3 month Notice Period: Here’s everything you need to know about the policy

“Seven years here now. Salary is average compared to my friends. Most companies are not interested when I mention a 3-months notice period. How do I get out of this rut?”

A mandatory, non-negotiable 3-months notice period at leading IT firms inconveniences many employees. These employees miss out on better employment opportunities.

In fact, this concern only reiterates a larger share of similar online threads and even petitions (some with more than 50 thousand signatures). In these petitions, employees repeatedly question the purpose behind ‘an unreasonable policy’.

So, how does a 3-months notice period policy in India work? Has it evolved over the years with the changing recruiting landscape? Unlike other countries, what warrants the 90-days notice in India?

The Calibr team spoke to many employers, HR executives, and employees to understand this less addressed workplace policy issue.

What is Notice Period?

A notice period is a time that an employee serves from when they quit their last working day. It also applies to employers who give a certain period of notice to employees, before termination.

The length of this notice varies across countries and job sectors. However, an outgoing employee’s expected formalities largely remain the same. This includes an effective knowledge transfer (KT) to a backup resource and the settlement of accounts relating to the employee’s claims. It also includes their entitlements, transfer of benefits, payment of gratuity, the release of relieving documents, etc.

Nagesh Saralaya, 31, has recruiting experience in both IT and banking sectors. When asked to prioritize reasons validating the existence of a 3-months notice period in Indian service-based companies, he says,

Lengthy notice period helps in employee retention and also in buying time to replace the resource.

Most of the industry experts do not recall a specific period in time when the 3-months notice period policy in India turned into industry practice. Manoj Kumar is the founder of HR Analytics think-tank WorkplaceIf. According to him, the trend apparently started when multinational companies began outsourcing their services.

“The policy has its roots in offshoring activities because it involves clients stressing upon service-based companies on efficient KT to a backfilling resource,” he says.

Unique to Indian Job Market

In many aspects, the 3-months notice period is quite unique to the Indian job market. Here, it applies to even entry-level employees working in the IT sector. The United States of America follows an "employment-at-will" policy regarding termination. In this policy, both parties (company and employee) can end the employment at will at any time, without any notice or providing any reason. Based on goodwill, people agree upon a customary two weeks' notice.

In fact, data from Mercer’s “Global HR Factbook” outlined the minimum legal requirements for notice periods across 43 countries. This data insinuated that employees resigning in the US, Mexico, Hong Kong, Ireland, Singapore, and the UK have the shortest (one week) statutory notice period. The same study also listed countries like Switzerland, Slovakia, and the Czech Republic to have two months' notices.

In most European countries, notice periods increase depending on the number of years an employee has served in a company. It may also vary with certain high ranking leadership roles. China and Japan observe infrequent job changing among its working population. However, East-Asian economies obligate a month's notice.

Big Companies dictate Trends

In India, the 3-months notice period rule began to thrive with many leading IT companies. They adopted it as part of their employment policies and set off the trend. “However, it has by and large become a norm for most IT firms now,” shares Rajesh Kumar Singh, HR Head, KPIT Technologies.

Nagesh is a Regional HR Manager at Kotak Mahindra Life Insurance Ltd. Talking from a company-specific perspective, he states that the 3-month period is indispensable in a competitive industry.

“Imagine if you are the only company mandating a 1-month notice period, then you would be scapegoated by competitors, who would take advantage by poaching your resources,” he says.

Mitalee Dabral is the Global HR head of an Engineering Solutions company. She stresses that the pace of economy growths and job market standards dictate the length of the notice period.

She is also vocal about the kind of recruiting challenges that lengthy notice periods have posed to employers.

Unlike bigger multi-nationals, the replacement cost and turnaround time to backfill a resource might be huge for smaller companies who cannot afford to have the concept of bench (a set of employees who could act as backup resources) to ensure a resigning employee is also productive during the notice period is difficult too, she says.

3-months Notice—A mere retention tool?

We conducted a survey for over 2800 respondents. Around 90 percent answered in affirmative to a question that enquires the misuse of the 3-months notice period by employers. Employers may use it as a retention tool that cuts down attrition rates.

“It is just a tactic to make sure the employee does not switch to another company as most employers are not willing to wait for three long months to on board a new resource,” shares 27-year-old Rohini. H. J, who has over four years of work experience in the IT sector.

Often failure to serve the full notice period might lead to consequences like blacklisting, blocking certain relieving documents, and in extreme cases suing for a breach of contract.

It is kind of hypocritical for big MNCs to force outgoing employees to negotiate on the farthest joining date (with their new company) possible when they want newcomers to join as early as possible, says a 25-year old, ex-Accenture employee, who wishes to remain unidentified.

Mitalee disagrees from the employer standpoint. She feels it is difficult to retain employees who have already made up their mind to quit.

“At best, you can play around with a company’s attrition data, which is not good in the longer run,” she says.

Business Criticality and Favouritism

In a survey done by Hush, 80 percent felt that favouritism plays a role in an employee being relieved earlier than their stipulated notice period.

“The length of the notice to be served is hugely dependent on business criticality and your rapport with the immediate boss/manager,” shares a 36-year old female employee. He/she has recently quit a prominent software company after putting in close to 15 years of work.

A retired consultant with over three decades of experience at TCS explains how and why the nature of skills being transferred tend to influence notice periods. He says, “When the demand for skills is more, the company’s expectations for an individual to join will always be about a month—however, the release of its employees will be longer. On the contrary, when the supply is more than the demand for skills, the situation reverses.”

Often a longer notice period in many IT companies is justified on the basis of an efficient KT. But a staggering 90 percent of the employees who took the Hush survey do not agree.

Kousthub Belur worked for about three years with a leading IT firm, before pursuing further studies abroad. He agrees that an optimum time period is required for resourceful KT. However, he also feels that three months is long.

If KT requires more than 45 days, it means that there is over dependency on a single person in a particular project, shares the 25-year-old.

Is a Notice Period Legally Binding?

Most Indian IT companies work on a service-based model. Here, many of their employees work for customers in certain billing periods. In such cases, it is easy to wonder why there is an inconsistency among IT companies itself. Especially, when it comes to the length of notice periods.

“At the level of an organization, it could be inferred that the nature of work is similar. However, when you drill down customer needs, expectations, and contractual obligations, the commitments can drive into varied complexities,” reasons the ex-consultant from TCS, who also believes that the fundamental driver in most notice period negotiations is evaluating who needs whom the most

Mitalee knows most hiring companies acquire new talent and are not willing to wait for three months to fill up a vacancy. “And that’s precisely why it is kept negotiable,” she reiterates.

In some cases, people do not serve the full notice. Some of the most common grounds are buy-outs, medical complications, personal crises, higher education, marriage, and associated migrations.

There are cases where exemptions are not applicable. In such cases, employees are frequently inconvenienced by missing out on competitive offers that may mark their career growth.

I got a couple of screening calls and after learning that I have a 3-months notice period, they never called back despite me telling them that I can negotiate and get it shortened post getting an offer, shares a 36-year-old employee, name undisclosed, narrating the kind of hassle they had to face while considering a career shift from a leading company.

Manoj has an aversion to employers who push their employees to join as early as possible.

“Almost all HR executives know of the standard practices. Yet, it is unfair for some of them to use pressure tactics on employees to convince their incumbent companies to shorten their notice time”.

In agreement with many employers we spoke to, Mitalee also considers outgoing employees to be the biggest ambassadors of a company’s reputation.

“No employer wants to end terms with an employee on a bitter note. Hence, the moral compass often lies with HR personnel to rise above all biases and negotiate on reasonable grounds to shorten notice periods and yet ensure smoother transitions,” she opines.

What do Employees say?

Hush also spoke to a group of IT employees at the project manager level. This was in a leading IT company headquartered at Bangalore. When questioned about the strategy of a few employees who first put down papers and then began to look for jobs so as to avoid serving a notice, most of these key informants felt that it was ‘a realistic yet risky route to take’.

A female employee shared, “Only those who are privileged to have savings handy and not have many responsibilities to take care of can afford the same."

In the same discussion, an employee stated that ‘some employees keep giving interviews with their notice periods. This is after they have a stable offer in hand, leading to lobbying on salary packages’. This may lead to employers dealing with ambiguous situations. For instance, they may have to doubt an employee’s real intention to join a certain company.

Rajesh Kumar Singh is of the opinion that a 3-months’ notice does not necessarily impact all employees in a negative way.

"In certain termination cases, a 3-months notice period also acts as a cushion to ensure employee welfare and avoid undesirable consequences".

The 42-year-old advocates for better dialogue among bigger IT companies. This is to cut down on lengthy notice periods and adopt uniform guidelines. Around 83 percent of all respondents who took the Hush survey also voted for 1-month to be the ideal length of a notice period that IT companies should espouse.

In my personal opinion, notice periods should range from a bare minimal of 15 days to maximum 45 days in any industry for any role, except the CXOs where the entire handover would take longer time, says Nagesh.

He supports the cause with a list of recommendations that could initiate discussions and bring in place standard best practices:

• Building processes for better business delivery continuance 
• Creating platforms where knowledge sharing happens across employees rather than just relying on ‘Handover Takeover’ (HOTO) when an employee resigns 
• Creating a workplace environment where an employee develops an emotional connection with the company

Legal Enforcement and Government Intervention

We spoke to a group of project managers insisting the need for a progressive intervention on 3-months notice period rule. While one employee termed it a ‘ridiculous policy’, the other one stressed on the need to relook at it. This was especially at a time when more open-minded millennials are entering the industry.

Rahul Kejriwal briefly served at the Ministry of Labour and Employment. He is now the program director at ‘Next IAS’. He shares that there is a lack of clarity on legalities governing notice period policy in India. This leads to many big MNCs exploiting it in the form of a coercive tool.

Terming the 3-months’ notice as a ‘wasteful exercise,’ the 30-year old states this is an important employee concern. He also believes that the Ministry of Labour and Employment should deliberate upon this.

It may involve drafting a tricky legislation, but to begin with the Ministry should consider bringing in a model code that IT companies can follow.

Some investor friendly states across the country have exempted IT companies from adhering to the labour laws of India.

Karnataka and Tamil Nadu have extended exemptions for IT companies for provisions under ‘The Industrial Employment (Standing Orders) Act 1946’. This mandates 1 months’ notice period for 'workmen'. However, this is except for those holding managerial positions.

Rajesh Singh states that the latest ‘Shops and Establishment Act’ (covered under individual state legislation) is also silent on directives with regard to notice periods.

The Central government, which is ideally the model employer for most companies, also mandates a 3-months notice period. This is not a pressing need to be addressed, unlike other employee concerns/priorities. The dialogue though (if it has to begin) should start among the bigger MNCs, he says.

“The larger policy goal, however, should be to cap the maximum limit of notice periods to a much shorter duration to free up the labour market (in which transitions are easier for both the employee and the employer),” concludes Rahul.

Millennials redefine the code and conduct of conventional workspaces. Hence, the need to have a meaningful dialogue in capping lengthier notice periods is more pertinent than ever. However, to what extent can timely policy interventions help in this regard? Only time can tell.

Email Templates for 3 Months Notice Period

Email Template 1:

Subject: Request for Resignation—Monica Kapoor (Name)

Sir/Madam, 

I am writing to you to inform you that I will be resigning from the post of Senior Manager (Job Title) at Tata Consultancy Services (Company’s Name) and my last day of working here would be 25th of June 2019, that is three months from now. So, please consider this email as my official resignation. 

It was not an easy decision on my part. As the last two years have been very gratifying. Thank you for providing me with this wonderful opportunity. I have had such a friendly and smart set of colleagues to work with and for this I am grateful.

I would love to work again for this wonderful organization in the future as well whenever possible.

Please let me know how I can be of assistance during this transition.

I look forward to staying in touch.

Thank you.

Sincerely,

Monica Kapoor

Senior Manager

Ph: 1234567891 

Email Template 2:

However, the following is a template for email to shorten the 3-months notice period resignation letter for a personal reason.

Subject: Request for Resignation — Raj Sharma (Name)

Sir/Madam,

Please acknowledge this email as my resignation letter for the role of QA test engineer at Accenture.

As per my employment contract, the standard notice period of the resignation process is three months from now, which is June 25th, 2019. But I would like to reduce it to one month as because of an unforeseen problem at home.

Therefore, my final day will be 25 April. Despite having to leave Accenture, I deeply appreciate the opportunities you’ve provided me with during my time as a QA test engineer.

I will do all the necessary things for a smooth transition after I move on. I would be happy to assist with the process of finding an external replacement.

Please let me know how I can be of assistance during this transition.

I look forward to staying in touch.

Thank you.

Sincerely,

Raj Sharma

QA test engineer

Ph: 1234567891

These are two of the simplest ways in which you can put forward all the information required in your mail for the 3-months notice period.