How much does it cost to buy out a notice period?
In India a notice period is commonly 30 days at junior levels and 60 to 90 days at senior ones. Enter the monthly salary the policy uses and how much notice is left to see the buyout amount and the days it saves.
- Notice days left
- 90 days
- Daily rate
- ₹5,000
- Calculated on
- monthly basic salary ÷ 30
Buying it out lets them join about 90 days sooner. Compare that with what each week of the role staying empty costs in the cost of vacancy calculator.
How it’s calculated
- Days left = notice period − days already served − any earned leave the employer lets you set off.
- Daily rate = monthly salary ÷ 30 (calendar month) or ÷ 26 (working days), whichever the employer’s policy uses.
- Buyout = daily rate × days left. Use the monthly figure the policy names: some employers calculate on basic salary, others on gross.
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Questions, answered.
How is notice period buyout calculated in India?
Multiply the daily rate by the days of notice not served. The daily rate is the monthly salary divided by 30, or by 26 where a policy counts working days. Whether that monthly salary is basic or gross depends on the employer: the offer letter or HR policy says which, and that choice can change the amount a great deal.
Can earned leave be adjusted against the notice period?
Sometimes. Some employers let unused earned leave count towards the notice period and many do not; it is the employer’s decision under its policy. If it is allowed, enter those days in the calculator to see the shorter buyout.
Who pays the notice buyout?
The employee owes it to the old employer, and it is usually deducted from their full and final settlement. A new employer that wants the person sooner sometimes reimburses it, often as a joining bonus. Agree who pays before the resignation goes in.
Is a notice buyout reimbursement taxable?
A buyout amount reimbursed by the new employer is usually treated as part of the employee’s salary income. How it is taxed depends on how it is paid, so confirm with your finance team or a tax adviser before promising a net figure.
Is buying out a notice period worth it for an employer?
Compare the buyout with what each week of the role staying empty costs you. The cost of vacancy calculator on this site gives that figure. For a senior hire, a few weeks of buyout is often cheaper than the same weeks without them.