Understanding Performance Allowance Deductions: Why Is 15% Being Taken from My Pay?

Hi, this is Tanuja. Kindly guide me on Performance Allowance, as in our company, they are deducting 15% under this category. Please help me.

Regards,
Tanuja
HR

Salary Breakdown and Deductions

Let me simplify the salary breakdown by listing what is included apart from:

- Basic Salary
- HRA
- PF
- ESIC
- PT
- TA

What other deductions can be made? Our company is deducting an additional 15% from employees' salaries under the guise of a Performance Bonus. Is such a deduction legitimate? If so, what are the rules governing it?

Regards,
Tanuja

I have never come across such a type of deduction from the salary towards PA (Performance Allowance). Performance Linked Incentive is paid to the employee at the end of the appraisal period.

Thanks!

Pon is right. You too are an HR professional. Please confirm, as per your understanding, the route/path of payments for any 'Bonus' or 'Incentive'—whatever the reason for such a payment (performance, festival, etc.): will it be from Employee → Company OR Company → Employee? Please elaborate on your query with some clarity, and the forum members are sure to give you the right suggestion(s).

Regards,
TS

What the originator of this discussion means, I think, is that a person's salary has been fixed at 10,000/-. What the company is doing is paying 8,500/- (85% of the agreed salary) and retaining 1,500/- (15% of the agreed salary) every month. This amount will be released to the employee on a so-called "satisfactory performance" at the end of the assessment period, let's say 12 months. By then, the person would have received 8,500 x 12 = 102,000/- and will be paid the remaining balance of 1,500 x 12 = 18,000/- if the performance is found "satisfactory." If it is "not satisfactory," the concerned person will be shown the door and denied this balance payment. This is a totally unfair practice and totally unprofessional behavior by the employer. Unfortunately, this practice exists in numerous companies in this country, even though it is considered misconduct on the part of the employer. I trust my interpretation of the issue raised originally by Tanuja is correct.

Regards,
UG