By S&S Co. Advocates & Solicitors · Published 28 April 2026 · Informational content, not legal advice: see our disclaimer
The Notice Period, Explained
Most Indian employment contracts specify a notice period, commonly thirty, sixty or ninety days depending on seniority, during which either the employee or the employer must give advance notice before ending the employment relationship. The specific notice period, and whether it differs for resignation versus termination, is governed by the individual employment contract, read together with any applicable certified standing orders or the Shops and Establishments Act of the relevant state, which may prescribe minimum notice requirements independent of the contract.
Notice Pay in Lieu of Notice
Most contracts allow either party to pay a sum equal to the salary for the unserved notice period in lieu of actually serving it: commonly called 'notice pay' or 'pay in lieu of notice.' Where an employer terminates employment immediately and pays notice pay, this is generally treated as satisfying the contractual notice obligation, provided the contract permits payment in lieu and the amount actually paid corresponds to the full unserved period.
What a Garden Leave Clause Does
A garden leave clause allows an employer to require an employee, typically a senior or client-facing employee serving their notice period, to stay away from the workplace and refrain from performing active duties, while continuing to receive full salary and contractual benefits through the remainder of the notice period. Garden leave differs from notice pay in lieu because the employment relationship, and the employee's confidentiality and fidelity obligations, continue unbroken through the garden leave period rather than being immediately terminated.
What to Check Before Relying on These Clauses
Employers invoking garden leave should ensure the contract clearly permits it, that full pay and benefits continue without interruption, and that the period does not extend meaningfully beyond the contractual notice period. Employees should check whether their contract's notice pay clause caps the amount payable, whether it is calculated on gross or basic salary, and whether accepting notice pay or garden leave affects their eligibility for other exit benefits such as bonus or leave encashment.
Frequently Asked Questions
Can an employer terminate an employee immediately by simply paying notice pay?
Generally yes, where the contract expressly permits payment in lieu of notice: the employer must pay a sum equal to the salary for the full unserved notice period for this to validly substitute for actually serving the notice.
Is garden leave the same as being terminated?
No: during garden leave the employment relationship legally continues, with full salary, benefits and contractual obligations (including confidentiality) remaining in place; the employee is simply relieved of the requirement to attend work or perform active duties.
Can an employee refuse to serve garden leave and insist on working through the notice period?
This depends on whether the contract gives the employer a unilateral right to impose garden leave: where such a clause exists and is properly invoked with full pay continuing, courts have generally treated it as a valid exercise of the employer's contractual rights.
Does accepting notice pay affect an employee's other exit entitlements, like gratuity?
Not typically for entitlements that are independently governed by statute, such as gratuity, which depends on completed years of continuous service rather than how the notice period itself was concluded, but employees should check their specific contract and any applicable full-and-final settlement terms.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Standard Indian employment contract notice and garden leave clause practice.
- Relevant state Shops and Establishments Act provisions on notice of termination.