Prianka (AVP) 24 September 2013

Company liable to pay for shortfall in notice period

Dear All,

I am employed as AVP at a 100% public sector bank subsidiary. The company has its registered and corporate office in Mumbai and is engaged into investment banking services while i am located at the delhi office. After serving the organization for 4 years (not under probation anymore), I have resigned from services of the company on account of some personal reasons and have specified in my resignation letter that i am ready to serve the entire notice period of 3 months as per company policy. The relevant extracts from the company policy are reproduced below for reference:

"An employee may resign from the services of the Company during the period of probation including the extended period of probation by giving one months‘ notice or pay one months‘ salary in lieu thereof.

On confirmation, the employee is required to give three month‘s notice or pay three month‘s salary in lieu thereof.

However, the resignation of the official is subject to the approval of the MD & CEO.

The notice period of 1 month / 3 months may be reduced/waived by the MD&CEO at his discretion. In the interest of the Company, the resignation of the official may be accepted forthwith and the official may be relieved immediately by waiving the notice period. "

I was informed by the HR a few days back, that i would be relieved within 1.5 months from the date of my resignation. When i enquired from HR as to the reason for shorter notice period, she specified the clause in policy:

"The notice period of 1 month / 3 months may be reduced/waived by the MD&CEO at his discretion. In the interest of the Company, the resignation of the official may be accepted forthwith and the official may be relieved immediately by waiving the notice period"

Since, i was ready to serve the entire 3 months notice period and the company has reduced the notice period in their own descretion, i have asked them to pay me for the remaining notice period. Though, the employee policies are clear regarding payment by employee in lieu of the notice period, am i right in asking for any compensation for the remaining notice period of 1.5 months because the notice period has been reduced at the instance of the management while i was agreeable to service the entire notice period?

If so, what would determine the salary components that i should be paid by the company. Elsewhere in the policy, it is mentioned (under heading probation and confirmation) that

"An official during the period of probation, including the period of extended probation may be terminated from the services of the Company by giving one month‘s notice or payment of one month‘s emoluments in lieu thereof. Emoluments mean Basic Pay, HRA, Conveyance Allowance, Special Allowance, LTA, and Medical allowance."

I would also like to state that other employees (all of us have similar profile, only difference being seniority) have served 3 months notice period. However, i am yet to know a case similar to me. Also, there has never been any adverse event concerning me at the workplace.

Kindly advice.

Regards

Prianka

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3 Replies

Kumar Doab (FIN) 24 September 2013

The following two Supreme Court of India judgments should adequately address your concerns…………………

It can be construed:

That relieving date given by employee can not be advanced.

Till expiry of notice employee should be eligible for all consequential benefits.

In your case it seems to CTC………………

>>> Supreme Court of India

Nand Keshwar Prasad vs Indian Farmers Fertilizers ... on 1 April, 1998

https://www.indiankanoon.org/doc/1452145/

“11. After giving our careful consideration to the facts and circumstances of the case, it appears to us that the law is well settled by this Court in a number of decisions that unless controlled by condition of service or the 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 earlier date. It has also been held by this Court that it is open to the employee concerned to withdraw letter of resignation before the same becomes effective…….”

>>>> The Supreme Court judgment by Justice B N Srikrishna, Justice C K Thakker

“ holding that that an employee can withdraw his resignation during the notice period and is entitled to consequential benefits from the company if he is not allowed to work.”

Supreme Court of India

Srikantha S.M vs Bharath Earth Movers Ltd on 7 October, 2005

https://www.indiankanoon.org/doc/1097853/

“The appellant was informed that his resignation had been accepted and he would be relieved `with immediate effect'. It was also stated that the appellant would be entitled for pay towards notice period as per Company rules.”

“It was urged on behalf of the Bank that Regulation 20(2) provided for notice to protect the interest only of the employer (Bank) and to enable it to make other arrangements in the place of the resigning employee. The proviso to clause (2) enabled the Bank to reduce the notice-period to less than three months and as such it was not obligatory for the Bank to wait till the notice period would expire.”

"We are of the opinion that clause (2) of the regulation and its provisons are intended not only for the protection for the bank but also for the benefit of the employee. It is common knowledge that a person proposing to resign often wavers in his decision and even in a case where has taken a firm decision to resign, he may not he ready to go out immediately. In most cases he would need a period of adjustment and hence like to defer the actual date of relief form duties for a few months for various personal reasons. Equally an employer may like to have time to make some alternative arrangement before relieving the resigning employee. Clause (2) is carefully worded keeping both these requirements in mind. It gives the employee a period of adjustment and rethinking. It also enables the bank to have some time to arrange its affairs, with the liberty, in an appropriate case, to accept the resignation of an employee even without the requisite notice if he so desires it. The proviso in our opinion should not be interpreted as enabling a bank to thrust a resignation on an employee with effect from a date different from the one on which he can make his resignation effective under the terms of the regulation. We, therefore, agree with the High Court that in the present case the resignation of the employee could have become effective only on or about April 21, 1986 or on June 30, 1986 and that the bank could not have ``accepted'' that resignation on any earlier date. The letter dated February 7, 1986 was, therefore, without jurisdiction."

Attached File : 141163814 nand keshwar prasad vs indian farmers fertilizers ... on 1 april, 1998(1).pdf, 141163814 srikantha s.m vs bharath earth movers ltd on 7 october, 2005 (1).pdf downloaded: 325 times

Prianka (AVP) 24 September 2013

Many Thanks sir for such a promt response.

That relieving date given by employee can not be advanced.

I would like to bring to your notice that i have not specified any relieving date. i have just mentioned that i agree to service the entire notice period of 3 months as per company policy as i had no idea that the company may advance the relieving date (dont think, it has happened earlier)

Till expiry of notice employee should be eligible for all consequential benefits.

As informed by the HR, The company has waived off the notice period. Would they still be liable to pay for the remaining notice period?

Thanks once again for the advice

Regards

Prianka

Kumar Doab (FIN) 24 September 2013

Both the judgments are delivered by the Apex Court of the Republic of India.

These shall apply to your bank/employer.

Your bank/employer is not above the Supreme Court of India.

Go thru the judgments and extracts posted in the thread.

“i have just mentioned that i agree to service the entire notice period of 3 months”

It means same and is sufficient……………

“Would they still be liable to pay for the remaining notice period?’

Yes.

If you are not able to handle the matter on your own, approach a competent and experienced labor consultant/service lawyer with copies of all of your documents and your lawyer shall do the needful.

Which bank it is?

If you don't mind to reveal the name send the name by PM.