Leaving My Job in September: Will I Still Receive My Bonus and Increment from Last Year?

The increment is done in my company in April every year, but it is effective in September along with the bonus, which is paid in October for the year. I am leaving the company in September. Will I get my increment amount and bonus, as it is for the previous year for which I have worked?

There is usually a cutoff date for the bonus payout. If you are in the company on that date, then you will receive the bonus. If not (you are missing it by a few days), then you should talk to your HR and see if something can be worked out.

Hope that helps.

Eligibility for Bonus Under the Payment of Bonus Act

Under the Payment of Bonus Act, even if you leave before the payout of the bonus, but you have served for at least 30 days in that financial period, you are eligible for bonus payment. The management is legally liable to pay you the bonus for the financial period and even pay to former employees on a pro-rata basis. They should have your address; they are legally bound to pay you. However, unfortunately, many Indian corporates avoid paying former employees. They are also legally required to submit Form C with details of the bonus payout.

Eligibility Criteria for Bonus

By the way, what is your Basic Salary and Gross Salary? Are you under the bracket of eligibility for a bonus under the provisions of the Bonus Act? If yes, then as per labor law, you must receive it. You should demand it from HR; they are legally bound.

Best wishes,
Rajesh Satyal

There are two points in this:

1) Receipt/payment of bonus to employees

2) Effecting the increment along with bonus payment

You must note one thing. Bonus payment is statutory. If you are one of those employees falling within the ambit of the Bonus Act, then it is your right to claim the bonus. Awarding an increment is totally at the discretion of the management. There is no rule or act saying that after completion of one year, one has to be paid an increment. Even if the management decides not to administer an increment for the year, it is up to them. You and I cannot question the management. An increment is what is paid to employees to motivate and sustain them for a longer period.

Secondly, while existing employees get an increment, to pay an increment to leaving employees is totally the decision of the management. And you have no right to claim it as you claim a bonus. If you get it, be happy.

Regards,
V. Balaji

Yes, Balaji, you are correct. It also depends on when such an increment was effected. If the increment is effective in September, then Veronica is sure to lose all increment benefits. But if the company issues the letter effective on an earlier date, to be payable in September, then I guess she is eligible to receive that increment effective from the announced date, regardless of when she resigns.

However, as rightly pointed out by Balaji, why would the company give an increment to a resigning employee? An increment is given to acknowledge and encourage good work. So, Veronica, I believe you would lose the increment.

Points Raised by V. Balaji

V. Balaji stated, "There are two points in this: Receipt/payment of bonuses to employees and effecting the increment along with bonus payment. You must note one thing. Bonus payment is statutory. If you are one of those employees falling within the ambit of the Bonus Act, then it is your right to claim a bonus. Awarding an increment is entirely at the discretion of the management. There is no rule or act stating that after completing one year, one must be paid an increment. Even if the management decides not to grant an increment for the year, it is up to them. You and I cannot question the management. An increment is paid to employees to motivate and retain them for a longer period.

Secondly, while existing employees receive increments, paying an increment to departing employees is entirely the decision of the management. You have no right to claim it as you do with a bonus. If you receive it, be content."

Regards,
V. Balaji

Check with your HR about your company's policy on increment and bonus payments, as many companies have a policy of not paying bonuses or increments to individuals who are serving their notice period.

Regards

As Rajesh says, you are eligible for the bonus under the Payment of Bonus Act for the period you worked in that financial year, even if it's only one month.

And as per Balaji, you are not eligible to claim your increment amount if you leave the company before September. Increment is meant to motivate and sustain employees, so why would the management give an increment to an employee who is leaving? Furthermore, there is no regulation regarding increments.

Regards,

You are eligible for a bonus even if you are not in service after a year. However, the increment will be given only if you are in service at the time the decision is made regarding the increment. The management will not be interested in giving any increment if the individual is not in service, even if the increment was decided for the previous year.

Regarding Bonus Payment During Notice Period

Management cannot withhold a bonus for an employee serving a notice period, as it is not allowed under Indian labor laws, specifically the Payment of Bonus Act. Management is legally bound to pay the bonus, and it must either be paid along with the payout of others or in the full and final settlement of the resigned employee.

An employee can approach the labor office to seek guidance, help, and support to ensure they receive their bonus payout.

Please check your company policy. If there is such a 'wrong' policy, you can politely discuss it with your Head of HR and explain the legal provisions of the Bonus Act.

Best wishes,
Rajesh Satyal

Check with your HR about your company policy on increment and bonus payments. Many companies have a policy not to pay a bonus or increment to a person who is serving the notice period.

Regards

The increment has already been processed, and all employees have received a slip detailing the increment amount, statutory bonus amount, and arrears from April 2012 to date. The increment is effective from April to March but will be reflected in September, as previously mentioned. I will be with the company for the entire month of September. Will I be eligible for both of these amounts? Additionally, what will be my salary for this month? Will it include the increment amount, or will it remain the same for me?

Understanding Bonus and Increment Payments

Bonus is paid for the work that you have already put in, so your company has to pay you the bonus if you are eligible under the Bonus Act. A lot of companies club ex-gratia as part of the bonus (ex-gratia is the amount over and above the statutory provisions as per the Bonus Act). You need to determine if your bonus is purely a bonus or if it includes a large ex-gratia component. That apart, as I mentioned, the bonus is for the service you have "already" rendered and hence should be paid.

Increment and Its Eligibility

Increment, on the other hand, is an upward revision in salary to be paid for the service that you will provide in the "future." So, if you do not work with the company anymore, there is no question of an increment. Also, you have mentioned that in your company, increments are "effective" in September. That means the revised salary will be for the period from September to August of the next year—a period when you will not be with the company. Therefore, you will not earn a salary from the company during that period, and since the increment is part of the salary, you are not eligible for the increment.

Even though the management has announced the increment for the upcoming year in April, it is effective only from September, i.e., from September 2012 to August 2013. As per your words, you will serve the company until September, and starting from October 1, 2012, you will leave the company. You have informed the management about this too.

So, in this situation, it all depends on the management to give you a revised salary for the month of September. You can't demand it because there is no law binding the increment. However, you can claim your bonus amount.

Hope you are clear in your doubts now.