Dear Seniors,
Greetings of the day!!
With reference to the above subject, please let me know your valuable input & suggestion for the following
As per the appointment letter, the company is suppose to give Rs. 60000 as retention Incentive and Rs. 60000 as performance bonus.They have not mentioned any rule for these two in the appintment letter.
After completion of 1 yr they have paid 100% retention amount and 0% performance bonus.After 4month they fired the employee with 3 month salary.
1. Does the employee eligible for 4 months retention benefit?
2. Can any company give 0% performance bonus?
If any rule is there then please give me the copy of the same.
Looking forward for your valuable earliest response.
With Thanks & Regards

From India, Gurgaon
Dear Apekhya,

Things like 'Retention Incentive' and 'Performance Bonus' are not mandatory, driven by any statute of the centre or state governments. Hence, unlike a PF, Payment of Wages for example, there cannot be any common rules and regulations about them.

Thus, I believe there cannot be a direct yes or no answer to both your questions.

Generally companies resort to non payment of performane bonus due to one or more of the following reasons:

(a) poor performance

(b) termination of service of an employee on grounds of indiscipline, unethical behaviour, background check failure etc.

(c) company itself did not achieve its financial or other set objectives

But from what you have said, I feel it could have been due to reasons mentioned in (a) / (b).

Hope I have answered your query.


I thought my response will be more complete only with the below points as well...

I am highlighting few rules that companies generally follow. Of course, they will vary from industry to industry and company to company.

Retention Incentive:

1. An employee should complete 'X' no. of years / months before being eligible for retention incentive

2. An employee should get a minimum performance rating to be eligible for this incentive

With regard to Performance Bonus, some companies give 100% to those who secure highest performance rating and lesser % for those getting lesser rankings. For example, 100% for those rated 5, 90% for those rated 4 etc... (where 5 is the highest and 1 is the least in performance ranking).

Another method that is used is highest rating (in the example given above, 5) will be given 100%+ x%. Here, 'x' will be determined by various factors like company's revenue target, unit's function on various parameters like customer satisfaction, productivity, safety, innovation etc.

Of course there is also a debate that always goes - should performance bonus be part of CTC or should it be over and above CTC.



From India, Madras
Dear Sir,
Thank you very much for the valuable input.
In this case, performance of the employee is good but as the company doesn't have that much business in India and that employee is one of the highly paid salaried so they terminated that employee.They don't have performance rating criteria so this is very difficult to proof the eligibility of bonus.
The company doesn't have certain agreement/rules for retention incentive. The clause which was clarified to employee during the joining period was if they will complete 1 yr then they will be eligible for retention amount. so I think the employee should get the retention. whats your view?
Please suggest.

From India, Gurgaon
Dear Apekhya,
This is a typical 'grey area' scenario we face very often in HR.
In your first posting you had said that the person got 100% 'Retention Incentive'. Hence, I presume you are talking about the 4 months of the second year.
From what you have said they have paid 3 months salary before terminating the employment. The reason for which was 'not much business in India'. In such a scenario I think it is not appropriate on one's part to expect retention incentive.

From India, Madras

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