Insights on Performance-linked Bonus, CTC, and Employee Compensation Policies

Hi All,

Thank you so much for your valuable feedback.

Archana: I think it is performance-linked bonus. Hence, the employee should have been with the company at the time of appraisal for this to be effective, even though it is part of the CTC. The company, while giving the offer, has informed them that it is a performance bonus and can vary from 0-100%.

To my knowledge, I think the performance bonus is paid to an employee if they are on board at the time of disbursement of the same.

All respected individuals, please confirm.

Hi, Srikar...

I understand that it's a performance-linked bonus, but my query is: has this employee completed one year in the organization? Please understand that if the person in question has completed one year of service and has earned some bonus (which may not necessarily be 100% and it can't be 0% either), then he/she is eligible for that bonus. The performance-linked bonus, which is a part of CTC, is to be paid if the person has completed one year, no matter when the company distributes it. However, it depends upon the company policy.

Regards,
Archna

Dear Friend,

As shown in the CTC of the employee, and it is linked to the performance of the employee, the company has to pay it. It is not necessary to pay during the full and final settlement. As and when the company reviews the budget and performance, it can be paid during that time.

For example, Mr. A is leaving the company in March, and the performance appraisal system is in May, it can be paid in May.

Hr@hrd

Dear Srikarbala,

Please check whether the company policy states that the performance bonus is payable only to employees who were on the payroll at the time of disbursement. If this is defined as such, you can deny payment. Also, ensure that the performance bonus was communicated to the employee during the appointment stage, as outlined in the appointment letter, specifying that salary bifurcation is based on the agreed terms.

If this is not the case, there is no obligation to make the payment. However, if the bonus terms were agreed upon during the appointment and have been included in the salary breakdown, then settlement may be necessary.

Ultimately, the decision rests with you unless the individual proceeds with legal action.

Please let me know if you need further assistance or clarification.

Hi All,

I am going through the same situation currently. I belong to a big Indian IT MNC. I have resigned a week after the completion of our appraisal cycle. I have worked a lot, and my managers (appraiser and reviewer) agree to this in my performance appraisal with their statements and points awarded. However, now I see my appraisal closed with the lowest ratings, which will definitely deny me my Performance Bonus. I wanted to know if I can take legal action against them. Can I take this to the Labour Commissioner?

I have been awarded Employee of the quarter twice, and I have all the proofs of appreciations for my good work. Please advise me.

Thanks & Regards,
SP

Hi, I have read the comments mentioned above.

My question is, does management have the right to deny a performance-linked bonus from the previous year? In my case, I left the organization in Sep '14, and my PLB for the previous year (April '13 to March '14) is pending. The management is denying payment, stating that I left prior to the declaration of appraisals. However, it was not mentioned in the terms of appointment that the bonus is payable only after appraisals.

Kindly suggest what I should do.

Hi,

This is in reference to the variable pay which is a part of my CTC. The company's performance cycle is from April to March, and the payout is in July. As per the contractual agreement, I am eligible for a performance-linked bonus of 80% of my CTC and 20% based on the company's performance. I understand that the company's performance will only be established once the books close in March '19. I have been employed with the organization since 2008. I left the organization in mid-December '18.

My question is: Since I have been meeting expectations from April '18 to December '18, am I eligible for the bonus payout? If yes, what would be the approach? Please let me know if any additional details are required.