Should We Give a Diwali Bonus to an Employee on Leave? Seeking Legal Advice

Respected Forum members and seniors, I have an urgent query and request your legal expertise to help resolve the situation.

Diwali Bonus Policy

Our company, not as a policy but to boost employees' morale, gives a Diwali bonus of one month's salary to staff who have completed more than three months with the organization on the occasion of Diwali.

Case of Concern

We have a case where one staff member was hired in October 2009 (after Diwali) in a managerial capacity. There have been ongoing issues with his performance, and lately, the person has proceeded on three months' leave without pay for an elective medical procedure for which he has been undergoing treatment for the last two years. The management suspects that the staff member has deceived us and that the reason for the elective surgery is not true. We are still waiting for his medical documents, which he claims he is yet to receive from his doctors.

Decision on Bonus Payment

The decision-makers are feeling reluctant to give the Diwali bonus to this staff member. Should there be a reason that we should pay the bonus to him also if we are paying it to other employees?

Legal Considerations

If tomorrow this issue becomes legal, what can we do to justify our stand?

Regards

I don't see any reason to give him the bonus. Clearly, there should not be any payment for such cases.

My suggestion is that you can ask him to submit the documents, and until then, you can keep the bonus on hold. Even if he submits the medical documents (fake documents), it will not be complete. You can ask for the medical documents (prescription, test reports, medical bills, etc.) for the days he was in the hospital, along with the discharge summary. Clearly mention to him that you cannot release the bonus until the documents are verified. One cannot produce all these as fake documents. You can verify the medical documents submitted by him through any third-party mediclaim insurance company. They will confirm whether the treatment is genuine or not. If you find that it is fake, you will have a strong basis to deny his bonus.

Regards,
Shanky

Dear Neha, we have already sent the staff a reminder letter for submitting the medical documents. The problem we see is that if the management decides not to give the staff the bonus amount, how can we justify our stand legally if the staff takes the matter for legal opinion, as we know that the staff has an inclination to get involved in all this.

I agree with Shanky's opinion that in case we are able to verify the medical documents and find out if they are fake, then we would have all the means to justify our decision for not giving the staff the bonus. Is there any other suggestion you may think of where the employer can decline the bonus to one staff while continuing to give it to others? What can be the other reasons where the bonus can be declined?

Dear Manu, I see that you are worried more from the legal perspective. To deal with this, please answer the following queries that will lead you to the answer.

1. Has your management given in writing in his offer of appointment to the employee that he will be paid a Bonus (Customary) upon completing 3 months of service?

2. Has the management referred that the policies of the company will govern the employee in the appointment letter?

3. Is there a written policy of the company that indicates that employees completing 3 months of service are eligible for a Bonus (Customary)?

4. In the policy, is there any mention about disqualification (if he is not performing satisfactorily, he will not be eligible, etc.)?

5. Is the employee covered under the Payment of Bonus Act (drawing more than Rs.1000/-)?

If your management has done what is mentioned in questions 1, 2 & 3, then you have to abide by it and pay him the Bonus.

If your management has not made any mention as indicated in 4, then also the employee is entitled to a Bonus.

If your management has not committed anything in 1, 2 & 3, and the employee is not eligible as per question 5, then the employee is not entitled to a Bonus.

The most important fact is if the employee is entitled to a Bonus as per the Act, then irrespective of any matter, if he has completed the required service as per the Bonus Act, then he is automatically eligible to receive a bonus.

Trust the matter is clarified.

Regards,
M.V. Kannan

If the F & F amount is more than the bonus, pay him the bonus, get his medical records, check them, and if they are fake, recover the amount from his F & F. Discriminating against a single person in an organization may not be humane.

With Regards,

Regards