Notice Period Under the New Labour Code
By Varun M
Two completely different rules get conflated here: what the law requires when your employer lets you go, and what your contract requires when you resign. The new labour code only sets one of the two.
New Labour Code Salary Calculator
See how the wage rule affects your pay while you're working through a notice period.
The short answer
The Industrial Relations Code, 2020 sets notice requirements for employer-initiated retrenchment, scaled by establishment size. It does not set a resignation notice period at all — that comes from your employment contract.
Retrenchment notice, by establishment size
| Establishment size | Requirement |
|---|---|
| Fewer than 50 workers | No notice, no permission — retrenchment compensation only |
| 50–299 workers | 1 month's notice (or pay in lieu) + compensation, no permission needed |
| 300+ workers | Prior government permission required, plus notice + compensation |
Retrenchment compensation is 15 days' average pay for every completed year of continuous service — payable in every one of the three cases above, regardless of establishment size.
Resignation: the new labour code says nothing
This is the point most people get wrong. There's no clause in the Industrial Relations Code, or anywhere else in the four new labour codes, that sets a minimum or maximum resignation notice period for employees. Your resignation notice period is whatever your employment contract or offer letter specifies — commonly 30, 60, or 90 days for many private-sector roles — subject to whatever your state's Shops and Establishments Act may separately require.
Worked example — a 90-day contractual notice period
An employee's offer letter specifies 90 days' notice on resignation. Can the company enforce it? Generally, yes — the new labour codes don't cap or override contractual resignation notice, so a 90-day clause remains enforceable exactly as it was before the codes took effect, unless a specific state law says otherwise for that category of employment.
Worked example — retrenchment at a 120-worker company
A company with 120 workers retrenches one employee with 6 completed years of service. It falls in the 50–299 band: 1 month's notice (or pay in lieu) is required, plus retrenchment compensation of 15 days' average pay × 6 years.
What this doesn't cover
Termination for proven misconduct follows a different disciplinary process entirely, not the retrenchment provisions above. It can also affect gratuity eligibility in ways ordinary resignation or retrenchment don't — that's a separate topic from what's covered here.
Related reading
- Overtime pay under the new labour code — another Industrial Relations Code change affecting your day-to-day employment.
- Which labour code obligations apply at what headcount — the employer's-eye view of the same establishment-size tiers used above.
FAQ
No — this is the single biggest misconception on this topic. The Industrial Relations Code, 2020 sets notice requirements for employer-initiated retrenchment, not for an employee resigning. Your resignation notice period is whatever your employment contract or offer letter specifies, subject to any applicable state Shops and Establishments Act.
It depends on your establishment's size. Under Section 70, establishments with fewer than 50 workers need no notice, just retrenchment compensation. Establishments with 50–299 workers need one month's written notice (or pay in lieu) plus compensation. Establishments with 300+ workers need prior government permission, on top of notice and compensation.
15 days' average pay for every completed year of continuous service, in addition to the notice (or notice pay) itself — payable regardless of establishment size, for any qualifying retrenchment.
If that's what your contract says, generally yes — the new labour codes don't cap or override contractual resignation notice periods. Some states' Shops and Establishments Acts set their own minimums or maximums for certain categories of employment; check your specific state's rules if you're unsure.
No — retrenchment specifically means termination for reasons like redundancy, not termination for proven misconduct or disciplinary reasons, which follows a different process entirely (and can affect gratuity — see gratuity before 5 years: death or disability for a related eligibility exception, though misconduct forfeiture is a separate topic from that).
Last verified: 14 Aug 2026
Sources: Industrial Relations Code, 2020, Section 70 (retrenchment notice and compensation).
This is indicative information, not legal advice. Confirm your exact rights and obligations with your employer's HR team or a qualified labour law professional before making employment decisions.