Notice Buyout Calculator
Updated August 2026 · Free · No sign-up
Calculate your notice period buyout — what it costs to leave before serving full notice, what the new employer might reimburse, and the basic-vs-gross question that changes the amount by thousands.
Quick answer: Buyout = per-day salary × unserved notice days. On a ₹60,000/month gross with 45 days unserved: ₹90,000 (gross basis) or ~₹45,000 if policy uses basic only. Many new employers reimburse buyouts — but the reimbursement is taxable salary.
The Formula
Buyout = (Monthly Salary ÷ divisor) × Unserved Notice Days
Three policy variables decide your number: the salary base (gross vs basic — check your appointment letter; "basic" halves the bill at typical structures), the divisor (30 vs 26), and whether the employer even permits buyout (it's a contractual option, not a right — many Indian IT companies allow it only with manager approval and knowledge-transfer completion).
Worked Examples
Example 1 — standard IT case. ₹60,000 gross, 90-day notice, serving 45: buyout = 2,000 × 45 = ₹90,000, recovered from your FnF settlement (often wiping out leave encashment and pending salary).
Example 2 — basic-only policy. Same case, basic ₹30,000: buyout = 1,000 × 45 = ₹45,000 — reading the clause is worth exactly ₹45,000 here.
Example 3 — leave adjustment. Many policies let earned leave offset notice days: 12 EL days against 45 unserved → pay for 33. Ask before paying for days your leave balance could cover.
New Employer Reimbursement (And Its Tax Sting)
Common in Indian hiring: the new employer reimburses the buyout against your relieving letter and FnF proof. Two catches: reimbursement is taxable salary in your hands (a ₹90,000 reimbursement nets ~₹62,000 at 30% slab — negotiate grossed-up amounts), and the paying employer usually claws it back if you leave within 12-18 months. Meanwhile the deduction on the old-employer side: whether GST/tax applies to notice-pay recovery has been litigated — current position generally favors no GST on employee notice recovery, but employers' treatments vary.
Negotiating Your Exit Timeline
- Check the clause first: "notice period of 90 days or salary in lieu thereof" = buyout is YOUR option. "Notice period of 90 days, buyout at company discretion" = negotiate.
- Offer knowledge transfer against days: a written KT plan with sign-offs is the strongest currency for early release without payment.
- Use leave balance strategically: EL adjustment against notice beats encashment in most structures (encashment pays basic; buyout charges may be gross).
- Get the relieving date in writing before committing a joining date — the notice period end date calculator maps the calendar; double-booked joining dates burn offers.
- If the employer forces full notice: that's generally their contractual right; absconding instead risks the relieving letter, background checks, and the FnF entirely.
UK/US Readers: The Equivalent
US at-will employment makes this largely moot (two weeks is custom, not contract — see the two weeks notice calculator). UK contracts with 1-3 month notice handle early exits via negotiation, garden leave, or PILON (payment in lieu of notice) — PILON is the employer paying YOU to leave early, the mirror image of the Indian buyout where you pay them.
Frequently Asked Questions
How is notice period buyout calculated?
(Monthly salary ÷ 30 or 26) × unserved notice days. Whether "salary" means gross or basic is policy — it roughly halves or doubles the amount.
Can my new employer pay my notice buyout?
Many do, against relieving proof — but the reimbursement is taxable salary in your hands and usually carries a 12-18 month clawback.
Can I adjust earned leave against notice period?
Many policies allow EL offset against unserved days — 12 leave days can reduce a 45-day buyout to 33 days. Ask before paying.
Is notice buyout a legal right?
Only if your contract says "notice or salary in lieu thereof". Discretionary clauses require employer consent — knowledge transfer completion is the usual condition.
Is GST charged on notice pay recovery?
Recent rulings have generally gone against GST on employee notice recovery, but employer treatments vary — check your FnF statement.
What happens if I just leave without serving or paying?
Absconding risks your relieving letter, FnF settlement, PF transfer smoothness, and background verification at future employers — negotiate instead.
✓ Formula verified • Last updated: August 20, 2026