Notice of Termination & Can Companies Force Employees to Serve Notice Period?

Can Companies Force Employees to Serve Notice Period? Absolutely No and let find out more about Notice of Termination.

Even though companies across the world are coming up with people friendly policies, there is always a small section of employees who like to take advantage of the same. Often employees leave organizations without serving notice in the lure of better chances elsewhere. But this is only a short term advantage. Barring some countries, most good organizations require a ”service or relieving certificate” as proof of employment.

The signed and   stamped ” Letter of Appointment” between and employer and employee is a legally valid document in the court of law. If an appointment letter clearly spells out the conditions of termination and notice, and the employee signs the document, then he/she must abide by the terms. However, most organization have a condition of ”lieu of”.

Typically the notice period can be waived ”in lieu of” pay deduction. And most employees exercise that option by negotiating the difference with the other organization. There are always exceptions but no ethical   organization can force an employee to serve the notice unless there is a pressing business need or ”notice pay” refusal from employee or monetary advances provided to the employee.

The Specific Relief Act says that a Contract of Personal Service cannot be enforced in a Court of Law which means that if an employee quits before the Notice period the Employer can only recover the Notice pay. No Employer can force an Employee to complete the Notice period, it is for the employee to complete the Notice period in order to take his full salary and the relieving letter.

Read Everything about Termination Policy in India as per Indian Labour Laws

You can leave the job by either giving notice or payment in lieu of notice.The Company’s policies and procedures are the supplementary aspects. The constitution of India provides the fundamental right to every person to choose the profession of his choice and any agreement contrary to this is invalid.

By putting the clause in service regulation that it is company’s discretion to accept the notice or not is against the provisions of constitution of India. Hence company cannot threaten you by showing this clause. The Company cannot force you to serve the entire notice period.

Employer’s Notice Period

If the employer fails to provide the requisite notice to the employee (or pay in lieu of the notice period), the termination of employment can be held to be unlawful. If the contract provides for a longer notice period, noncompliance with such a requirement could be treated as unlawful termination and/or breach of contract, depending on the laws that are relied on by the employee when pursuing their claim.
The Limitation Act, 1963 provides a limitation period of three years for filing a suit from the date from when the right to sue accrues which, in this case, would be the date of termination of employment at which the required notice to the employee was not served.

If the employee is terminated without being served the requisite notice period, the employee can file a complaint with the labour authorities against the employer claiming unlawful termination. The first level of dispute resolution is conciliation, but this is not mandatory (see Sections 4 to 7 and 10 of the ID Act and applicable rules). If conciliation fails for a workman, the employee may need to prove that the termination of employment by the employer failed to comply with the requirements of law or contract. In cases where the statutory requirements are not complied with, a labour court may:

  1. Make an order of reinstatement.
  2. Order payment of back-wages and continuity of service.
  3. Award the employee reasonable costs of litigation.

Employees’ Notice Period

If an employee fails to serve the required notice under law or contract, the employer has a legal claim against the employee for breach. In practice, labour courts are unlikely to award damages beyond the notice period pay, unless the employer can prove actual damages.

The employer may be able to seek damages for any losses incurred by the employer, although in some state level Shops and Establishments Acts the employee’s liability is limited to the amount of pro-rata salary for such period (such as the Delhi Shops and Establishments Act, which provides that if a magistrate is satisfied that an employee has been dismissed without any reasonable cause or discharged without proper notice or pay in lieu of notice, the magistrate may, for reasons to be recorded in writing, award, in addition to one month’s salary, compensation to the employee).

The employee litigation process in India is fairly challenging in view of the procedural requirements and the time taken. Indian courts are not known to grant extensive damages for such matters. There is also a reputational risk involved when litigating against an employee. Accordingly, if the employee fails to serve the notice period, employers typically tend to withhold/recover the notice period pay from any full and final payments to be made to the employee at the time of cessation of employment.

However, legal enforceability of such a practice is questionable since it is not an authorised deduction from wages. Since employment contracts are of a personal nature, it is unlikely for courts to grant an injunction preventing the employee from joining another company.

Also, it is common for prospective employers to agree with the candidate to buy-out the employee’s notice period with the previous employer, typically by offering an additional payment to the candidate (terming it reimbursement, notice period buy-out pay, signing bonus or joining bonus). This is particularly if the prospective employers want the candidate to join early and the previous employer allows the employee to leave early.