90 days’ notice period – Boon or Bane?

Notice Period in the USA - Mostly 2 weeks.?

Notice period in India - Around 60-90 days.?

Is this difference justified??

There are a lot of perspectives on the 90 days’ notice period & like any other interesting riddle they all have some merit. The best way to demystify this is to understand why it was instituted, how it changed over the years and what is its current form. Once we do that, this becomes easier to understand.

What is the 90-day notice period?

In a nutshell, 90-day notice means that the employee needs to inform the company at least 90 days before they leave the organization. This also works the other way around where the employer needs to give a notice of 90 days before asking the employee to leave. However, there are exceptions to these rules.

But is a 90 days’ notice period relevant today??

A lot has changed over the past two decades. Several aspects of recruitment and work have shifted online. This has caused recruitment, on-boarding and training processes to speed up. Finding a replacement no longer takes 90 days in most cases, especially in industries like tech where there is a sufficiently large talent pool. At the same time, there are also several industries which are facing a talent shortage.?

Today, the 90-day notice period is causing problems for both employees and employers but also holds valuable benefits for both.?

Due to this policy, employees need to wait for three long months before switching to a better opportunity. Refusing to do so may require them to pay a heavy compensation. However, this policy also protects them from being laid off with a short notice and gives them sufficient time to find a new opportunity.?

Employers face the challenge of working with employees who have mentally moved on. An employee who has given their notice tends to have low motivation and productivity levels. Additionally, employees also use this period to offer-shop (a practice where employees use an offer from one company to get a better offer from another one). However, this policy provides a good amount of time for job shadowing and knowledge transfer sessions, both of which are of great value to employers.?

Let’s now look at both sides in detail.

The Candidate’s Perspective?

Employees typically do not prefer having a 90-day notice period given today’s scenario. In fact, some of them have gone to the extent of filing a petition requesting the government to reduce this period. Why is that?

• They are stuck in a situation where in order to take up a better opportunity they may have to pay compensation or risk their work experience letter.?
• New opportunities often come with a timestamp and employees sometimes have to let go of an opportunity because they may not be willing to pay a heavy compensation. Or the employers are not fine with waiting for the notice period to end.?
• They also have to work for three months in an organization they are no longer interested in and this therefore hinders their learning and growth.?

However, with several large organizations announcing layoffs amidst a global financial crisis, employees would require a sufficient amount of time to find their next job. In such cases, having a longer notice period turns out to be beneficial to candidates.?

The Employer’s Perspective?

Employers typically prefer having a longer notice period and have not made much effort to reduce the length of this period. Why is that?

A longer notice period helps them? Hire the best candidate for the job.

• Get enough time to ensure a good knowledge transfer process. Esp. for employees that are in client-facing roles, it does take time to get the new employee on board.?
• Having a short notice period could therefore lead to high levels of inefficiency in the work which is a great cost to the organization.?

On the other hand, employers have the pressure to minimize bad hires as they would have to keep them for 3 months despite being a misfit. They also have to bear the cost of paying employees with low drive and efficiency as their focus would have shifted to their new organization.?

Our recommendations and their benefits

The reason the issue is complicated is that if a company reduces the notice period without their competitors or other companies following suit, they become easy targets to get candidates quickly which will make their business suffer at least in the short run. So, companies have no choice but to increase and match what the market does to protect itself.

Therefore, one of the ways in which this can actually be done properly is if there is legislation/law mandating it to be 15/30 days across the sector.

If that is done there are a host of benefits that would accrue to everyone involved.

1. Companies would become more efficient with systems and processes, if an employee resigns and all one has is 15 days, more effort will be put in to document their work and maintain data about what they do.

2. Since this would be uniform across the board, companies will learn to live with it very quickly.

3. More mobility for employees and the whole debate about ghosting, and dropping off becomes less in intensity when the downside is only 15 days, companies will sooner than later find that talent they want.

4. In recruitment the "always on" mode will actually reduce as there isn’t a crazy need to make a backup of a backup of a backup. So, more quality & less repetitive work.

5. It would also mean that you as an employee also get 15 days’ notice before being asked to go, are you ok with that?

Conclusion?

Times have clearly changed and countries across the globe have been making their rules around the notice period extremely flexible in order to cater to the needs of employees. Several countries such as the UK, USA and Singapore follow a notice period system which is less than a month. With India being a big economic power, such policies need to be regularly reviewed in order to ensure economic efficiency.