Notice Period Buyout Calculator
What it costs to leave early — the buyout amount for unserved notice days, and what your new employer would need to reimburse.
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You have an offer that starts in a month. Your contract says ninety days. The difference is a number, and this works out what it is.
The arithmetic
Buyout = (monthly salary ÷ 30) × unserved days
Worked example. Monthly salary ₹80,000, ninety-day notice, serving thirty days:
Unserved days = 90 − 30 = 60
Buyout = (₹80,000 ÷ 30) × 60 = ₹1,60,000
Gross or basic — read the contract, not the calculator
This is the variable that changes the answer most, and it is entirely determined by your employment agreement.
Some contracts compute the buyout on gross monthly salary. Others compute it on basic only. On the example above with basic at 40% of salary, a basic-only clause makes the buyout ₹64,000 instead of ₹1,60,000 — a difference of ₹96,000 on identical facts.
Find the clause before you negotiate anything. It is usually under "Termination" or "Separation" and is frequently one sentence long.
What to check before you commit
Whether leave balance can be adjusted. Many employers allow unserved notice to be offset against accrued earned leave rather than paid in cash. This is often substantially cheaper, since encashment is normally computed on basic while the buyout may be on gross. Ask explicitly — it is commonly permitted but rarely volunteered.
Whether your new employer will reimburse. Notice buyout reimbursement is a normal ask in the Indian market, particularly for senior roles and when the employer wants you to join sooner. Raise it during offer negotiation, not after you have resigned — the leverage disappears the moment you accept.
Whether the buyout is taxable. A buyout you pay is not deductible from your income. If your new employer reimburses it, that reimbursement is generally treated as taxable salary in your hands. So a ₹1,60,000 reimbursement is worth roughly ₹1,10,000 after tax at the 30% slab — worth factoring into what you ask for.
Whether the relieving letter is conditional. Some employers withhold the relieving letter until the buyout is paid. Since most Indian employers require a relieving letter from your previous job before confirming your appointment, this is not a bill you can simply decline to pay.
Negotiating it down
Notice periods are frequently negotiable in practice even when they look fixed in writing, particularly if you can complete a handover cleanly or if your team has capacity. A well-managed exit with a documented handover often earns a reduced notice period at no cost, which beats any buyout arithmetic.
Ask before you assume the contract is the final word.
Notice Buyout — frequently asked questions
How is a notice period buyout calculated?
Buyout = (monthly salary ÷ 30) × unserved days. On ₹80,000 a month with a 90-day notice period where you serve 30 days, the 60 unserved days cost ₹1,60,000. Whether "monthly salary" means gross or basic is set by your contract and changes the answer dramatically.
Is the buyout calculated on gross or basic salary?
It depends entirely on your employment agreement — both are common. On ₹80,000 monthly with basic at 40%, a gross-based clause gives ₹1,60,000 for 60 days while a basic-only clause gives ₹64,000. The clause is usually under "Termination" or "Separation" and is often a single sentence. Read it before negotiating anything.
Can I use my leave balance instead of paying?
Many employers permit unserved notice to be adjusted against accrued earned leave. It is frequently cheaper, since leave encashment is usually computed on basic while the buyout may be on gross. It is commonly allowed but rarely offered unprompted, so ask HR directly and get the answer in writing.
Will my new employer pay my notice buyout?
Reimbursement is a normal ask in the Indian market, especially for senior roles or when the employer wants an early start date. Raise it during offer negotiation — once you have accepted and resigned, the leverage is gone. Note that the reimbursement is generally taxable salary in your hands, so a ₹1,60,000 reimbursement is worth about ₹1,10,000 net at the 30% slab.
Can I just refuse to pay and leave?
In practice this is difficult, because most employers withhold the relieving letter until dues are settled, and most Indian employers require a relieving letter from your previous job before confirming your appointment. The buyout is therefore usually enforceable through that route rather than through litigation. Negotiating a reduced notice period is a far better strategy than declining to pay.
Is a notice period actually negotiable?
Often, yes — more often than the contract suggests. A clean, documented handover and a team with capacity to absorb your work give a manager real reasons to agree to a shorter notice at no cost. That outcome beats any buyout arithmetic, so ask before assuming the written period is final.
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Results from this calculator are estimates for informational use only — not financial, medical, or professional advice. Read our full disclaimer before acting on any number you see here.