Is It Legal to Withhold Salary During Probation for Non-Performance? Seeking HR Insights

Hi,

I have an urgent query. In our organization, management wants to implement a rule while recruiting candidates. Salary would be mentioned in the offer letter/appointment advice, with a ratio of 25% basic including allowance and 75% as the incentive (₹10,000/- salary + ₹30,000/- incentive for one sale. In case he does 2 sales, then the amount will be ₹60,000/- and so on.

It would also further mention that during the probation period, one month will be treated as the lead time during which 25% of the salary will be released even if the employee does not make any sale. But from the next month, in order to release even the 25%, he has to make a minimum of one sale. Management will only pay if he performs.

Now my contention is, can we legally or as per HR policy implement such a thing in writing?

It is strange to hear. Suppose the employee does not make a single sale for six months, do you mean to say that he will not be paid for 6 months? Whether he is a full-time employee or a dealer?

Dear HR professional,

What question are you asking? HR personnel cannot ask such types of queries. If you do not pay any salary to the employee, how will they pay rent and other expenses? Legally, you cannot delay the salary part, but sales-based incentives are your responsibility.

Regards,
JS Malik

Hi Mr. Malik,

Mr. Malik is absolutely correct; no employer has the right to withhold the pay of its employees, whether they are on probation or regular, when the employee serves the company full-time as per the current legislation. It is illegal for an employer not to pay the salary on time when work is assigned to an employee, regardless of whether the employee generates sales for the employer. If the employee is putting in effort to complete the tasks assigned, the employer is obligated to pay the salary promptly. Failure to do so can lead to legal consequences, and the employer may face punishment in accordance with the prevailing laws if the employee seeks redress from the labor court.

Mohan Rao
Manager HR

Hi Shuvra,

You can go ahead, please. Human resources are not machines; they too hold the value of capital of the company. They are not to be deprived even after the Industrial Revolution. Unfortunately, the fate in India has not changed. The employer spends more than required on unnecessary expenditure but takes a lenient view when it comes to his employees. This is a bad circumstance we do find in India as of today.

Without human resources, no industry can flourish. Be aware of it.

Mohan Rao
Manager HR

Please go back to basics.

Are you running a company of machines or a company of human beings?

Are you being paid the same way?

Are you hiring employees or slaves?

Please change the practice or please change the company.

Hi,

It is very strange to hear such things from an HR person. Salary is a legal compliance, and you have to pay it on time. For the incentive part, you can consider anything.

Hello,

If you are paying only on the basis of performance, I am afraid they cannot be called permanent employees. Call them freelancers who need not be forced to deliver or come to work and work out of a particular place. They can do the work from their own end, and if a sale clicks - they can be paid. Since there is no fixed source of income, it does not mean they have to only work with your company and earn.

If they are not freelancers - then "very bad policy adopted by the company." Try talking to them and changing it. I assume you are helpless, but just obey - try talking if this is the case and tell them that if we pay people only on performance, then they might not want to work for your company and start looking out. Good Luck! Keep us posted.