Do I have to pay a notice period buyout in India?

Offer letter demands 90 days notice or a salary buyout? See what the clause means, when it can be negotiated, and a polite email to HR to cut it down.

The risky clause

The Employee must serve 90 days notice. If the Company waives notice, or the Employee leaves early, the Employee shall pay 3 months gross salary as buyout.

Why it is dangerous

A buyout is a contract term, so it binds you if you signed it, but there is no automatic legal rule that you must pay three months of salary. Terms that are one-sided, such as the company can fire you instantly while you owe 90 days, are good points to negotiate before signing. Ask a CA how any payment would be taxed. This is general information, not legal advice.

Safer clause to propose

Either party may end employment with 30 days written notice. If the Employee leaves early, the Employee shall forgo salary only for the unserved notice days, calculated on basic pay, with no additional penalty.

Message to send

Hi [HR Name],

Could the notice period be 30 days for both sides, and any shortfall be adjusted against basic pay for the unserved days only? A mutual notice term keeps things fair. Thank you, [Your Name]

Frequently asked questions

Can a company refuse to accept my resignation?

Usually the contract sets the notice period. Many employers accept an early exit with a buyout. Check your offer letter and company policy.

Is a notice period buyout taxable?

Tax treatment depends on who pays whom and the facts. Ask a chartered accountant before you pay or receive one.

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