What skipping your remaining notice days actually costs — the standard formula Indian companies use, with the caveats that change the number.
Most Indian employment contracts let you exit before your notice period ends by buying outthe days you don't serve — you (or your next employer) pay your current company for the remainder. The standard formula is simple: your monthly salary divided by 26 or 30 (your contract specifies which), multiplied by the days you skip. Put your numbers in:
₹
090
Estimated buyout for 60 skipped days
₹2,00,000
₹3,333 per notice day 30 served · 60 bought out
Directional estimate on gross salary — your contract's exact formula governs, and the amount is typically deducted from your final settlement and taxable.
How the formula works
Buyout = (monthly salary ÷ 26 or 30) × days not served. The divisor is the detail people miss: ÷26 treats a month as working days (excluding Sundays and holidays), which makes each skipped day about 15% more expensive than ÷30, which uses calendar days. Contracts vary on which salary base applies too — some compute on basic salary only, others on gross — so the same 60 skipped days can cost meaningfully different amounts at two companies. Your employment agreement is the source of truth; this calculator assumes gross.
Three things that change the real cost
01
It's usually deducted, not invoiced
The buyout amount is typically recovered from your full and final settlement— your last salary, leave encashment, gratuity and pending reimbursements — rather than paid separately. If the buyout exceeds your F&F, you pay the difference.
02
Tax cuts both ways
Your salary during a served notice period is taxable as usual — and buyout recoveries often don't reduce your taxable salary, so you can end up taxed on money you handed back. Treatment varies; confirm with your finance team or a CA before relying on a number.
03
Your next employer might pay it
Buyout reimbursement as a joining bonus is a common ask in Indian hiring — but it's a negotiation item, and every rupee spent there is leverage not spent on your offer. Decide which matters more before you raise it.
P
PATHWISE
Your notice period is one input. See your full exit readiness.
A buyout makes sense when the offer on the table is time-sensitive and the math is clearly in your favour — a 40% hike dwarfs a month of bought-out notice. It makes less sense as a routine move: many companies also require serving a minimum stretch regardless of payment, and an unserved notice handled badly can cost you a clean relieving letter, which matters more than the money at your next background check. The deeper problem is usually the notice period itself — a 90-day clause costs you long before you resign, by filtering which jobs will even consider you.
These are directional estimates, not legal or financial advice. Buyout eligibility, the formula, the salary base, and tax treatment are all set by your specific contract and company policy — read your employment agreement, and get professional advice for anything contested.
Common questions
How is notice period buyout calculated in India?
The standard formula is monthly salary divided by 26 or 30, multiplied by the days you do not serve. Your contract specifies the divisor: ÷26 treats a month as working days and makes each skipped day about 15% more expensive than ÷30. Contracts also differ on whether the base is basic salary or gross.
Do I pay the buyout separately, or is it deducted?
It is typically recovered from your full and final settlement — your last salary, leave encashment, gratuity and pending reimbursements — rather than invoiced separately. If the buyout exceeds what your settlement owes you, you pay the difference.
Can my new employer pay my notice period buyout?
Buyout reimbursement as a joining bonus is a common ask in Indian hiring, but it is a negotiation item rather than a standard benefit. Every rupee spent there is leverage not spent on your base offer, so decide which matters more before you raise it.
Does a notice period buyout reduce my tax?
Generally not in your favour. Buyout recoveries often do not reduce your taxable salary, so you can end up paying tax on money you handed back. Treatment is contested and varies by employer — confirm with your finance team or a CA before relying on a number.
Can my company refuse to let me buy out my notice?
Often, yes. Buyout is commonly written as something the employer may accept rather than a right you can exercise, and many companies require serving a minimum stretch regardless of payment. An unserved notice handled badly can also cost you a clean relieving letter, which matters more than the money at your next background check.
Figures on this page are directional estimates based on published market data and Pathwise's own model — not financial, legal, or career advice. Individual outcomes vary.