The employee is suppose to come back and serve the notice. Employee shall not on unpaid leave during the notice period, there are 3 ways:
1) cancel the unpaid leave and ask him come back to serve notice.
2) ask him to pay 1 month salary
3) ask him to come back after the unpaid leave
This is a loop hole of the annual leave system, and if your company practice to allow unpaid leave. For not serving the notice period, employee is suppose to pay salary in lieu of notice. However, by applying the unpaid leave, the employee is escaping from their responsibility for paying the company instead. This is very common in some industries, and I have personally handled quite a number of such cases. As a good HR practice, you may want to state it clearly in your policy.
