilized leaves will be paid only if an employee serves or buy-out the notice period.

If any person leaves without informing his bosses/ HR or leaves without serving the notice period, they are officially declared as ‘Absconding’ and losses their chance of rehiring as many companies have the policy of not hiring back the absconding candidature.

Mostly the companies conduct a thorough third-party background check of their new employees. Their HR will contact the previous employer to ascertain whether you were part of that organisation for the duration mentioned in the documents. If you leave without serving the notice period or buying-out your notice period, the absconding status of yours will be intimated to them and No reputed company inducts an absconding employee into their ranks. Finally it can even land you in the law of court and restrain you from working especially if you join a rival company without serving a notice period or buying-out a notice period.

But why ever attempt such an act. Remember leaving without serving a proper notice period or buying-out a notice period can prove to be highly or fatally damaging blow to your career! It directly impacts your professionalism and work ethics. Instead, isn’t it a better option to negotiate with HR to have your notice period reduced or optionally can use your unutilized leaves to reduce the notice period duration. I am sure there is always a way out if only we communicate transparently.



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