Performance Linked Bonus - Variable Pay - CiteHR
Boss2966
Industrial Relations
Archnahr
Consultant, Writer And Trainer
Paladin
Hr Consultant
Hrm_ns@gsfcltd.com
Recruitment & Selection, Training &
Srikarbala
Human Resources
Rizeq.com
Human Resource Management
+5 Others

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Hi,
We have a performance linked bonus included in our CTC. This is equivalent to one months gross salary. and we said it is payable at the end of the year along with their appraisal.
an employee left the company in december 2010. and while doing the final settlement, the company did not take bonus into the F&F.
the question is
1) should the company pay this bonus since it is a part of the CTC?
IF yes. what is the basis. If "NO" What is the basis for not paying it
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you should pay bonus as it is linked with performance & employee has worked during the period.
Dear Srikar,
First of all including the performance Bonus in salary is completely wrong and should not be done.
However I believe if the same was included in the salary CTC it should be paid in F & F.
Dear All
If it is the case of Bonus then he should be paid at least of minimum 8.33%. Here the case is performance linked Bonus. The management has every right to deny the performance linked bonus as the bonus is based on Performance of the employee. As the employee is resigned from the post his performance has not been taken into consideration, as the same is paid to encourage the employee to perform better way during next year.
So there is no need of making payment of Performance Linked Bonus.
With warm regards
S. Bhaskar
9099024667
Hello, When it is clearly defined performance linked bonus, it is not applicable to a person who resigned from the services during that period. regrds, w.l.n
Hello SrikarBala...
Plz mention what is the basis of giving performance linked bonus to the employees?
If it is on some criteria- what is that? and then based on the criteria you can measure how much the employee has contributed towards the achievement of the same and pay accordingly.
Also I would like to know before answering your query that for how long the employee worked in the organisation since you started this performance linked bonus.
But Yes, the company should pay his/her bonus for the time he/she worked in the organisation.
Regards,
Archna
Hello All,
I hope you figured it out by now, My vote goes to what S. Bhaskar said. Some key things to note would be performance prior to leaving, if it was a sales resource where all targets met, not met, or did he out perform all expectations?
If the resource left on the 1st and appraisals are done on the 15th, what did his managers have to say? I've seen most employees start producing positive outputs 3-6 months into their role, so if they leave before 1 year, then there is not much of a return on investment.
What did you go with?
Rizeq (dot) com
Bonus should be paid if:

1. Employee met (or exceeded) all or part of the requirements established at the beginning of the period - Performance, sales, suggestions implemented, personal/ professional improvement, and the like.

2. Bonus based on individual's meeting/ exceeding the requirements, not the overall performance of the Company.

3. Employee made an effort to, and did, meet/exceed expectations for 99% of the Bonus year.

4. Bonuses are paid on past performance, not future expectations, especially where no goals have been set/negotiated for the next year.

Bonus should be pro-rated based on goals met (+1), exceeded (+1x), or not met (-1x , depending on whether or not the employee had control over the critical aspects of the goal).

I don't think that the employee should be penalized for leaving the Company in the latter part of December, assuming that the Bonus Year is the same as the calendar year. Even if he did leave the first week of December, the Company accrued a benefit from his efforts and achievements throughout the year. I believe the employee is due compensation, in the form of a Bonus for his positive contributions, especially when the Company has derived a current and possibly a future benefit.

PALADIN
He left in december, the company’s policy says that it is payable at the end of the financial year which is March.Therefore the person is not liable for this bonus.
Dear,
As PLB is part of CTC, it is not the part of Statutory Bonus.
on this point whether such bonus should be paid or not, it is on the discretion of the management.
But Performance Bonus not only includes performance of individual but also counts regularity and dedication towards the organisation.
on leaving the Job in Mid Performance of the position will also fluctuate, because replacement will take some time in holding the charges/responsibilities. also mid term leaving will also affect the performance of others.
in view view such type of employee should not be entitled for Performance bonus.
Regards
Bhanu
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