Though I have read many forums and articles before posting my query here but still wanted a detailed and correct approach for this.
We have a Performance Based Variable payout mentioned in the salary annexure (to be paid after completing a year with the company). One of the employee joined us on Oct 8, 2017 and completed a year with us on October 7, 2018. The employee however resigned on 12 October 2018. My question is should we be paying that performance bonus to him basis his last year's performance? There are no other terms and conditions mentioned anywhere in the offer/appointment letter/ HR manual related to Performance Based Variable payout.
Is it true that this performance bonus should only be paid out if the employee would have continued to stay? Is this a liability on company? If company decides not to pay the performance variable pay, can an ex-employee file a complaint in the labour court? Is variable pay considered a part of wages?
Please help.
From India, Delhi
We have a Performance Based Variable payout mentioned in the salary annexure (to be paid after completing a year with the company). One of the employee joined us on Oct 8, 2017 and completed a year with us on October 7, 2018. The employee however resigned on 12 October 2018. My question is should we be paying that performance bonus to him basis his last year's performance? There are no other terms and conditions mentioned anywhere in the offer/appointment letter/ HR manual related to Performance Based Variable payout.
Is it true that this performance bonus should only be paid out if the employee would have continued to stay? Is this a liability on company? If company decides not to pay the performance variable pay, can an ex-employee file a complaint in the labour court? Is variable pay considered a part of wages?
Please help.
From India, Delhi
Dear member,
Please note the following:
a) The employee has completed his one year of employment on 07-10-2018. Therefore, he was eligible to get his performance bonus on 08-10-2018. He submitted his resignation four days letter. Therefore, his resignation should not have any bearing on the disbursement of the performance pay.
b) While designing the salary structure, you divided it into two components. One was fixed portion and another was variable. Payment of this variable portion was deferred till completion of new year. Now the since the employee has completed the year's time, he is eligible to receive the variable portion. Denying him would be transgression of the terms of the employment which your company had designed it.
c) Probably your concern is why company should be paying performance pay to an employee who is already on the notice period. It would be "liability" to the company. In what sense you used this word that I cannot say, but then your company is liable for the variable pay. Matter closes there.
Thanks,
Dinesh Divekar
From India, Bangalore
7879Please note the following:
a) The employee has completed his one year of employment on 07-10-2018. Therefore, he was eligible to get his performance bonus on 08-10-2018. He submitted his resignation four days letter. Therefore, his resignation should not have any bearing on the disbursement of the performance pay.
b) While designing the salary structure, you divided it into two components. One was fixed portion and another was variable. Payment of this variable portion was deferred till completion of new year. Now the since the employee has completed the year's time, he is eligible to receive the variable portion. Denying him would be transgression of the terms of the employment which your company had designed it.
c) Probably your concern is why company should be paying performance pay to an employee who is already on the notice period. It would be "liability" to the company. In what sense you used this word that I cannot say, but then your company is liable for the variable pay. Matter closes there.
Thanks,
Dinesh Divekar
From India, Bangalore
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