Hi all,
Our employees' CTC includes a fixed percentage or amount as Variable Performance Pay (VPP) apart from fixed Basic, HRA, Spl Allw, etc. The VPP was to be paid quarterly but has not been paid. Management says the VPP is not payable since there hasn't been much production.
Since the VPP is a part of the CTC, I would like guidance on whether the VPP is payable or not, considering it is part of the CTC. I request replies at the earliest.
Regards,
Dinan
From India, Hyderabad
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4Our employees' CTC includes a fixed percentage or amount as Variable Performance Pay (VPP) apart from fixed Basic, HRA, Spl Allw, etc. The VPP was to be paid quarterly but has not been paid. Management says the VPP is not payable since there hasn't been much production.
Since the VPP is a part of the CTC, I would like guidance on whether the VPP is payable or not, considering it is part of the CTC. I request replies at the earliest.
Regards,
Dinan
From India, Hyderabad
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Dear Dhinakaran,
Even though the variable pay is part of CTC, it will be given only when a given target is achieved. The employee is only eligible for the Annual gross salary that is shown in the CTC along with Bonus, medical reimbursement, and other benefits like mediclaim or LSP.
The variable pay terms/conditions would have been discussed with the employees at the time of joining. The VPP would be given only when the employee/department/overall factory is achieving the targets.
The CTC is only to show whatever the cost is involved in employing the employee for the year and also used for various projections/budgets.
From India, Mumbai
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Even though the variable pay is part of CTC, it will be given only when a given target is achieved. The employee is only eligible for the Annual gross salary that is shown in the CTC along with Bonus, medical reimbursement, and other benefits like mediclaim or LSP.
The variable pay terms/conditions would have been discussed with the employees at the time of joining. The VPP would be given only when the employee/department/overall factory is achieving the targets.
The CTC is only to show whatever the cost is involved in employing the employee for the year and also used for various projections/budgets.
From India, Mumbai
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Hi,
If performance-based bonus or variable performance pay is explained to the employee before joining and the employee agrees to it in writing, then there is no need to pay. The statutory bonus is mandatory and will not attract TDS, while PBB or VPP attracts TDS.
What is the measure for calculating the VPP or PBB? Does your company have any tools for it? Usually, this will be calculated based on the KPI points that an employee acquires through the KRAs given.
Regards,
Karthik
From India, Vijayawada
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If performance-based bonus or variable performance pay is explained to the employee before joining and the employee agrees to it in writing, then there is no need to pay. The statutory bonus is mandatory and will not attract TDS, while PBB or VPP attracts TDS.
What is the measure for calculating the VPP or PBB? Does your company have any tools for it? Usually, this will be calculated based on the KPI points that an employee acquires through the KRAs given.
Regards,
Karthik
From India, Vijayawada
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Dear Mr. Shenbagarajan,
Thank you for the reply. However, I would like to add that no targets/KRI, etc., have been spelled out, and no written documents are available for the VPP. Now the management informs that it is not mandatory to pay VPP. Some employees had requested that since it is part of the CTC and no target has been fixed, the VPP may be paid, but the management says no.
Let me have your views on the above and how to go about the same.
Regards,
Dhinan
From India, Hyderabad
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Thank you for the reply. However, I would like to add that no targets/KRI, etc., have been spelled out, and no written documents are available for the VPP. Now the management informs that it is not mandatory to pay VPP. Some employees had requested that since it is part of the CTC and no target has been fixed, the VPP may be paid, but the management says no.
Let me have your views on the above and how to go about the same.
Regards,
Dhinan
From India, Hyderabad
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Dear Mr. Karthik,
Thank you for your views. Kindly see my reply to Mr. Shenabagarajan. Furthermore, when no targets or KRIs are fixed, measuring the achievement is not applicable. Please let me have your views.
Regards,
Dhinan
From India, Hyderabad
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Thank you for your views. Kindly see my reply to Mr. Shenabagarajan. Furthermore, when no targets or KRIs are fixed, measuring the achievement is not applicable. Please let me have your views.
Regards,
Dhinan
From India, Hyderabad
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Hi Megh,
We have a similar situation here. Our performance bonus is a variable component in CTC. Two measures are individual results against predefined quantitative and qualitative targets. I have performed, and my performance bonus figures are calculated and mutually signed by me and my immediate senior (a copy of that document is in my file available with HR).
However, the organization is not paying with the reason that even though I have performed exceptionally well individually, the organization as a whole has not performed well.
Do you have any suggestions for a resolution to this issue?
Regards,
Megh
From France, Issenheim
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We have a similar situation here. Our performance bonus is a variable component in CTC. Two measures are individual results against predefined quantitative and qualitative targets. I have performed, and my performance bonus figures are calculated and mutually signed by me and my immediate senior (a copy of that document is in my file available with HR).
However, the organization is not paying with the reason that even though I have performed exceptionally well individually, the organization as a whole has not performed well.
Do you have any suggestions for a resolution to this issue?
Regards,
Megh
From France, Issenheim
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The important consideration
1. Whether the CTC figure was mentioned in the advertisement.
2. Whether the CTC figure of Rs is mentioned in the appointment order.
If the answer to both questions is yes, you have every right to claim it. You can file a writ petition in the high court under Article 226.
I will quote some judgments below. Maybe useful to all.
Advertiser is bound by the advertisement - Supreme Court
SUPREME COURT OF INDIA: (2009) 4 SCC 484
Appellants: Buddhist Mission Dental College and Hospital Vs. Respondent: Bhupesh Khurana and Ors.
The Commission rightly came to the conclusion that this was a case of total misrepresentation on behalf of the institute, which amounts to unfair trade practice.
As far as the cross-objections filed by the respondents are concerned, we are of the opinion that the appellant institute, by giving a totally misleading and false advertisement, clearly misled the respondents that the institute is affiliated by the Magadh University and recognized by the Dental Council of India. The respondents have lost their two valuable academic years, which would have a tremendous impact on their future career.
Supreme Court: M.D., T. Nadu Magnesite Ltd. Vs. S. Manickam and Ors.
LegalCrystal Citation: legalcrystal.com/842317
The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance, or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance, or representation should be binding on the party making it and that party should not be permitted to go back upon it if it would be inequitable to allow him to do so, having regard to the dealings which have taken place or are intended to take place between the parties.
Calcutta High Court Swapan Kumar Maity vs South Eastern Railways And Ors. on 31 August 2006
Equivalent citations: 2007 (4) CHN 616
As pointed out by the Supreme Court in the case of Madras City Wine Merchants' Association v. State of Tamil Nadu reported in 1994(2) SCC 509, a legitimate expectation may arise:
(a) if there is an express promise given by a public authority; or
(b) Because of the existence of a regular practice, the claimant can reasonably expect to continue; or
(c) Such an expectation must be reasonable.
IN THE HIGH COURT OF PUNJAB AND HARYANA Civil Writ Petition No. 3608 of 1997 MANU/PH/0945/2001
Decided On: 04.01.2001
Appellants: Kabul Singh vs. Respondent: State of Punjab
Therefore, taking into consideration all these factors, I am of the view that the petitioners, who applied in pursuance of the advertisement-annexure P-1, have been regularly selected by a duly constituted selection committee and, therefore, are entitled to be regularized from the dates of their initial appointment instead of 1996 and are entitled to be paid regular scales of pay as prayed for from the respective dates of their initial appointment.
IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR MANU/MP/0649/1999
Equivalent Citation: 2000(2) MPJR222, 2000(2) MPLJ116
W.P. No. 1022 of 1998
Decided On: 05.11.1999
Appellants: Ravi Madanlal Paliwal Vs. Respondent: State of M.P. and others
Thereafter, the College issued an advertisement in the daily newspaper 'Nav-Bharat' dated 25-6-1989 inviting applications from candidates for filling up various posts, including the post of Assistant Professor in the department of Physics. As regards the qualification and the salary, the advertisement indicated that - "qualification and salary as per U.G.C. College Code." In pursuance of the advertisement made by the College, the petitioner applied for his appointment.
IN THE HIGH COURT OF GAUHATI (SHILLONG BENCH) MANU/GH/0151/1997
Equivalent Citation: 1999(2) GLT18
Decided On: 20.11.1997
Appellants: Rajat Kanti Choudhury and Anr. Vs. Respondent: State of Meghalaya and Ors.
Held, Petitioner's appointment was made as per the terms of the advertisement which was issued by the Government of Meghalaya.
Supreme Court of India Official Liquidator Vs. Dayanand and Ors.
LegalCrystal Citation: http://legalcrystal.com (2009) IIILLJ305SC; 2008(13) SCALE558; (2008) 10SCC1
In short, a person can be said to have a 'legitimate expectation' of a particular treatment if any representation or promise is made by an authority, either expressly or impliedly, or if the regular and consistent past practice of the authority gives room for such expectation in the normal course. As a ground for relief, the efficacy of the doctrine is rather weak as its slot is just above 'fairness in action' but far below 'promissory estoppel'. It may only entitle an expectant: (a) to an opportunity to show cause before the expectation is dashed; or (b) to an explanation as to the cause for denial.
Gauhati HC: Mrs. Subrata Borah Chowlek Wife of Chowken Gohain and Mrs. Anima Gogoi Wife of Deepti Kumar Gogoi Vs. The Indian Oil Corporation Ltd., represented by the Chairman and Ors.
LegalCrystal Citation: legalcrystal.com/136473
Decided On: Apr-29-2009
If the respondent-Corporation had acted contrary to the promises made in the advertisement and the selection, the Court is entitled to find out the reasons thereof.
The respondents acted contrary to such promises and extracted the services of the petitioners in exploitative terms.
The respondents, with their eyes wide open, made out the promises to the petitioners for regular appointments and conducted the selection on that basis. At no point of time, they were intimated that their appointment shall be on less than a 45-day basis and that they would also not be entitled to service benefits as promised in the advertisement.
From India, Salem
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1. Whether the CTC figure was mentioned in the advertisement.
2. Whether the CTC figure of Rs is mentioned in the appointment order.
If the answer to both questions is yes, you have every right to claim it. You can file a writ petition in the high court under Article 226.
I will quote some judgments below. Maybe useful to all.
Advertiser is bound by the advertisement - Supreme Court
SUPREME COURT OF INDIA: (2009) 4 SCC 484
Appellants: Buddhist Mission Dental College and Hospital Vs. Respondent: Bhupesh Khurana and Ors.
The Commission rightly came to the conclusion that this was a case of total misrepresentation on behalf of the institute, which amounts to unfair trade practice.
As far as the cross-objections filed by the respondents are concerned, we are of the opinion that the appellant institute, by giving a totally misleading and false advertisement, clearly misled the respondents that the institute is affiliated by the Magadh University and recognized by the Dental Council of India. The respondents have lost their two valuable academic years, which would have a tremendous impact on their future career.
Supreme Court: M.D., T. Nadu Magnesite Ltd. Vs. S. Manickam and Ors.
LegalCrystal Citation: legalcrystal.com/842317
The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance, or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance, or representation should be binding on the party making it and that party should not be permitted to go back upon it if it would be inequitable to allow him to do so, having regard to the dealings which have taken place or are intended to take place between the parties.
Calcutta High Court Swapan Kumar Maity vs South Eastern Railways And Ors. on 31 August 2006
Equivalent citations: 2007 (4) CHN 616
As pointed out by the Supreme Court in the case of Madras City Wine Merchants' Association v. State of Tamil Nadu reported in 1994(2) SCC 509, a legitimate expectation may arise:
(a) if there is an express promise given by a public authority; or
(b) Because of the existence of a regular practice, the claimant can reasonably expect to continue; or
(c) Such an expectation must be reasonable.
IN THE HIGH COURT OF PUNJAB AND HARYANA Civil Writ Petition No. 3608 of 1997 MANU/PH/0945/2001
Decided On: 04.01.2001
Appellants: Kabul Singh vs. Respondent: State of Punjab
Therefore, taking into consideration all these factors, I am of the view that the petitioners, who applied in pursuance of the advertisement-annexure P-1, have been regularly selected by a duly constituted selection committee and, therefore, are entitled to be regularized from the dates of their initial appointment instead of 1996 and are entitled to be paid regular scales of pay as prayed for from the respective dates of their initial appointment.
IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR MANU/MP/0649/1999
Equivalent Citation: 2000(2) MPJR222, 2000(2) MPLJ116
W.P. No. 1022 of 1998
Decided On: 05.11.1999
Appellants: Ravi Madanlal Paliwal Vs. Respondent: State of M.P. and others
Thereafter, the College issued an advertisement in the daily newspaper 'Nav-Bharat' dated 25-6-1989 inviting applications from candidates for filling up various posts, including the post of Assistant Professor in the department of Physics. As regards the qualification and the salary, the advertisement indicated that - "qualification and salary as per U.G.C. College Code." In pursuance of the advertisement made by the College, the petitioner applied for his appointment.
IN THE HIGH COURT OF GAUHATI (SHILLONG BENCH) MANU/GH/0151/1997
Equivalent Citation: 1999(2) GLT18
Decided On: 20.11.1997
Appellants: Rajat Kanti Choudhury and Anr. Vs. Respondent: State of Meghalaya and Ors.
Held, Petitioner's appointment was made as per the terms of the advertisement which was issued by the Government of Meghalaya.
Supreme Court of India Official Liquidator Vs. Dayanand and Ors.
LegalCrystal Citation: http://legalcrystal.com (2009) IIILLJ305SC; 2008(13) SCALE558; (2008) 10SCC1
In short, a person can be said to have a 'legitimate expectation' of a particular treatment if any representation or promise is made by an authority, either expressly or impliedly, or if the regular and consistent past practice of the authority gives room for such expectation in the normal course. As a ground for relief, the efficacy of the doctrine is rather weak as its slot is just above 'fairness in action' but far below 'promissory estoppel'. It may only entitle an expectant: (a) to an opportunity to show cause before the expectation is dashed; or (b) to an explanation as to the cause for denial.
Gauhati HC: Mrs. Subrata Borah Chowlek Wife of Chowken Gohain and Mrs. Anima Gogoi Wife of Deepti Kumar Gogoi Vs. The Indian Oil Corporation Ltd., represented by the Chairman and Ors.
LegalCrystal Citation: legalcrystal.com/136473
Decided On: Apr-29-2009
If the respondent-Corporation had acted contrary to the promises made in the advertisement and the selection, the Court is entitled to find out the reasons thereof.
The respondents acted contrary to such promises and extracted the services of the petitioners in exploitative terms.
The respondents, with their eyes wide open, made out the promises to the petitioners for regular appointments and conducted the selection on that basis. At no point of time, they were intimated that their appointment shall be on less than a 45-day basis and that they would also not be entitled to service benefits as promised in the advertisement.
From India, Salem
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