When we make Full and final settlement of a individual if the person has not given a notice period
Do we have rule that Notice period should be deducted @ of basic only or it can vary from company to company
As we are redoing the company policies can we work out Notice period on gross looking at a high rate of attrition in BPO’s
Is it possible or we have stander/fix law to have notice period deducted @ of basic only
From India, Mumbai
1Do we have rule that Notice period should be deducted @ of basic only or it can vary from company to company
As we are redoing the company policies can we work out Notice period on gross looking at a high rate of attrition in BPO’s
Is it possible or we have stander/fix law to have notice period deducted @ of basic only
From India, Mumbai
By normal practice, it is payable in lieu of notice period on basic salary.
However, it could be payable on gross as well. Do stipulate this in your HR policy document and the appointment letter clearly. Terms of employment need to be equitable and hence, both the Company as well as the employee stand to pay in either case.
The liability of the Company also increases in case the Company stands to pay. Also, do factor in uniformity in basis for leave encashment during full and final settlements and take-home versus gross pay differentiation. Factor in the incidence of ESI, PF, Gratuity, Bonus, TDS, FBT, if any on the payables.
The basic issue to brood over is the percentage of 'recoverables', i.e. how many employees really pay and go..
Rahul Kumar
From India, New Delhi
However, it could be payable on gross as well. Do stipulate this in your HR policy document and the appointment letter clearly. Terms of employment need to be equitable and hence, both the Company as well as the employee stand to pay in either case.
The liability of the Company also increases in case the Company stands to pay. Also, do factor in uniformity in basis for leave encashment during full and final settlements and take-home versus gross pay differentiation. Factor in the incidence of ESI, PF, Gratuity, Bonus, TDS, FBT, if any on the payables.
The basic issue to brood over is the percentage of 'recoverables', i.e. how many employees really pay and go..
Rahul Kumar
From India, New Delhi
Scena,
Hi, While making full and final settlements the notice period is payable by both sides. That is if the employee resigns he/she is liable to either pay notice period to the company or serve through the notice period. If the company terminates the services of employee the company is liable to pay the notice pay to the employee.
Now if the employee resigns he pays the basic salary - this is as per the service rules framed by the Ministry of Human Resources Govt. of India.
It is not correct on the part of the company to recover notice period on gross salary.
But if the employer terminates the services of employee he is liable to pay the gross salary for the notice period as he is depriving the employee of his livelihood.
Many companies do not follow this rule and adopt to a strategy that basic pay is considered for full and final settlement.
As an HR professional we must be just and should adhere to the lawful settlements depending on the rules adopted by your company. If in case your employer is not correct in approach as a good HR professional you must draw the attention of your seniors to this approach.
You can look for such statutory information on the website of Ministry of HRD.
All the best
Hi, While making full and final settlements the notice period is payable by both sides. That is if the employee resigns he/she is liable to either pay notice period to the company or serve through the notice period. If the company terminates the services of employee the company is liable to pay the notice pay to the employee.
Now if the employee resigns he pays the basic salary - this is as per the service rules framed by the Ministry of Human Resources Govt. of India.
It is not correct on the part of the company to recover notice period on gross salary.
But if the employer terminates the services of employee he is liable to pay the gross salary for the notice period as he is depriving the employee of his livelihood.
Many companies do not follow this rule and adopt to a strategy that basic pay is considered for full and final settlement.
As an HR professional we must be just and should adhere to the lawful settlements depending on the rules adopted by your company. If in case your employer is not correct in approach as a good HR professional you must draw the attention of your seniors to this approach.
You can look for such statutory information on the website of Ministry of HRD.
All the best
Thanks for the information .
But I am from a BPO (call center )HR and a practical problem which I am facing is ppl. Leaving their job within a month or two.
So deducting notice period @ of basic is of no much good to the company .
The idea of making a policies to have notice period @ of gross is to cut down the out flow to ppl. How have no commitment or work ethic.
My Question is can we go ahead and make a policies were in we have the notice period @ of gross with in the laws
From India, Mumbai
But I am from a BPO (call center )HR and a practical problem which I am facing is ppl. Leaving their job within a month or two.
So deducting notice period @ of basic is of no much good to the company .
The idea of making a policies to have notice period @ of gross is to cut down the out flow to ppl. How have no commitment or work ethic.
My Question is can we go ahead and make a policies were in we have the notice period @ of gross with in the laws
From India, Mumbai
If any organization clearly mentioned in their appointment letter that "X" amount will be the recoverable from the employee, if he/she doesn't serve the notice,
organization also liable to pay the same to the employee, when he/she terminated without any notice.
If there is no clarity about the amount, than recoverable amount can be calculated only on basic + DA as per labour low.
Vikas Seth
From India, Ahmadabad
organization also liable to pay the same to the employee, when he/she terminated without any notice.
If there is no clarity about the amount, than recoverable amount can be calculated only on basic + DA as per labour low.
Vikas Seth
From India, Ahmadabad
Again, there is no law governing notice periods. It is defined as per Company policy, practice and industry norms. Notice period is widely based on the basic salary.
You can make that on gross salary and make suitable HR policy on the same. But appointment letters must also specify basic or gross clearly. Past appointment letters cannot be detrimentally changed to gross salary unless the employees agree in writing to the change in terms of their employment. Unilateral change by management will be illegal and legally null and void.
The points to ponder before changing from basic to gross are :
1. Is it a normal industry practice. If not, employees will be disgruntled and will relent. Attraction of talent will become difficult with detrimental terms of employment as compared to the industry/competitor practices
2. What would be the impact? Will essentially attrition reduce with this move? May not..
3. Can a larger amount of payable be recovered from employees? They may escape without fulfilling the obligations. Piled up legal notices, if so, will give a negative branding to the Company.
4. Will the Company's liability not increase manifold in case a downsizing/rightsizing exercise done by the Company at any time in the future.
5. Tax liability of both employee and employer may increase in case of payables apart from computational hassles (annual components apportionment, taxation, retention pay proration, etc)
6. Even good employees' motivations may sink low.
Think about the many cons in this approach. Rather than sorting out attrition, it may land up creating a plethora of unforeseen problems.
There could be methods like legal notices, detrimental bonds, withholding of good character certificates and recommendation letters, etc. adopted by HR, per force. Other methods can also be thought through.
Rahul Kumar
09968270580
From India, New Delhi
You can make that on gross salary and make suitable HR policy on the same. But appointment letters must also specify basic or gross clearly. Past appointment letters cannot be detrimentally changed to gross salary unless the employees agree in writing to the change in terms of their employment. Unilateral change by management will be illegal and legally null and void.
The points to ponder before changing from basic to gross are :
1. Is it a normal industry practice. If not, employees will be disgruntled and will relent. Attraction of talent will become difficult with detrimental terms of employment as compared to the industry/competitor practices
2. What would be the impact? Will essentially attrition reduce with this move? May not..
3. Can a larger amount of payable be recovered from employees? They may escape without fulfilling the obligations. Piled up legal notices, if so, will give a negative branding to the Company.
4. Will the Company's liability not increase manifold in case a downsizing/rightsizing exercise done by the Company at any time in the future.
5. Tax liability of both employee and employer may increase in case of payables apart from computational hassles (annual components apportionment, taxation, retention pay proration, etc)
6. Even good employees' motivations may sink low.
Think about the many cons in this approach. Rather than sorting out attrition, it may land up creating a plethora of unforeseen problems.
There could be methods like legal notices, detrimental bonds, withholding of good character certificates and recommendation letters, etc. adopted by HR, per force. Other methods can also be thought through.
Rahul Kumar
09968270580
From India, New Delhi
if your problem is reducing attrition then follow COPC guidelines:
a) raise the entry barriers/ rigor of testing while hiring, if recruitment is easy then only candidates swicth jobs.
b) ask the candidate to spend half a day/ 1 day "on the job" before offering employment.
This will reduce attrition as people who do not appreciate the work profile will not join.
But the problem is multifarious: Are you willing to have low hires/ high attrition in the hrining stage than later at training/ operation stages.
c) a small query: have you analysed the attrition Vis a Vis work area/ supervisor.
Maybe candidates are not comfortable with a particular process/ manager ?
if you need COPC guidelines, let me know
surya vrat
9999645755
From India, Delhi
a) raise the entry barriers/ rigor of testing while hiring, if recruitment is easy then only candidates swicth jobs.
b) ask the candidate to spend half a day/ 1 day "on the job" before offering employment.
This will reduce attrition as people who do not appreciate the work profile will not join.
But the problem is multifarious: Are you willing to have low hires/ high attrition in the hrining stage than later at training/ operation stages.
c) a small query: have you analysed the attrition Vis a Vis work area/ supervisor.
Maybe candidates are not comfortable with a particular process/ manager ?
if you need COPC guidelines, let me know
surya vrat
9999645755
From India, Delhi
Hi
The notice pay is often Basic plus DA and if an organisation has mentioned notice pay of Gross salary in the offer letter it is admissable as per the law. Since the offer of letter once accepted is a contract agreed upon by the employer and employee.
In case of BPO industry u can try Bonds for initial periods.
Regds
Pankaj.
From India, Mumbai
The notice pay is often Basic plus DA and if an organisation has mentioned notice pay of Gross salary in the offer letter it is admissable as per the law. Since the offer of letter once accepted is a contract agreed upon by the employer and employee.
In case of BPO industry u can try Bonds for initial periods.
Regds
Pankaj.
From India, Mumbai
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Full n final settlement.doc