Dear Professionals,
Is there any legal aspect for Notice pay??
As per our HR policy we consider basic salary of one month in lieu of one month notice. Some companies are following gross salary. In our company rotation is on higher side so we decided basic salary.
Please advice.
Nimra
From India, Mumbai
Is there any legal aspect for Notice pay??
As per our HR policy we consider basic salary of one month in lieu of one month notice. Some companies are following gross salary. In our company rotation is on higher side so we decided basic salary.
Please advice.
Nimra
From India, Mumbai
604
In our HR Policy it is basic salary but the employee who terminated due to mis conduct is asking for one month gross salary and he said company has to pay gross salary legaly. Our company is new company and we did not give him appointment letter. he joined us before three months.
Please advice?????
From India, Mumbai
Please advice?????
From India, Mumbai
Hi
If you have not given appointment letter then you are any way out of the trouble;-)
Though it is not a good practice. :x
This kind of issues are dealt in detail in appointment letter,in case of termination due to misconduct one may not be paid anything at all - the clausing stating reasons which may lead to termination.
It is only in case of lay off,non performance companies fire people with salary.
But in case the company is willing to pay him then the company (or employee) should pay basic or gross salary as stated in your HR policy ,but in either case the rule is same, i.e. if it is written basic salary to be paid by the employee as notice pay then company also will pay the basic salary in case of termination. It is never that employee pays to the company basic and company pays to the employee gross salary (For the termination reasons ).
Thanks
Geeta
From Korea, Seoul
If you have not given appointment letter then you are any way out of the trouble;-)
Though it is not a good practice. :x
This kind of issues are dealt in detail in appointment letter,in case of termination due to misconduct one may not be paid anything at all - the clausing stating reasons which may lead to termination.
It is only in case of lay off,non performance companies fire people with salary.
But in case the company is willing to pay him then the company (or employee) should pay basic or gross salary as stated in your HR policy ,but in either case the rule is same, i.e. if it is written basic salary to be paid by the employee as notice pay then company also will pay the basic salary in case of termination. It is never that employee pays to the company basic and company pays to the employee gross salary (For the termination reasons ).
Thanks
Geeta
From Korea, Seoul
Hey Nimz70,
Legally you are liable to pay only Basic+ DA (If you have any) other allowance may be refused as, especially you are terminating the fellow.
You should refer the labor act for any guidance if not listed in your company policy. Suggest you read all Act pertaining to termination clauses rather than getting spoon feed answers as this will help you know more that you need and this is exactly what you need to feed your brain as HR Executive. :lol:
Ukmitra
From Saudi Arabia, Riyadh
Legally you are liable to pay only Basic+ DA (If you have any) other allowance may be refused as, especially you are terminating the fellow.
You should refer the labor act for any guidance if not listed in your company policy. Suggest you read all Act pertaining to termination clauses rather than getting spoon feed answers as this will help you know more that you need and this is exactly what you need to feed your brain as HR Executive. :lol:
Ukmitra
From Saudi Arabia, Riyadh
Dear Nimra,
Notice pay is as per the exit clause of appointment letter. It is a compensation given by one party (Who broke the contract) to other party because of the breach of contract. Law regarding breach of contract is given in section 73 of Indian contract Act 1872.
Section 73 is declaratory of the common law as to damages. The basic purpose of damages is to put party whose rights have been violated in the same position, so far as money can do so, as if his rights have been observed. When compensation sum is named in a contract as the amount to be paid in case of breach then it is know as liquidated damages. Example in the employment contract. When it damages are not given in contract then it known unliquidated damages in these damages will be defined by court on the bases of reasonableness and facts of the case.
Section 74 contract of contract act deals with liquidated damages and penalty. Whether they compensation amount mentioned in contract is liquidated damages or penalty will be defined by court. Compensation amount mentioned in contract will be maximum damages if court found that amount is not reasonable then it can reduce it because compensation is only given for losses not for penalty but court can not increase compensation amount.
By keeping section 73 and 74 of contract act in view organisation should put reasonable and clear amount in exit clause of appointment letter to avoid legal hassle. It is general law that whenever there is any ambiguity in terms of contract then benefit of doubt will given to party who don’t make(write) the contract. (i.e. party who make the term of contact will suffer) As you know in Indian law there are many definition of wages or salary. Wages defined differently in every act. So it is advisable to clear in appointment letter that whether Salary means basic or gross as a notice pay. If you don’t make it specific and clear than whole purpose of putting liquidated damages in appointment letter is nullified.
For more HR related information: White Eagle
From India, Hyderabad
Notice pay is as per the exit clause of appointment letter. It is a compensation given by one party (Who broke the contract) to other party because of the breach of contract. Law regarding breach of contract is given in section 73 of Indian contract Act 1872.
Section 73 is declaratory of the common law as to damages. The basic purpose of damages is to put party whose rights have been violated in the same position, so far as money can do so, as if his rights have been observed. When compensation sum is named in a contract as the amount to be paid in case of breach then it is know as liquidated damages. Example in the employment contract. When it damages are not given in contract then it known unliquidated damages in these damages will be defined by court on the bases of reasonableness and facts of the case.
Section 74 contract of contract act deals with liquidated damages and penalty. Whether they compensation amount mentioned in contract is liquidated damages or penalty will be defined by court. Compensation amount mentioned in contract will be maximum damages if court found that amount is not reasonable then it can reduce it because compensation is only given for losses not for penalty but court can not increase compensation amount.
By keeping section 73 and 74 of contract act in view organisation should put reasonable and clear amount in exit clause of appointment letter to avoid legal hassle. It is general law that whenever there is any ambiguity in terms of contract then benefit of doubt will given to party who don’t make(write) the contract. (i.e. party who make the term of contact will suffer) As you know in Indian law there are many definition of wages or salary. Wages defined differently in every act. So it is advisable to clear in appointment letter that whether Salary means basic or gross as a notice pay. If you don’t make it specific and clear than whole purpose of putting liquidated damages in appointment letter is nullified.
For more HR related information: White Eagle
From India, Hyderabad
Dear Nimra,
Notice pay is regulated by Law. It is compulsary under law that if a person employment were to be terminated after the expiry of 6 months period then he should be given/give one month salary.
The Industrial Disputes Act is very clear on this subject and prescribed two months and three months notice respectively in case of establishments falling under its purview and having a certain number of employees.
IF your company does not come under the purview of the ID Act, then you shall have to follow either your industry standard practices in that area or else prescribe your terms of employment as per your requirements to curtail turnover.
Regards
From India, Bangalore
Notice pay is regulated by Law. It is compulsary under law that if a person employment were to be terminated after the expiry of 6 months period then he should be given/give one month salary.
The Industrial Disputes Act is very clear on this subject and prescribed two months and three months notice respectively in case of establishments falling under its purview and having a certain number of employees.
IF your company does not come under the purview of the ID Act, then you shall have to follow either your industry standard practices in that area or else prescribe your terms of employment as per your requirements to curtail turnover.
Regards
From India, Bangalore
Hi, On this Mr. Murali Dutt is absolutely right.But it depends on the policy fo the compnay that it how is your policy? But you have to go thru with the policy. Rgds, Rakesh Kashyap
Hi all,
In our company we termintaed a guy in 1 and half months giving the reason in the termination letter that he could not meet to the expectations of the company. It is mentioned in the termination letter that he will be be paid one months salary in liue of notice.
In his appointment letter it is mentioned that on termination he will be paid one month salary in liue of notice. salary section says in his appointmnet letter says that salary and other other benefits are given in the salary Break up. In the salary breakup the contents are Basic Pay, HRA, PF, Travel Allowances etc.
So what should we pay to that guy? Basic Salary + DA + HRA etc or just the Basic Pay?
Thanks
From India, Bangalore
In our company we termintaed a guy in 1 and half months giving the reason in the termination letter that he could not meet to the expectations of the company. It is mentioned in the termination letter that he will be be paid one months salary in liue of notice.
In his appointment letter it is mentioned that on termination he will be paid one month salary in liue of notice. salary section says in his appointmnet letter says that salary and other other benefits are given in the salary Break up. In the salary breakup the contents are Basic Pay, HRA, PF, Travel Allowances etc.
So what should we pay to that guy? Basic Salary + DA + HRA etc or just the Basic Pay?
Thanks
From India, Bangalore
Hi
Your answer is in your problem statement. You will pay him Basic Salary + DA + HRA etc whatever is due in a one month salary - going by your appointment letter/termination letter and HR policy.
Hiring a candidate and firing him due to non performance is purely considered as fault in the recruitment process - you could not assess the candidate correctly. So now on humanitarian grounds too, if you are firing him then you must pay him one month salary or notice. Make it clear in your HR policy and appointment letters/termination too.
Thanks
Geeta
From Korea, Seoul
Your answer is in your problem statement. You will pay him Basic Salary + DA + HRA etc whatever is due in a one month salary - going by your appointment letter/termination letter and HR policy.
Hiring a candidate and firing him due to non performance is purely considered as fault in the recruitment process - you could not assess the candidate correctly. So now on humanitarian grounds too, if you are firing him then you must pay him one month salary or notice. Make it clear in your HR policy and appointment letters/termination too.
Thanks
Geeta
From Korea, Seoul
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