Notice Buyout

What is notice buyout?

In the employee exit process, if an employee has to leave the job, he has to resign and serve a notice period as per the company policy. Notice period varies from company to company. Typically notice period is of 30 days to 60 days. In case an employee has to leave the job on an urgent basis due to studies, early joining in the new job or any other reason, he has an option of notice buyout.

The employee has to make payment for the notice period not served and this money is reimbursed by the new employer if he is joining somewhere. For example, if an employee is supposed to give a notice period of 60 days but he can serve a notice of 30 days, he has to pay 30 days salary to his ex-employer. Notice Buyout option also varies from company to company as all the companies do not provide a buyout option for the complete notice period.

notice buyout

Frequently Asked Questions about Notice Buyout

1. What is notice period buyout?

In case an employee has to leave the job on an urgent basis, he/she has to make payment for the notice period not served. If the employee joins a new organization, the employer often reimburses the amount. 

2. Can a company reject notice buyout?

A company has every right to reject the notice buyout as the primary objective of notice period is to avoid any abrupt disruptions in the business activities. During this period organizations hunt for a fit replacement and hence its presumed that an employee always serves the notice period. 

3. How to ask HR for notice period buyout?

Convincing the HR for notice period buyout seems bit tricky at times. The easiest way to do so is to convince HR citing the importance of your reasons and remember to ask it as a favor and not as a demand. And good communication is the key between the two parties. 

4. How to calculate notice period buyout?

The notice period is generally calculated on the basis of the employee’s working period and the mandatory days they need to serve based on the legal contract of the organization. 

Formula = (Monthly salary/30) *(Remaining Notice period Days) 

5. Are the employees on notice period eligible for leaves?

Yes, an employee is entitled to take remaining leaves according to their annual leave calendar. If they use more leaves than the ones they are entitled to, it might either result in loss of pay or an extension of the notice period. 

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