Notice Period under Indian Labor & Employment Law

The term ‘notice period’ refers to the number of days an employee must continue to work at the company after they have submitted their resignation. Simply put, it refers to the days between the date of submitting your resignation and last working day at the organization. It can be given by the employer or the employee themselves to end the employment.

The duration of a notice period may be different in different organizations and for different roles in the company. It may also vary depending upon the industry, the size of the company, contractual terms, and the employment laws of the country. Usually, a notice period lasts somewhere between 2 to 8 weeks.

The employment laws of India provide several rules and regulations that aim to protect the workers’ rights and safeguard their welfare. Wrongful termination can potentially lead up to a legal battle between the employer and the employee, which can extensively impact their relationship. As such, it is imperative to ensure that an employee’s termination complies with the relevant laws of the country and the state, whichever is applicable.

The laws that govern the ‘notice period’ are provided under:

• The Industrial Disputes Act, 1947
• Shops and Establishment Acts of Different States

The Industrial Disputes Act, 1947

As per the Industrial Disputes Act, 1947, the term ‘retrenchment’ is used in lieu of ‘termination’ as the Act is only applicable on ‘workmen,’ as provided under Section 2(s) of the Act.

It is pertinent to note here that while the Act itself does not define ‘notice period’ but Section 25F of the Act provides that a ‘workman,’ who has been employed continuously for at least one year by an employer, may not be fired by the employer until the ‘workman’ has received a written ‘retrenchment’ notice stating the reason for the same and either the notice period is over or apt wages have been provided to the ‘workman’ in lieu of the notice period. Besides, as mandated by the clause, the ‘workman’ shall also be eligible to receive retrenchment pay from the employer.

Shops and Establishment Acts of Different States

The provisions relating to termination of employment under the laws governing the Shops and Establishment Acts in the various states, such as New Delhi, Haryana, etc., differs in terms of ‘notice period’ and same is subject to number of days that an employee has been continuously working for an employer.

Under Section 30(2) of the Delhi Shops and Establishments Act, 1954, the employer may terminate the employee by serving them a one month’s notice period or by paying salary in lieu of notice, in case the employee has worked at the firm for a total period of three months. Similarly, the employee shall be required to serve a one-month notice period at their place of employment after being employed for three months of continuous service.

As per Section 47(1) of the Telangana Shops and Establishment Act, 1968, no employer shall, without an apt justification, discharge employees who have been continuously employed for at least a six-month period without giving them at least a one-month written notice or wages in place of the notice. With respect to an employee who has been continuously employed for not less than a year, employers are required to provide service compensation amounting to 15 days average weekly salary.

The rules for shops and establishments in Haryana provide that no employer shall issue a one-month notice or pay wages in lieu of the notice period to terminate employees unless the employee has been continuously employed for at least a three-month period. Similarly, employees, after completing a continuous service for three months, can terminate the employment by giving a prior notice of seven days or pay wages in lieu of the same to the employer.

Relevant Judicial Decisions

In the matter of Sanjay Jain vs. National Aviation Co. of India Ltd., the Supreme Court held that it is the employee’s right to resign when they want, and they cannot be forced to serve at the organization if they are not willing to do so, unless there is some provision in the Rules or in terms of appointment/employment or some disciplinary proceedings are pending that are being avoided by the employee through the resignation.

In the case of SS Shetty vs. Bharat Nidhi Ltd., the apex Court stated that an employee shall be eligible to receive compensation in lieu of notice even if their employment is terminated on an account of misconduct.

The Delhi High Court, in the case of SDU Travels Pvt. Ltd. vs. Vipin Sharma, held that in the case of private employment, employers are completely entitled to take required steps to terminate the employment of an employee if the individual is not up to the mark. When it comes to employment in the private sector, employment is governed by the terms and conditions of the employment. As such, unless proven to violate the terms and conditions of employment, the termination of employment cannot be deemed illegal. An employment contract that provides services to be terminated after serving one month’s notice shall at best get the employee the wages for one month in lieu of the notice.

Conclusion

Although there is no specific definition for ‘notice period’ in India, its meaning can be derived from the different interpretations of the Industrial Disputes Act, 1947 and the Shops and Establishment Act of various states.

Labor laws, in India, fall within the ambit of both Central and State governments’ powers, which can lay down legislations pertaining to the same. While the overall aim remains the same, different states often have slightly different labor laws from each other.