How is notice period buyout calculated?

Most companies take a monthly salary, divide it by a number of days to get a daily rate, and multiply by the notice days you will not serve. The salary may be basic or gross, and the divisor may be 30 or the actual days in each month. Your appointment letter or HR policy decides which one applies.

Should I use basic or gross salary?

Use whatever your company policy names. Many appointment letters say “basic salary in lieu of notice”, while others say gross salary or simply salary. If the policy is silent, ask HR in writing before you agree to a date. This calculator lets you enter both and switch between them to see the difference.

Who pays the notice buyout amount?

Usually you do, through a deduction in your full and final settlement, or by paying it before you are relieved. Some new employers agree to reimburse it as a joining bonus. Ask for that in writing in your offer letter, and keep the buyout receipt or settlement statement as proof.

Does GST or tax apply to notice pay?

Treatment of recovered notice pay has been the subject of rulings and can change, and your full and final settlement may also adjust income tax. Your employer’s payroll team can tell you how they handle it. This calculator shows only the basic buyout arithmetic, without taxes.

Notice Period Buyout Calculator

How the buyout amount is worked out

A notice buyout is the pay you give up, or pay back, for notice days you do not serve. The arithmetic is simple once you know two things from your company policy:

Which salary: basic salary is common in Indian appointment letters, but some companies use gross salary or even CTC.
Which divisor: a flat 30 days, or the actual days in the month (28 to 31).

Example: with a basic salary of ₹40,000 on a 30-day basis and 45 notice days left to buy out, the amount is 40,000 ÷ 30 × 45 = ₹60,000. On gross salary the same days cost more.

Before you agree to a buyout

Ask HR to confirm the amount, the salary used and your new last working day by email.
Check whether unused leave can be adjusted first — that can reduce the days you need to buy out.
If your new employer offered to reimburse the buyout, get it written into your offer letter.
Make sure your relieving and experience letters show the agreed last working day.

Work out your full last day with the notice period calculator, write a polite resignation letter, read resignation letter samples and prepare a relieving letter request.

Worked example

Buying out 45 days of notice

What goes in

Basic salary: ₹40,000 a month Company policy: buyout on basic, 30-day month Notice still to serve: 45 days

What you get

On a 30-day basis one day of basic is ₹40,000 ÷ 30 = ₹1,333.33, so 45 days costs 45 × 1,333.33 = ₹60,000. If the policy used gross salary instead, the same 45 days would cost more, which is why the page asks which one your company uses. The tool also shows the new last working day if you buy out those days, so you can tell the new employer a realistic joining date before you ask HR to confirm.

Common mistakes

Calculating on gross salary when the policy says basic, or the reverse, which can change the buyout amount by tens of thousands of rupees.

Forgetting that some companies deduct the buyout from the full and final settlement instead of asking for a separate payment.

Promising a joining date to the new employer before HR has approved the buyout in writing.

When to use it: Use it when a new offer needs you to join before your notice ends and you want to know the cost before talking to HR or the new employer.

Free Notice Period Buyout Calculator

How the buyout amount is worked out

Before you agree to a buyout

Worked example

Buying out 45 days of notice

Common mistakes

Frequently asked questions

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