Notice Period Buyout Calculator

Notice periods cut both ways. You may pay the company — or your new employer may pay on your behalf — to walk out early, and just as often the company pays you instead when it relieves you the same day. Both directions run on one little formula that divides a monthly wage by 26, and both appear below so nobody negotiates the number from memory.

Enter values

Results

Amount payable to buy out notice: ₹69,230.77
Wage for one notice day (÷ 26): ₹2,307.69
Cost to the company (pay + employer PF): ₹71,307.69

How is the Notice Period Buyout calculated?

Enter the monthly basic plus DA your notice clause is written against and the number of unserved days — a 60-day clause with 30 days left is 30. The buyout amount comes out on the statutory 26-day divisor, with the daily wage shown for reference. A third line adds the employer's 12% PF, prorated over the same days, to show what covering those days costs the company.

Formula

Daily wage = monthly basic + DA ÷ 26, the Payment of Gratuity Act divisor most employment contracts borrow. Buyout = daily wage × notice days. Employer cost = buyout + 12% × PF wages ÷ 26 × days, where PF wages follow the ₹15,000 ceiling unless you opted for full wages. The 26-day divisor and a calendar average differ by more than a day's pay.

Example

Basic plus DA of ₹60,000 with 30 days of notice left: daily wage is 60,000 ÷ 26 = ₹2,307.69, so the buyout is ₹69,230.77. The company's side adds employer PF of 12% on ₹15,000 PF wages, prorated over the days — 1,800 ÷ 26 × 30 = ₹2,076.92 — taking its cost to ₹71,307.69. Half the period, 15 days, would be ₹34,615.38 payable.

Things to remember

Read your clause before the exit conversation: some contracts compute notice pay on fixed gross rather than basic + DA, which changes the number materially. Notice pay is salary income, so expect TDS on anything you receive. Reconcile this figure against dues like gratuity on the severance page.

Frequently Asked Questions

Who pays the notice period buyout amount?

Whoever wants the notice waived. If you leave early, you (or your new employer, a common joining arrangement) pay the company; if the company relieves you immediately, it pays you the same notice pay instead. The formula is identical in both directions.

How is notice pay calculated in India?

Monthly basic plus DA ÷ 26 × unserved notice days. On ₹60,000 with 30 days left that is 60,000 ÷ 26 × 30 = ₹69,230.77. Watch for clauses based on full gross salary instead — those pay more than this basic-based figure.

Can my new employer pay my notice period?

Yes, and it is routine. Companies negotiate it as part of joining — a notice buyout in the offer, sometimes recovered only if you leave early. Treat the payment as taxable salary of the year it is paid.

Is notice period buyout taxable?

Yes. Anything paid in lieu of notice is salary income for the year received and taxed at your slab rate, with TDS generally deducted. Entering it in the income-tax calculator shows the slab impact of the extra month.