Notice Period Buyout
A notice period buyout happens when your new employer pays to cover the days you don't serve at your current job. In India, most tech companies require 30 to 90 days' notice before you leave. If you join the new company early, your old employer deducts the missing days from your final salary. The new employer covers that amount.
How It Works
When you resign, your current employer expects you to work through the full notice period. If you leave before those days are done, they deduct the unserved days from your final pay. The new company agrees to make up that loss.
Step 1: Calculate the shortfall. Say your notice period is 90 days and you can only serve 45. The deduction equals 45 days of your current per-day salary. Most companies calculate this as your monthly gross divided by 26 working days.
Step 2: Raise it before you sign the offer. Tell the recruiter directly: "My notice period is 3 months and I can serve 45 days. Can you cover the balance?" Do this before you accept the offer. After you sign, your negotiating position weakens.
Step 3: Get it in writing. Ask for the buyout amount to appear in the offer letter or in a written email from HR. A verbal confirmation is not enough.
Step 4: Collect proof from your current employer. The new company will ask for your final settlement letter or a payslip showing the deduction. Many companies credit the buyout 30 days after you join and submit that document.
The buyout is treated as income and is taxable in India.
Also worth trying: Ask your current employer for early release through a mutual settlement. If they have already started hiring your replacement, they may let you go without any deduction at all.
Example
There is a senior data engineer at a Pune IT services company. Her notice period is 90 days and her monthly gross is ₹1.2 lakh. A Bengaluru fintech startup offers her a role and needs her to join in 45 days. The unserved 45 days amount to roughly ₹1.8 lakh in deductions. The startup agrees to pay ₹1.8 lakh as a buyout, credited 30 days after Priya joins and shares her final settlement document.
Common Mistakes
1. Not getting it in writing: A verbal agreement from a recruiter means nothing once you join. If the buyout is not in the offer letter or an official email, follow up before you resign.
2. Assuming the company will agree: Startups with tight hiring budgets often say no. Companies hiring for senior engineering or ML roles are more likely to approve. Know this before you start the conversation.
3. Waiting until after you sign to bring it up: Raise the buyout at the offer stage. Once you sign, the company has little reason to add extra costs.
FAQs
Can every company offer a notice period buyout?
No, it depends on their budget and how urgently they need the role filled. Funded product companies and large tech firms are more likely to agree than early-stage startups.
Is the buyout amount always equal to the unserved days?
Usually yes, but some companies cap the total. Read the offer letter carefully to check if there is a limit on what they will pay.
What if my current employer refuses early release even with a buyout?
You have two options. Serve the full notice period or leave early and accept the salary deduction that your new employer has agreed to cover.
Does leaving early affect my background verification?
No, BGV checks your employment dates and reason for leaving. An early exit covered by mutual agreement or a buyout does not create a problem in verification.
Should I ask for the buyout in the offer letter itself?
Yes, ask for it in the offer letter or a written email from HR before you sign. Do not rely on what the recruiter says over a call.
