Why Companies Should Not Have A Long And Rigid Notice Period For Their Employees

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Can one stay with the ex-girlfriend for just three months so that both of them can handle the “transition” period seamlessly? Not asking actually, it’s just a thought hovering around social media platforms targeted towards various companies’ HR policy — “organisations want candidates to join in 10 days, but themselves have a long notice period”.

Though the argument is not new, it has again come to the fore amid the era of mass layoffs, rapid hiring and increasing attrition rates. But what’s causing this re-uproar?

Experts opine that although statutory provisions prescribe a minimum notice period of one month, typically corporates provide a notice period of upto three months or so in employment contracts.

“Very often, employees breach these contractual notice period obligations and even corporates rarely seek their enforcement through judicial interventions as labour law enactments are skewed towards employees and the process is time-consuming and cumbersome,” said Minu Dwivedi, Partner, J Sagar Associates.

“All companies wanted immediate joiners only! But If they wanted to release the candidates, they should serve the notice period 2-3 months,” Subbareddy Maddula, Founder, MD and CEO, RupsTech, wrote in a LinkedIn post.

“And they are not even agreed to join the candidates [in] 10 days also. All HR managers [say] no no… we don’t have that much time… Indian Government should look into those rules and policies and take action on those companies,” he added.

What purpose does a long notice period serve?

In case we ignore the compliance issue, the question arises: Do we really need a long notice period? Do companies benefit from it?

Eight out of 10 employees want the duration of the notice period reduced to a month from three months, according to a survey of 2,800 employees in major banks and IT companies in metro cities by HR tech platform Hush. HR veterans too agree that the three-month notice period is unnecessary and should only be retained for special circumstances and very senior levels.

Reynu Bhat, Head of HR and L&D at HDFC Securities, believes certain roles are very critical for business continuity and they require a lot of in-depth searches for the right candidate.

“Hence, for similar positions, the replacement mostly takes anywhere between 2-3 months. The time requirement is not only for finding the correct candidate but also for the documentation and handover of the outgoing employee, which in most cases, is absolutely crucial,” she asserted.

Often sudden and unplanned exits by employees are hugely detrimental to businesses and hamper smooth knowledge transfer from the outgoing employee to his replacement.

However, Dwivedi pointed out even if employees serve their perfunctory longer notice period, employers rarely benefit from their continued presence as such employees tend to become “lax in the performance” of their duties and at times even complicate the handover process instead of facilitating it.

Impact on existing employees

Industry leaders say the continuance of an outgoing employee at the workplace for a long time after such a person has put in his papers may negatively impact the existing employees.

“Since the outgoing employee’s focus and interest in the existing employment obligations is bound to be reduced and he is more likely to discuss the advantages of the new opportunity availed by him,” Dwivedi said.

Echoing the same, Bhat said since the outgoing employee has already made up his mind to move on, involvement/commitment/productivity “levels drop which adversely impacts the existing employees”.

A common phenomenon seen today is outgoing employees negotiating with present employers to reduce their notice period, as their future employers want them to join at the earliest and are not willing to wait for the employee’s notice period to end. It is a daunting process for all the parties involved.

“Seeing their colleagues go through such tumultuous times, the existing employees often get demotivated and start having ill feelings towards their employers, which is never a good thing,” Dwivedi explained.

What should be the ideal notice period then?

Dwivedi suggested having a short notice period would invariably reduce the conflict between the current employer and the outgoing employee and will result in a smooth and amicable departure.

“Employers should be more supportive and magnanimous towards outgoing employees as such employees are like flag-bearers of the company to the world at large,” Dwivedi added.

Bhat believes that 1-2 months is an ideal period for most of the roles nowadays! However, she also pointed out that the timeframe of the notice period depends on the nature of the role.

In a case of outgoing employees losing motivation, “Based on the criticality of the position, a decision can be taken for an early release,” Bhat said, adding, “The only con is that you may not find a replacement quickly but still, one is better off without a demotivated employee.”

In conclusion, Dwivedi said very often, companies also waive off the longer notice period obligations of employees and release them on an earlier date “with notice pay or put them on garden leave with full pay”.

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