Notice Period, Resignation and Termination: Your Rights Under the Labour Codes

Your notice period is mainly what your appointment letter says; no general law fixes 30, 60 or 90 days for every employee. Whatever the notice dispute, your employer cannot hold back wages you have already earned: under section 17(2) of the Code on Wages, 2019, dues must be paid within two working days of resignation, dismissal or retrenchment. A “worker” retrenched under the Industrial Relations Code, 2020 is entitled to one month’s notice (or wages in lieu) and compensation of 15 days’ average pay for every completed year of continuous service. A non-compete that stops you working after you leave is generally void under section 27 of the Indian Contract Act, 1872.

Notice period: what actually binds you

For most private sector employees, the notice period is a contract term. If your appointment letter says 60 days, that is your starting point. Many letters also allow the employer to accept “salary in lieu of notice”, or let you buy out the balance.

• If you leave early without consent: the employer can usually claim the notice pay shortfall, but only up to what the contract provides. It cannot invent a penalty that is not in the contract.
• If the employer refuses to accept your resignation: keep your resignation email and the date. Ask in writing for the last working day. Do not simply stop coming to work without a written record.

Your money cannot be held hostage

Section 17(2) of the Code on Wages says that where an employee is removed, dismissed, retrenched or resigns, “wages payable” must be paid within two working days. A notice period dispute does not cancel this duty. The employer may adjust a genuine notice pay shortfall if the contract permits, but it cannot freeze your entire salary, leave encashment and other earned dues until you “settle”.

Gratuity, if you qualify, is a separate statutory right. Provident fund belongs to you and is withdrawn or transferred through EPFO, not through the employer’s goodwill. See gratuity rules and PF and ESI rights.

If dues are not paid, the route is a written demand, a legal notice, and a claim before the authority under section 45 of the Code on Wages within three years. The full process is in salary not paid by employer.

Termination and retrenchment under the Industrial Relations Code

The four Labour Codes came into force on 21 November 2025. Retrenchment is now governed by the Industrial Relations Code, 2020.

Who is protected: a “worker” under section 2(zr). This excludes persons employed mainly in a managerial or administrative capacity, and persons in a supervisory capacity drawing wages above the notified limit (currently ₹18,000 per month). A software developer with no managerial role may well be a worker; a regional sales head usually is not. Coverage depends on the real nature of duties, not the job title.

Conditions for retrenching a worker with at least one year’s continuous service (s.70):

1. one month’s written notice stating the reasons, or wages for the notice period in lieu;
2. retrenchment compensation equal to 15 days’ average pay for every completed year of continuous service;
3. notice to the appropriate Government in the prescribed manner.

In addition, section 83 requires the employer to deposit 15 days’ last drawn wages per retrenched worker into the worker re-skilling fund. This is separate from retrenchment compensation.

Larger units: Chapter X applies to industrial establishments (factories, mines and plantations) that employed 300 or more workers on average per working day in the preceding 12 months. Retrenchment there needs three months’ notice or wages in lieu and prior permission of the appropriate Government (s.79).

Managers and others outside “worker” are governed by their contract. Their remedy for wrongful termination is usually damages for the notice period and dues in a civil suit, not reinstatement.

Relieving letter, experience certificate and original documents

There is no general statute that gives every private employee a right to a relieving letter. In Bharat Aviation Pvt. Ltd. v. Rahul Sudhindra Soni (Bombay High Court, May 2026), the court refused to compel a relieving letter and experience certificate where the employee had left in breach of his service bond. Standing orders for workers in industrial establishments do provide for a service certificate on exit, but that applies only within their coverage.

In practice:

• Resign by email, complete handover, return company assets against a receipt, and then ask in writing for the relieving letter.
• If the contract or HR policy promises these documents, a legal notice citing that clause usually works.
• Never hand over original degree or school certificates. Show originals for verification and give self-attested copies. If an employer is holding your originals, demand them back in writing and then send a legal notice; a civil suit for return of specific movable property is available.

Non-compete clauses after you leave

Section 27 of the Indian Contract Act makes void every agreement by which anyone is restrained from exercising a lawful profession, trade or business. In Percept D’Mark (India) Pvt. Ltd. v. Zaheer Khan (2006), the Supreme Court held that restrictive covenants operating after the contract ends are hit by section 27. So a clause saying “you will not join any competitor for two years” is generally unenforceable once you have left.

Two cautions. First, a restriction during employment (no moonlighting for a rival) is usually valid. Second, confidentiality and non-use of trade secrets survive your exit. Taking client lists or source code is a separate legal problem.

Frequently asked questions

Is a 90-day notice period legal?

Yes, if it is in your contract. No general law caps it for private employees. You can negotiate a buyout or early release.

Can my employer withhold my salary because I did not serve full notice?

It can adjust notice pay only as the contract permits. Earned wages must otherwise be paid within two working days of exit under section 17(2) of the Code on Wages.

How is retrenchment compensation calculated?

For a worker, 15 days’ average pay for every completed year of continuous service, under section 70 of the Industrial Relations Code. So a worker with 6 completed years gets 90 days’ (6 × 15) average pay, plus notice pay if notice was not given.

Is a relieving letter mandatory?

Not under a general statute. It depends on your contract, HR policy and, for workers, applicable standing orders.

Can I be sued for joining a competitor?

A post-employment non-compete is generally void under section 27 of the Contract Act. Misuse of confidential information is a different matter.

Quick quiz

To understand work rights from offer letter to exit, see Certificate Course in Everyday Law for Every Indian.

Sources

• Code on Wages, 2019, sections 17 and 45
• Industrial Relations Code, 2020, sections 2(zr), 70, 77, 79 and 83
• Indian Contract Act, 1872, section 27
• Percept D’Mark (India) Pvt. Ltd. v. Zaheer Khan, Supreme Court, 2006
• Bharat Aviation Pvt. Ltd. v. Rahul Sudhindra Soni, Bombay High Court, 2026

This page is for education and general information, not legal advice for a specific case. Law as on 29 October 2026.