Notice Periods and Buyouts: A Practical Guide for Employers

Notice periods should reflect how long it takes you to find and train a replacement. A long notice for a junior role mostly frustrates people; a short notice for a key accountant at year-end can hurt you.

Write notice terms clearly in the appointment letter, with separate terms during probation and after confirmation. Certain establishments may also be governed by standing orders, state shops and establishments rules or the Labour Codes, which came into force from 21 November 2025 with rules still being notified. Check the latest requirements, or consult a professional, before finalising your terms.

• During probation: often 7 to 30 days
• Front-line and junior roles after confirmation: often 15 to 30 days
• Mid-level professional roles: often 30 to 60 days
• Senior or hard-to-replace roles: sometimes up to 90 days

How you handle exits shapes your reputation with current staff and future candidates. Accept the resignation professionally, confirm the last working day in writing, and agree a handover plan.

Have an honest conversation about why they are leaving. Sometimes there is a fixable issue; often there is not. Either way, you learn something. Our guide on exit interviews has questions to use.

Plan the replacement as soon as a resignation arrives, not near the last day. If you start immediately, a 30-day notice is often enough to hire and get a few days of overlap for handover, which is far smoother than a gap.

1. 1Acknowledge the resignation in writing within a day or two
2. 2Confirm the last working day based on the notice terms
3. 3Agree a handover list: open tasks, files, passwords, client contacts
4. 4Decide whether to request the full notice or offer early release
5. 5Plan the replacement hire immediately
6. 6Schedule the exit interview and full and final settlement

Many appointment letters allow either side to pay salary in lieu of notice instead of serving it. If an employee wants to leave early, you can agree early release, ask them to pay for the unserved days, or adjust against earned leave if your policy allows.

Be reasonable. Forcing an unwilling employee to sit out 90 days rarely produces good work. Equally, if a smooth handover genuinely needs time, explain that and agree a middle path. Whatever you agree, put it in writing, and process the full and final settlement and relieving letter on time. Withholding a relieving or experience letter as leverage tends to create disputes; get advice if a recovery is genuinely due.

When you hire experienced white-collar staff, most of your best candidates will be serving notice. Ask about notice period on the very first screening call, not at the offer stage, so you can plan.

Long notice periods are where offers are lost: the candidate's current employer makes a counter-offer, or another company offers a faster start. Our guide to reducing offer drop-outs explains how to stay in touch during this time.

• What is your notice period as per your appointment letter?
• Have you already resigned? If yes, what is your last working day?
• Is early release or buyout possible at your company?
• Do you have any earned leave that could be adjusted against notice?
• Is there anything that might make your company ask you to stay longer?

A buyout means you reimburse the candidate the amount their current employer recovers for unserved notice, so they can join sooner. It can be paid as a one-time joining bonus, often with a clause that it must be repaid if they leave within a set period.

Buyouts make sense when the cost of waiting is high: a client project starting, a team that is badly short-staffed, or a rare skill you might lose to a faster competitor. They make less sense for junior roles where you can find good candidates with short notice, or when the candidate's employer is unlikely to release them anyway.

• Ask for the exact buyout amount in writing from the candidate's current employer
• Pay against proof: relieving letter and recovery or deduction statement
• State the buyout and any repayment clause clearly in the offer letter
• Treat it as a taxable payment and process it through payroll
• Keep buyouts consistent so current employees do not see them as unfair

Before paying, check cheaper options. Sometimes a candidate can negotiate partial early release by completing handover quickly. Earned leave can sometimes be adjusted. You might also agree a later start but involve the candidate informally in planning, without asking them to work for you while still employed elsewhere, which would create a conflict.

Another option is to hire people with short notice periods for roles where that is realistic. Freshers, candidates between jobs and many blue- and grey-collar workers can often join quickly. You can reach them by posting a job on BetterJobs and asking every applicant about notice period on the screening call, or by searching the resume database.

In many blue-collar and shift-based roles — delivery, warehouse, housekeeping, security — formal notice periods exist on paper but workers often leave with little or no notice. Rather than relying on penalties that are hard to enforce, focus on reducing sudden exits and keeping a pipeline ready.

Keep notice terms short and realistic, such as seven or fifteen days, and explain them clearly in the local language at joining. Pay wages on time, settle dues promptly when someone leaves, and many workers will give you the notice you ask for. Keep a bench of pre-screened candidates for high-turnover roles so that one exit does not stop a shift. You can hire warehouse workers or hire housekeeping staff on BetterJobs when you need to refill quickly.

If you agree to buy out a candidate's notice, record it in the offer letter in plain words. For example: "The company will reimburse the notice period recovery made by your current employer, up to ₹[amount], on submission of your relieving letter and the recovery statement. If you resign within twelve months of joining, this amount will be recoverable from your full and final settlement." Have the clause reviewed so it is reasonable and enforceable.

Notice and buyout issues often turn into disputes when communication is poor. These are the mistakes that come up again and again.

• Discovering a 90-day notice only at the offer stage
• Pressuring candidates to abscond from their current job
• Paying a buyout without written proof of the amount recovered
• Applying different notice rules to different employees in the same role
• Delaying the full and final settlement or relieving letter of a leaving employee