Supreme Court’s take on Employment Notice Period

Notice Period is said to be the period when your company actually starts noticing you, a period when you are all set to end the ties with your current organization and kickstart another phase of life with another company. But is the notice period as smooth and calm for everyone? Before understanding this, it is better to have some clarity regarding the notice period.

To keep it simple, Employment notice period is the period after an employee serves resignation with the employer indicating his/her wish to end services with the respective organization and is given a certain period to serve with the organization before his/her services are terminated. The said notice period may vary from 1 month to 3 months or so, based on organization/company rules. Sometimes, the employer may terminate the services immediately after resignation and compensate the employee in lieu of the said employment notice period.

As can be seen, the resignation and notice period formalities involve two parties, i.e., the employer and the employee. Sometimes, there are some procedural gaps which give rise to situations when one of the parties has to approach the courts of law seeking relief. Examples of such situation may be an employee not willing to serve the required notice period, or an employer not willing to relieve the employee by accepting the resignation, etc. In such scenarios, Courts help with solving the legal riddles and decide for the parties. The blog here covers the Supreme Court judgments on employment notice period dealing with different legal/factual twists.

Supreme Court Judgments on Employee Notice Period

Retrenchment Notice Period

1. Pramod Jha v. State of Bihar, (2003) 4 SCC 619

The Supreme Court explained that retrenchment as per Section 2(oo) of Industrial Disputes Act, 1947 must satisfy the following requisites:

• Workman must be served with one month's notice in writing indicating the reasons for retrenchment,

• Retrenchment must be effective after the expiry of one month notice period, or the workman should be paid wages in lieu of the said notice period,

• The workman should be paid compensation equivalent to 15 days' average pay for each completed year of continuous service or any part exceeding 6 months,

• Serving notice to the appropriate Govt. Or the authority specified in the prescribed manner

2. J.K. Cotton Spg. & Wvg. Mills Ltd. v. State of U.P., (1990) 4 SCC 27

The Court held that an employee is only required to give a notice to quit as per Section 5 of Industrial Employment (Standing Orders) Act, 1946, and the service would terminate on the expiry of the said notice period. Mere acceptance of voluntary resignation of the employee does not terminate service of such employee, and it would not constitute ‘retrenchment' as per Section 2(s) of Industrial Disputes Act, 1947. This Supreme Court judgment on employment notice period also provided that “The period of notice will depend on the period prescribed by the terms of employment and if no such period is prescribed, a reasonable time must be given before the relationship is determined. If an employee is not permitted by the terms of his contract to determine the relationship of master and servant, such an employment may be branded as bonded labour.”

Is there a notice period for trainees? Supreme Court explains

1. Kalyani Sharp India Ltd. v. Labour Court No. 1, Gwalior, (2002) 9 SCC 655

The Court analyzed the order of employment vis-a-vis Section 25 F of the Industrial Disputes Act, 1947 and pointed out that the party was appointed as a trainee who had to undergo training to the satisfaction of the employer for a certain period. If the work was not satisfactory during the said period, employment could be withdrawn at any time since the party could be regularized only after completing his training. The question of issue of notice under Section 25 F of the 1947 Act before termination of service did not arise.

Supreme Court judgment on employment notice period and State's power to terminate services

1. Workers employed in Hirakud Dam v. State of Orissa, (1971) 1 SCC 583

While considering the question of whether the State has power to terminate services of any member of work-charged establishment as per Central Public Works Department Code by giving a month's notice or month's pay in lieu of such notice, the Court held the Government to be empowered under the relevant provision. It was clarified that dismissal was not restricted to punishment for serious misconduct, but also applicable to termination simpliciter of employee, wherein, notice or month's pay in lieu of such notice was obligatory.

Withdrawal of resignation during notice period

1. Air India Express Ltd. v. Gurdarshan Kaur Sandhu, (2019) 17 SCC 129

While considering a case of withdrawal of resignation within notice period under Civil Aviation Requirement (‘CAR'), the Court explained that the underlying principle behind stipulation of mandatory notice period was public interest and not the interest of the employee, to ensure that there were no last-minute cancellation of flights causing enormous inconvenience to travelers. It further clarified that the purpose of notice period was to find and train the replacement and could stand curtailed if No-Objection Certificate (‘NOC') was given to the pilot and resignation was accepted even before expiring of the notice period.

2. Srikantha S.M. v. Bharath Earth Movers Ltd., (2005) 8 SCC 314

In a case where the appellant resigned, his resignation got accepted and he was still serving the employment notice period, he withdrew the resignation. Company rules allow resignation by giving one month’s notice in writing or by paying one month's basic pay in lieu of the notice period. Since the appellant had not paid one month' basic pay in lieu of the notice to the company as per Company Rules, the supreme Court judgment on employment notice period ruled that the resignation was to become effective after one month and held the Company's action of accepting the resignation and not allowing the appellant to work after expiry of given period as illegal and unlawful.

Employee's Right to Resign

1. Sanjay Jain v. National Aviation Co. of India Ltd., (2019) 14 SCC 492

While supporting the employee terminating his services after serving the requisite notice for resignation, the Court held that “To resign is a right of an employee who cannot be forced to serve in case he is not willing to serve until and unless there is some stipulation in the rules or in the terms of appointment.”

The list above may not be exhaustive but deals with scenarios which a person may have to deal with while resigning from his/her current position in a particular organization. It also reflects the variety of experiences at private as well as State organizations, wherein, the road ahead is specified through applicable rules of employment, but the parties still get into a dead end where the Courts have brought in the solution to maintain harmony and safeguard the rights of the parties.

FAQs around Supreme Court judgment on employee notice period

Q- Is 3 months or 90 days notice period legal in India?

A- There is no legal specification to declare a specific period of employment notice as unlawful. Hence, a notice period of 3 months or 90 days remains legal.

Q- What happens if I don’t work during my notice period?

A- If a person has served the resignation, there is a general rule to serve notice period. However, if someone is not even willing to serve the employment notice period, negotiation may be initiated with the employer to waive off the notice period. There are provisions to pay the employer a certain amount in lieu of the said notice period.

Q- What is the maximum notice period for leaving a job in India?

A- There is no fixed minimum or maximum notice period before resignation in India. However, companies generally have 15 days to even 6 months of notice period as can be seen in the latest Supreme Court judgment on employment notice period in Air India Express Ltd. v. Gurdarshan Kaur Sandhu, (2019) 17 SCC 129.