Notice Period Rules in India and What Actually Applies

India’s law sets a notice period of one month, and it sets it for the employer letting someone go. It rises to three months only in a factory, a mine or a plantation with three hundred staff.

For an employee who resigns, no central law names a figure at all. That is why so many arguments about notice period end up being arguments about an appointment letter.

The three-month rule is the one I see quoted most often and understood least, because it turns on two things and most write-ups mention only one of them.

This page sets out what the law requires, who it covers, and where the rest of your notice period rules actually come from.

Who Sets the Notice Period Rules?

Three different instruments do, and which one you read depends on who is ending the job and how many people you employ.

The three sit in a clear order.

The Industrial Relations Code, 2020 is the only one of the three that puts a number into law, and the number it puts there is the employer’s.

Standing orders are the certified rulebook of service conditions a large establishment has to file. They cover both sides, but only large establishments keep them.

Your appointment letter fills everything left over, which for most businesses is the whole of a resignation.

Who is ending it	What the law says	Where the figure lives
Employer, any business	One month’s written notice, or that month paid out	Section 70 of the Industrial Relations Code
Employer, factory or mine with 300+	Three months’ written notice and prior government permission	Section 79 of the same Code
Employee resigning, 300 or more	Whatever the certified standing orders say	Item 8 of the Code’s First Schedule
Employee resigning, fewer than 300	The Code sets nothing	The appointment letter or employment contract

Who Counts as a Worker Under the Code?

Fewer people than you would expect. The Code says worker, not employee, and that one word decides who every rule below reaches.

Section 2 covers a person doing manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether those terms were spelled out or simply understood. Then it carves two groups out:

• Anyone employed mainly in a managerial or administrative capacity, at any salary.
• Anyone employed in a supervisory capacity drawing wages above ₹18,000 a month, or a higher amount the Centre notifies instead.

That carve-out is where most notice period disputes in an office actually live. A plant head in Chennai and an accounts manager at a corporate office in Gurugram will usually sit in that carve-out. The test is what the person actually does, not what the title says.

Their notice period is whatever their contract says, and nothing in the Code lengthens or shortens it.

The government’s own compliance handbook for employers reprints that definition in full, wage figure included.

Which Businesses the Code Counts

Industry under the Code is broad enough to cover a hospital, a coaching institute, a supermarket chain and a co-working operator. Being outside manufacturing does not put you outside these rules.

The definition does carve out three things. Institutions run by organisations wholly or substantially engaged in charitable, social or philanthropic service, the sovereign functions of government, and domestic service. A trust-run hospital or school can land on the wrong side of that first one.

What Notice Must an Employer Give?

One month, in writing, with the reasons in it. Or a month’s wages instead, if you want the person to stop sooner.

Retrenchment is the Code’s word for an employer ending someone’s job for any reason other than punishment. The definition also leaves out five kinds of ending, which are set out further down this page.

Section 70 sets three conditions, and all three have to be met before a retrenchment is lawful:

1. One month’s notice in writing, indicating the reasons for the retrenchment, with the notice period expired. Or those wages paid out instead.
2. Fifteen days’ average pay for every completed year of continuous service, and for any part of a year over six months, paid at the time of retrenchment.
3. Notice to the appropriate government, in the form the rules set out, or to whichever authority it names to receive it.

That third phrase needs unpacking. The appropriate government means your state for almost every business. The Centre takes over only for its own undertakings and a listed set covering railways, mines, major ports, telecom, banking and insurance.

The third is the easiest to overlook. A packaging unit in Pune that gives the month and pays the compensation has still met only two of the three, and a retrenchment that meets two is not lawful.

The One-Year Gate, and What Counts

Section 70 only reaches a worker who has been in continuous service for not less than one year. Section 66 of the Industrial Relations Code, 2020 then defines that more generously than the phrase sounds.

Somebody counts as having a year behind them if they actually worked 240 days in the preceding twelve months, or 190 days below ground in a mine.

Days on earned leave at full wages, days laid off, absence from an injury at work and maternity leave up to the statutory limit all count as days worked.

So a lab assistant at a college in Nagpur with long vacation breaks may cross the line even though the attendance sheet looks patchy. So may a hotel storekeeper in Udaipur through a quiet monsoon.

There Is No Headcount Floor Here

Section 70 reaches a worker employed in any industry. It names no minimum size, and the Code’s definition of industry covers any organised activity that produces, supplies or distributes goods or services, not only factories.

The figure of fifty workers does circulate, and it is real, but it belongs somewhere else. Section 65 limits sections 67 to 69 to factories, mines and plantations with fifty or more workers.

All three of those sections sit with lay-off, not with retrenchment notice.

Take a printing press in Ahmedabad with twelve people on the roll (an example). It sits inside section 70, and so do a courier depot in Indore and a dental clinic chain in Bhopal.

Average pay has its own meaning here. For a monthly paid worker it is the average of the wages payable over the three complete calendar months before the payment falls due. Four complete weeks for weekly pay, twelve full working days for daily.

The severance pay calculator works out the fifteen-days-a-year figure, and the termination letter formats carry the wording the notice itself has to hold.

When Does Notice Become Three Months?

At three hundred employees, and only if you are a factory, a mine or a plantation. Both halves have to be true.

Section 77 sets the headcount at three hundred on an average working day, counted across the previous twelve months. A government can notify a higher number.

Then the same section narrows who it reaches. For this Chapter only, an industrial establishment means a factory, a mine or a plantation, and nothing else.

That is the half almost everybody drops. An office, a hospital, a school or a retail chain never enters this Chapter, however many people it employs. It stays on section 70 and its one month.

Seasonal businesses, and those where work happens only now and then, are left out as well.

If both halves are true, section 79 puts two conditions in place of section 70’s, and you have to clear both before anyone is let go:

1. Three months’ notice in writing, indicating the reasons for the retrenchment, or those three months paid out instead.
2. Written permission from the government, before you act. You apply, you give your reasons, and you send the staff a copy of that same application on the day you file it.

The compensation does not change. Once permission is granted, or counted as granted, the same fifteen days’ average pay for every completed year falls due at the moment of retrenchment.

So a textile mill in Surat with four hundred on the roll is inside this Chapter. A call centre in Hyderabad with the same four hundred is not, because it is not a factory.

What Happens While You Wait

Section 79 gives the government sixty days to answer. If no order granting or refusing permission reaches the employer in that time, permission counts as granted and the application is treated as settled.

An order either way holds good for one year. The government can look at it again, or send the matter to a labour tribunal, which then has thirty days to decide it.

What Happens If You Skip It

The Code is blunt about this. Where no application was made, or permission was refused, the retrenchment is deemed illegal from the date the notice was given.

The worker is then entitled to all benefits as if no notice had been given at all.

Three months of notice served perfectly does not save it. Permission is a condition in its own right, not an alternative to giving notice.

The labour codes readiness checklist covers what else moved at the same thresholds when the codes came in.

Where Notice Period Rules Stop

Some endings are not retrenchment at all, and section 70 never reaches them. The Code lists five.

1. Voluntary retirement taken by the worker.
2. Retirement on superannuation, on reaching the age set for it.
3. Non-renewal of a contract on its expiry, or termination under a stipulation written into that contract.
4. Completion of the tenure of fixed term employment.
5. Termination on the ground of continued ill-health.

A sixth sits inside the Code’s definition of retrenchment. Being sacked for misconduct is not retrenchment, because the definition leaves out any punishment inflicted by way of disciplinary action. That route answers to your standing orders or your contract instead.

One more gap sits in section 70 itself. Anyone who has not crossed continuous service of a year is outside it, whatever the reason for the ending.

What Happens If You Sell the Business

Selling the business is not one of the exemptions. Section 73 says that where ownership or management is transferred, a worker with a year’s continuous service is entitled to notice and compensation as though they had been retrenched.

A restaurant group in Kolkata changing hands and a spa chain in Jaipur being bought out both owe that.

The section lets a buyer off only where all three of these hold:

1. The worker’s service carries on without a break.
2. The terms after the transfer are no less favourable than before it.
3. The new owner is legally liable to pay compensation on the basis that the service never broke.

Whatever the route out, the experience and relieving letter templates cover the documents the person leaves with.

The One Deadline You Do Not Set

However the exit happens, and whichever of those rules reached it, one clock is not yours to set. It is about the money rather than the warning.

Section 17 of the Code on Wages, 2019 gives you two working days from the exit to pay what is owed.

How the job ended makes no difference. Resignation, dismissal and retrenchment all carry the same two days, counted from the last day rather than from your payroll calendar.

A government can set a different limit for its own area. Until one does, this is the deadline that applies to you.

What Notice Must an Employee Give?

Whatever the contract or the standing orders say. The Code sets a period for an employee’s own notice in exactly one place, and that place hands the figure straight back to the employer.

The Code’s First Schedule lists the matters standing orders have to provide for. Item 8 reads termination of employment, and the notice thereof to be given by employer and workers. It names the subject and fixes no period.

Section 28 then decides who has standing orders at all. They are required of every industrial establishment with three hundred or more workers employed, or employed on any day of the preceding twelve months.

If that is you, section 30 gives you a short cut. Adopt the Centre’s model standing orders and they count as certified, so all you owe the certifying officer is the information that you have done it.

Put those together and the answer for most Indian businesses is short. Below three hundred workers there are no certified standing orders, so the Code leaves the appointment letter to carry it.

One place is still worth checking. Several states carry their own notice terms in their Shops and Establishments Act, for the establishments that Act covers. Look up your own state’s before treating the letter as the last word.

The Code Is a Floor, Not a Ceiling

Section 76 adds a line worth knowing, and it runs one way only.

Where a worker is entitled to better benefits than the Code gives, the worker keeps the better ones. That holds whether those benefits come from standing orders, an award, a contract of service or anything else.

So a contract promising the worker sixty days’ notice is not cut back to the Code’s one month. Section 82 carries the same line into the factories and mines that Chapter X reaches.

Read it the other way and it gives you nothing. A clause requiring the worker to serve ninety days is a burden on them, not a benefit, so section 76 has nothing to say about it. Whether that clause holds is a question about your contract, not about the Code.

Our appointment letter formats show where the notice clause sits and what it has to say for each side. Notice during probation follows the same logic, which the guide to probation period rules goes through.

Can You Recover an Unserved Notice?

Only on the grounds the Code on Wages allows, and the list is closed.

Section 18 of the Code on Wages opens by shutting the door. There are to be no deductions from the wages of an employee except those authorised under the Code.

An explanation to that subsection closes the obvious way round it. A payment made by the employee to the employer counts as a deduction too, so asking somebody to hand over a cheque instead is the same act in law as holding the money back.

What follows is a list of fifteen purposes a deduction may be made for. Fines, absence from duty, damage to goods, housing, amenities, advances, overpaid wages, income tax, provident fund, co-operative society dues, union dues and some railway-specific entries.

Recovery of a notice period somebody did not serve is not one of the fifteen.

The closest entry on the list is deductions for absence from duty. Whether an unserved notice counts as that is a question for your own adviser, because the Code does not answer it.

Do Notice Buyout Clauses Hold Up?

Up to a point. The Code caps what you can take back, and your own paperwork decides the rest.

The cap is the settled part. The total deducted in any wage period cannot come to more than half the wages for that period, whatever the clause says.

Past the cap it is judgement, and mine is this. A buyout the employee agreed to in writing on the day they joined sits on far firmer ground than one announced at the exit interview.

A design studio in Bengaluru with a sixty-day clause and a leaver who served twenty days is deciding this on its appointment letter, not on the Code.

None of this is hard to get right once. It gets hard on the thirtieth, across branches, when three people are on notice and two of them started it on different days.

How to Set Notice Period Rules That Work

Notice period rules work when they are written down for both sides before anybody needs them. That is most of the job, and the checklist below is the rest.

If I had to fix one thing before an exit went wrong, it would be the written notice itself. The disputes almost always start with a conversation nobody wrote down.

1. Write the notice period into the appointment letter, separately for each side, because the Code only fills in the employer’s half.
2. Assume one month unless you are a factory, a mine or a plantation with three hundred staff on a twelve-month average.
3. Serve the notice in writing with the reasons in it, since section 70 requires reasons and not just a date.
4. Send the government notice as well as the employee’s, since it is a separate condition and nothing in the exit itself prompts it.
5. Record the last working day on the day it takes effect, not weeks later when payroll catches up.
6. Release the final wages inside two working days, whoever ended it.

The attendance to salary workflow shows where a leaving date has to land for the final payroll run to come out right.

Every rule quoted on this page has been in force since the four labour codes took effect on 21 November 2025.

If you would rather the leaving dates, the final payroll run and the record of who changed what looked after themselves, Attendo does that part.

Frequently Asked Questions