Notice Period Wars in India: A Practical Guide for CEOs and HR Leaders

You just closed a brilliant developer after three months of back-and-forth. Competed with five other offers, finally got her at a 30% hike. She joins, ramps up, starts shipping features. Six months later, she walks into your office and resigns. You pull out her contract: 90 days notice period, signed and dated. She says she'll work one month and pay for the rest.

Your CTO is already panicking about the release schedule. Client commitments are suddenly at risk. And then you remember: you let that other guy from her team buy out his notice period just two months ago.

This is the mess every CEO deals with. You need to protect your business, but the legal landscape is tricky. Most founders get this wrong because they either don't know their rights or they know just enough to be dangerous.

Here's What You Can Actually Do (Legally)

Let's get the uncomfortable part out of the way first. You cannot physically force someone to work. Article 23 of the Constitution says no forced labor, and Section 14 of the Specific Relief Act backs this up: contracts of personal service cannot be "specifically enforced."

The Supreme Court made this crystal clear in 2018. Sanjay Jain v. National Aviation Co. of India Ltd. Once an employee gives contractual notice, the resignation becomes effective when the period ends. Your "acceptance" means nothing legally. It's a courtesy, not a requirement.

So no judge is going to order your engineer to show up on Monday morning.

But that doesn't mean you're helpless. You have real, enforceable options:

Hold them financially. They owe you payment for unserved notice period. That's breach of contract, and damages are legitimate. This isn't being petty; it's your contractual right.

Withhold final settlement. Everything: pending salary, leave encashment, bonuses. Adjust it all against what they owe you. Pay them only what's left after you recover your dues.

No experience certificate, no relieving letter. These aren't automatic. They come after settlement. No settlement? No documents. Simple.

Sue them. Yes, most companies don't because litigation is expensive and slow. But for senior roles where business impact is massive? Absolutely pursue it. Sometimes you need to make an example.

The trick is knowing these rights exist and documenting everything properly. The law gives you leverage. Most founders just don't use it.

The Legal Framework (What Actually Protects You)

Your employment contract is your first line of defense. For professional roles (managers, engineers, anyone who's not a "workman" under labor law) the contract is everything.

The Industrial Employment (Standing Orders) Act kicks in if you have 100+ workers. It requires you to define employment conditions in certified standing orders, and once certified, they're legally binding. Most startups never hit this threshold, but if you do, use it to your advantage.

State Shops and Establishments Acts usually mandate 30 days notice after someone completes a few months of service. That's your baseline. But here's the thing: the law doesn't cap notice periods. You can write 90 days, 120 days, six months for critical roles. As long as it's in the contract and they signed it, it holds.

Structure Your Notice Periods Like You Mean It

Entry-level roles? Thirty to 60 days is standard. These people are replaceable quickly, training is faster, business impact is limited.

Mid-level? Sixty to 90 days. They know your systems, they handle client relationships, they're running projects. You need time to backfill properly.

Senior roles? Ninety days minimum, and don't feel bad about going to 120 or even 180 for critical positions. Your VP of Engineering leaving suddenly can torpedo your roadmap for a quarter. A 90-day notice period isn't excessive. It's basic business planning.

Here's what most people get wrong: they apply notice periods by seniority instead of criticality. Your staff engineer working on your core IP? Ninety days. Your finance manager following standard processes? Sixty is plenty.

You can have different notice periods for different roles. It's completely legal as long as you base it on actual business factors: replacement difficulty, knowledge complexity, client dependencies. Just document why.

Buyout Approvals: This Is Your Decision

Nobody tells you this clearly enough: buyout approval is entirely your discretion.

When your contract says "payment in lieu of notice subject to management approval," that's not decorative language. It means you decide. Period.

When to say no:

You have critical deliverables due and this person is essential. Product launch in six weeks, they're the tech lead. Legitimate business reason to refuse buyout.

You haven't found a replacement yet. The role will be empty if they leave early. Business continuity is genuinely at risk.

Your client contract names this person. Removing them without transition actually violates your commercial agreements.

When you might approve (but don't have to):

The role is easy to backfill and impact is minimal. Their replacement starts next week anyway. They're clearly checked out and keeping them around is worse than letting them go.

Here's the critical part that trips up most founders: you don't need to be consistent across different cases. Each situation has unique business factors. Just document it. "Denied buyout for Patel: client deliverable due March 15, his expertise required, no overlap possible with early departure." Write it down. Protect yourself.

When They Abscond: Use Every Tool You Have

Absconding is a complete breach of contract. You have multiple remedies, and you should use them.

Withhold everything. Final settlement, leave encashment, bonuses: hold it all. Deduct what they owe you for notice period. Only pay them the difference, if anything's left.

Don't issue experience certificate or relieving letter. These come after settlement. No settlement means no documents. Let them explain to their next employer why they don't have proper relieving documentation.

Lock down their system access immediately and send a formal demand for return of company property. Make it official. Laptop, phone, access cards: everything.

Issue a legal notice through your lawyer. Demand payment for notice period salary plus any other damages you can quantify. This creates a formal record and signals you're serious about recovery.

Use Probation Period Properly

Probation is your window of maximum flexibility. Most companies waste it.

Standard practice is 15 to 30 days notice during probation versus 60 to 90 after confirmation. That's fine. But what people miss is that you can terminate during probation much more easily. Lower standards of proof, minimal procedural requirements. If it's not working, you can exit them fast.

Some smart companies put in their contracts: "During probation, either party may terminate with 7 days notice or payment in lieu." This gives you maximum flexibility when probation isn't working out.

Build a Policy That Actually Protects You

Your notice period policy is a business tool, not HR paperwork. Design it accordingly.

Critical roles (revenue-generating, client-facing, specialized technical): 90 days minimum. Important roles (mid-management, experienced professionals): 60 days. Standard roles (operational, support, junior): 30 to 45 days.

Put explicit buyout language in your contracts: "Either party may opt for payment in lieu of notice, subject to management approval based on business requirements." That "subject to approval" protects you.

Define how buyout is calculated: "Payment in lieu shall be Basic Salary plus HRA plus Special Allowance for the unserved notice period." No ambiguity about what components count.

Add protective clauses: "Notice period cannot be adjusted against earned leave." "Employee must complete knowledge transfer documentation before final working day." "Company asset return is mandatory for settlement release."

Documentation Is Everything

Poor documentation is how you lose cases you should win.

Your contract needs: clear notice period for probation and post-confirmation, explicit buyout clause with approval requirement, calculation methodology for payment in lieu, consequences of non-compliance, asset return requirements, non-compete and confidentiality terms.

Maintain records of: all resignation communications, your acknowledgment with notice period end date, buyout requests and your approval or denial with reasons, knowledge transfer documentation, asset return acknowledgments, exit interview notes (factual only), final settlement calculations showing all deductions.

What to Actually Do

This week: Pull your employment contract template. Read the notice period clause with a critical eye. Strong enough? Protects your interests? If not, revise it. Get your lawyer to review.

This month: Document your notice period policy. Define categories, periods, buyout approval process, consequences. Make it unambiguous.

This quarter: Train managers on handling resignations. What they can decide, when to escalate, how to document, what business factors matter.

Track your exit data ongoing. How many buyout requests? How many approvals? People absconding? Why? Use data to refine your approach.

The Bottom Line

Notice periods protect business continuity. That's practical, not evil.

You invested time and money recruiting. You invested in onboarding. You gave access to systems, clients, intellectual property. Expecting reasonable notice isn't unreasonable. It's rational business.

Companies that get this right: clear policies, document everything, make business-based decisions, enforce consequences consistently, don't apologize for protecting their interests.

But they also don't abuse the system. They don't trap people indefinitely. They don't use notice periods as punishment. They operate within legal boundaries while being firm about business needs.

That's the balance.