Is It Fair for My Company to Deduct Performance Pay from My Salary? Seeking HR Insights

I am drawing 1.6 lacs PA, and my company is deducting 1k per month from my package as performance pay. They say they will give it to me at the end of the year.

Question About Performance Pay Deduction

So, my question is, is it fine to deduct an amount from CTC as performance pay? Because it has lowered my net salary. Help me to understand. I am also in HR, currently handling admin, but still need to learn so many things.

Regards

It's fair enough to deduct Rs. 1000/- as performance pay. This mostly applies to sales & marketing and technical staff, with payment occurring quarterly, half-yearly, or annually (which varies by company). However, for Junior HR & Admin personnel, this is a first-time occurrence in my experience.

The deduction of performance incentives, paid annually, would help retain employees for a longer duration. Regardless, it's important to understand the performance evaluation process and its criteria.

Cheers,
Sunil

Hi, please visit the discussion under this thread https://www.citehr.com/431809-how-ca...ml#post1961810

I have come across many IT/Non-IT companies with the same practice. To be specific, it is not only for the marketing division; even administrative staff have the same clause. This is because the KRA weightage method is prevalent in recent times.

In the mid-90s, the trend was to retain some amount of salary from the CTC, which was paid on completion of a certain tenure or under any such condition. Nowadays, the same concept has been modified and termed as a performance incentive, giving the employer the upper hand to pay the specified amount in full or partially based on your performance.

Clarification with Management

You can clarify with your management:

1. Whether Rs. 1,000/- is a fixed amount you will receive at the end of the tenure, OR
2. Whether it is included as an average performance and can increase or decrease based on the kind of performance.

Also, inquire about the evaluation procedure for calculating such an incentive.

Every company is likely to have clauses that you may not like, but quitting the company frequently is not a viable option. It is better to play it safe with the current employer and consider a change only once you have gained ample knowledge and experience.

Regards,
Hiral

I'm okay.

1. Was this disclosed to you when you joined or during your interview?
2. Is this being deducted from your salary, or is it a part of your CTC?

The response will be different depending on the answer to the above.

Understanding CTC and Performance Pay

These days, the CTC is calculated with the elements of Gross + Co's Contribution for PF/ESI/Gratuity + Other benefits/perks + PLI (Productivity Linked Incentives).

The PLI will include the minimum PLI and maximum PLI. Therefore, the CTC will have an assured minimum amount (if PLI is not given for various reasons) and maximum CTC includes the maximum PLI for the individual depending on his/her grade and designation.

The PLI has two components - a percentage based on the Company's performance and the rest based on the individual's performance (Appraisals). Normally, the PLI is given once a year.

Coming to the question posed, the employee MUST know how the CTC is calculated before he/she joins, and it should be transparent to everyone. This is basic ethics - which is seldom exhibited!!

Regards,
Rajusiachen