Notice buyout: price the shortfall
Notice owed, notice served, and the contract's wage basis: the recovery or buyout amount out, computed the way it will appear in your full and final settlement.
Your inputs
The recovery / buyout
The same figure works both directions: it is what the employer recovers in your settlement, and what a new employer reimburses in a buyout. Your contract clause (not a statute) sets the basis; verify it before relying on any number here.
How buyouts actually flow
Three parties, one computation. You resign and serve less than contracted notice; your employer nets the shortfall (days short × the clause's daily wage) in your full and final settlement, shown as its own cited line. If your new employer offered a buyout, you submit that settlement statement and they reimburse the recovery. The single biggest swing is the wage basis: a 30-day shortfall on ₹40,000 basic recovers ₹40,000, but the same clause written on a ₹90,000 gross recovers ₹90,000, which is why reading the clause before resigning is worth more than any calculator. Employer-side payment in lieu runs the identical arithmetic with the sign reversed.
The legal frame, which is what governs notice, waivers, garden leave and the tax treatment on each path, is in the notice period & buyout guide; how the line nets into the settlement is on the FnF page.
A worked example
Sixty days' notice, thirty served, recovery on ₹40,000 basic ÷ 30: shortfall 30 days × ₹1,333 = ₹40,000 netted in the settlement, and reimbursed by the new employer whose offer included buyout. Serving 45 days instead halves the recovery to ₹20,000; serving the full 60 zeroes it. The negotiation this calculator enables: every extra week served is ₹9,333 off the buyout ask, which sometimes makes 'join two weeks later' the cheapest term in the offer.
Illustrative; your clause's basis and divisor govern; tax treatment on buyout reimbursements deserves a professional's confirmation.
Frequently asked questions
How is a notice buyout amount calculated?
Shortfall days × the daily wage on your contract's recovery basis, commonly monthly wage ÷ 30. The clause decides whether that wage is basic+DA or gross, which is the single biggest swing in the figure.
Who actually pays in a buyout?
Your current employer recovers the shortfall in your full and final settlement; a new employer offering buyout reimburses you against that settlement statement. The statement showing the recovery line is the artifact to keep.
Can my employer refuse a buyout and force me to serve?
Courts don't force service. The practical remedy is monetary recovery per the clause. But relieving-letter timing and handover expectations are the employer's levers, so negotiated exits beat unilateral ones.
Is the buyout amount taxable?
Recovery netted from your settlement reduces what you receive; reimbursement from a new employer has its own tax treatment worth confirming professionally. Keep the settlement statement either way; it documents both sides.
Does serving partial notice reduce the recovery proportionally?
Yes — recovery prices only the days short, so every extra week served cuts the amount by seven daily wages. Sometimes 'join two weeks later' is the cheapest clause in the new offer.
Every exit line, cited and computed.
Notice recoveries net into PeopleDeck settlements with the clause cited — per employee.
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