Long notice periods are back

In recent years, firms had curtailed their notice periods so that they could poach talent from competitors, and swiftly onboard them.

“Companies have notice periods of 2-3 months for a smooth transition to ensure there is no impact on business when an employee resigns. During the hiring frenzy of last year, companies wanted to hire quickly and realized, they would rather let go than adhere to stringent notice periods," said Roopank Chaudhary, partner, human capital solutions, India, Aon.

“However, now that hiring has normalized, we see firms going back to the 2–3-month routine," he added.

While some are reverting to longer notice periods, others are becoming more stringent, with some implementing it across hierarchies.

“We have always had three months for middle and senior executives, but now there is demand for even at junior levels. This is in line with market practices to ensure business continuity," said Vikram Bector, president and chief human resources officer, Piramal Group.

It’s not just financial services and pharma companies that are undergoing transformation; insurance company Bajaj Allianz Life Insurance has also decided to follow industry peers. As part of its ambitious plans to hire 3,000 employees this year, the company has implemented a mandatory 90-day notice period.

“Three months’ notice is mandatory among rivals and now, the entire sector has done the same. Earlier, the time (served by the candidate) was far more relaxed and optional. Now, getting people on board takes time," said Tarun Chugh, managing director and chief executive, Bajaj Allianz Life Insurance, which has been hiring aggressively over the past five years to take its workforce strength from 7,000 to 23,000.

Insurance, retail, pharmaceutical, and healthcare companies are strictly enforcing extended notice periods, in contrast to the earlier trend to ensure adequate support to clients even during the transition period.

Asia Healthcare Holdings (AHH), a TPG-backed healthcare platform, said notice periods of 2-3 months will help retain employees. Its group HR head Kumar Krishnaswamy, cited an example where an employee resigned to “take a break", without disclosing the real reason behind her move. Following interactions over a month, the company discovered that she wanted to shift because her husband had moved to a different location for his professional commitments. AHH tweaked her role and offered her a position in the same city, which she accepted.

“It was possible because of the longer notice period and in-depth conversation during her notice period. We strongly believe that employees open a lot more to the organization during notice periods."

In India, contracts are drafted differently than the West, where the contract is termed as ‘employment at will’, allowing an employee to decide her last day at work, which cannot be made to extend.