It’s important to know the compensation employees get, when they resign and make an exit from a company. Salary rules vary from company to company, but there are certain standard rules that apply everywhere. So, the employees must be aware of that. Some of the unscrupulous companies try to seize or chew up the accrued dues, but if you know the rules, you can seek legal assistance to claim your dues.
As a rule, if the notice period is served as per the recruitment policies of the company, then the company is entitled to pay the entire amount including that for the notice period served. However, it’s the ethical responsibility of an employee to work seriously for the company even during the notice period and not skip work or take it half-heartedly. You should leave the company on a happy note and should have a good image in your previous companies.
Companies are entitled to provide you the compensation for the entire notice period, if they ask you to serve that notice period. If you ask an employee to leave before the agreed upon notice period, you are entitled to pay your employee for the whole notice period. If you have simply asked them to request a notice period and notice period was not required or asked to be served, you can pay for the days employee has worked for.
Standard notice period is two weeks and for critical positions and upper management, it can be up to four weeks. Still some of the employers ask you to serve a notice period of six months or three months. It’s unfair and should be challenged, especially if you are not under some kind of contract, probation or training clause that calls for such a notice period. Payment for notice period “has” to be made even in case of termination or even if there is no contractual obligation for such payment.
Severance pay is actually a “goodbye payout” to the employee, when there is a layoff, job redundancy, or resignation through mutual consent. It could be the payment for one or two weeks of pay multiplied by the number of years the employee has worked for that organization. Whereas the severance pay for the senior executives depends upon the employment contract. Some benefits are also provided as part of the severance pay, such as health insurance. Some companies also provide outplacement assistance also, in order to help the employee secure a new job.
In case of termination, some companies don’t pay any severance package and even if they do it’s not for all employees. Severance pay is not common and it varies from person to person and as per the service contract. However, severance pay is not governed by any law and it depends entirely upon the discretion of the employer. Though, the Fair Labor Standards Act (FLSA) asks the employers to pay the severance benefits till the employee’s last day at work. However severance pay reduces the unemployment benefits extended to the employee in the US.
According to the law, companies are also liable to pay other benefits to the exiting employees if they are entitled for that, such as accrued vacation pay and commission etc. In the United States, you can contact the state department of labor, if you are deprived of any payment for the notice period served.