Notice pay calculator
Enter the notice period required, how much of it was served, and the salary basis.
How notice pay is worked out
When an employee leaves without serving the full notice period, the shortfall is often recovered (or paid) using the same per-day salary basis as other full-and-final components:
Notice pay = (Basic + DA) ÷ working days per month × shortfall days
Employers commonly treat a month as 26 working days (some use 30). The exact basis, and whether recovery applies at all, depends on the appointment letter and applicable law. Use this as a planning estimate for a full-and-final settlement, not as a legal determination.
Verify against your appointment letter, salary structure and current rules before acting. This tool is an estimate.
Worked example
Basic + DA Rs 40,000 per month, 30-day notice period, 10 days served. Shortfall = 20 days. Per day = 40,000 / 26 = Rs 1,538. Notice pay = 1,538 x 20 = Rs 30,769, subject to the terms of the appointment letter.
Frequently asked questions
How is notice pay calculated in India?
Notice pay is usually (Basic + DA) divided by the working days in a month, multiplied by the number of notice days not served. Employers commonly use 26 working days, though some use 30; use the divisor stated in your appointment letter or policy.
Can an employer recover notice pay from my salary?
If your contract requires a notice period and you leave without serving it, the employer may recover notice pay as per the appointment letter. The exact basis and amount depend on your contract and applicable law, so check your appointment letter.
What salary components are used for notice pay?
The common basis is basic pay plus dearness allowance only. Some employers define a broader base in the contract. Confirm which components your appointment letter treats as salary for notice pay.
Is notice pay taxable?
Salary received, including notice pay, is generally taxable as salary income in the year it is received. Tax treatment can vary, so confirm with your employer or a tax professional.
Handling notice pay fairly
Notice pay is a contract term, so the appointment letter decides the basis and the amount. Many employers recover the shortfall in notice days at the per-day salary rate, commonly basic plus dearness allowance divided by 26 or 30. Before you deduct anything, check the letter, confirm how many days were actually served, and set the recovery out in the full and final statement. Apply the same rule to everyone, and keep a written record. If the amount is large, it is worth a quick check with your accountant.
Notice pay: getting the settlement right
Notice pay appears in two directions. When an employee leaves early, the employer may recover the shortfall in days. When the employer asks someone to leave immediately, it may pay the notice amount instead. Both use the same per-day rate, which comes from basic pay plus dearness allowance divided by the working-day convention in the contract. Before anything is deducted, three checks are worth doing. Confirm the required period from the appointment letter, because it can differ from what people assume. Confirm the days actually served, including any approved leave or holidays that count. And confirm whether the contract sets out a different basis, such as gross salary. Write the recovery as a single line in the full and final statement, with the days and the rate shown.
Settling an early exit: a checklist
An early exit raises a few practical questions. How many working days were actually completed? What does the appointment letter say about the required period? Was any leave approved during that stretch? Gather the facts first. Then write the numbers down. Show the days, the daily rate, and the amount in the final statement. Keep a copy for the file. Give the employee a clear explanation. Most disputes come from surprise, not from the rule itself. If the amount is large, ask an accountant to review it. Small businesses often skip this step and regret it later. A written record protects both sides. It also makes the next exit faster, because the same method is already on file.
About this tool
Written and maintained by the AccoNova editorial and payroll team, and last reviewed on (first published ). This is a free public calculator and an estimate, not a payslip, a tax return or professional advice. Figures depend on your salary structure, exemptions, state rules and current statutes — verify before relying on a result. AccoNova publishes product guidance and educational resources; no independent qualified statutory reviewer is claimed.
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