When an employee decides to leave a job, they usually have to provide a resignation letter and serve a notice period as per the company policy, which generally ranges from 30 to 60 days. However, sometimes an employee may need to leave urgently due to reasons such as further studies or early joining at a new job. In such cases, the employee has the option of a notice buyout, where they can pay an amount for the notice period not served. The new employer may sometimes reimburse this amount.
For instance, if an employee has to give a 60-day notice but can only provide 30 days, they would need to pay the equivalent of 30 days' salary to their ex-employer as a notice period buyout amount.
To add a notice period buyout policy, navigate to Payroll (1) and then select the Settings (2) tab. Go to the Notice Period Buyout tab (3).
On the Notice Period Buyout screen, you can add a new notice period buyout policy or manage the existing ones. To add a new policy, click on the Add Buyout Policy (4) screen.
On the Add Buyout Policy screen, enter the Name of the Policy, and the Calculation Expression to calculate the per day value which will be applicable to organizations looking to buyout the employee's notice period.
You can define a formula using some of the existing salary components. To add a salary component, you can type it in or use the +Existing Salay Component and select the component you want to add, and add the formula you want to add.
After you've added the necessary details, click Save.
While putting in the formula for a component, make sure that you're using the 'Standard JavaScript' notation for formula expressions. For example, use the asterisk symbol ( * ) for multiplication and forward slash ( / ) for division. Also, all the names of the components used in the formula should be enclosed in square brackets like [CTC], and only outside this the curved bracket should be used for arithmetic operations. Another thing to keep in mind while putting in the formulas is that you should follow the order of operations, which is also known as BODMAS (Brackets, Orders, Division, Multiplication, Addition, and Subtraction).
It is hoped that this document was helpful. You can also check out the article on How to enable notice period buyout in the Full and Final (FnF) settlement.
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