Am I Entitled to a Bonus After Resigning? Understanding Employment Dates and Terms

I resigned from my previous company on 20/11/2012 and was relieved after serving the notice period on 17/01/2013. So, until what date was I on the rolls of the organization - the date I resigned or the date I got released?

I was supposed to receive a bonus in the December 2012 salary. However, I didn't receive it. There were two conditions stated in the letter:
1. I should be on the rolls of the organization when the payment is due (31/12/2013).
2. I should not have decided to leave the organization on or before 31st Dec 2012.

My doubt is: Was I on the rolls of the organization until the payment date? Also, the phrase "decide to leave" is misleading. Does it correspond to the date of resignation or the date of release?

Let's address your queries from both the employer's and employee's perspectives:

Expectation from the Employer

1. I should be on the organization's payroll when payment is due (31/12/2013).
The employer expects you to be an active employee on the organization's payroll and not resign or be released on or before 31/12/2013.

Expectation from the Employee

2. I should not decide to leave the organization on or before 31st Dec 2012.
This indicates that you should not consider leaving the organization and, obviously, should not submit your resignation. You should be an on-role employee, meaning someone who is confirmed within the organization and has not resigned or is serving a notice period.

The explanations above provide clarity on the terms used in your queries. Here are further details to enhance your understanding:

Types of Employees

1. Probation employee: Individuals under a probationary period.
2. Contract employee: Hired through a third-party payroll.
3. On-role employee: Confirmed employee from the completion of probation until resignation.
4. Off-role: Resigned or notice-serving employees.

Based on the information provided, the resignation date is crucial in your case. Unfortunately, you were not eligible for a bonus as per the conditions specified by your employer in the offer terms.

I hope this clarifies your concerns.
Regards.

The bonus is given for the financial year's work done by the employee. However, the payment is usually made during festival times like Diwali, or when an employee leaves the job as part of the full and final settlement. This is because the bonus is related to the financial year.

Regards,
Bhanu

Regarding your first question, until what date are you on the rolls of the organization: the date of resignation or the date of relieving? The answer is - the date of relieving, without a doubt.

Bonus Payment Eligibility

In terms of your bonus payment, you need to inform us of your basic salary or basic salary plus dearness allowance, if any, during the year 2012-13. If your basic salary or basic salary plus dearness allowance is less than Rs. 10,000 per month, then you are eligible to receive a bonus in accordance with the provisions of the Act. The employer must pay the bonus within 8 months from the close of its accounting year.

If you are ineligible to receive a bonus under the Act, your employer may still choose to pay you a bonus according to the terms of your employment or company policy. If the company policy states that you should be on the rolls of the company on the date of bonus disbursement, you should receive it. If your employer is not issuing the payment, you should raise a dispute in accordance with the applicable laws for your category.

Regards

As rightly opined by Mr. Korgaonkar, if you escape the ambit of the definition under section 2(13) in terms of salary, you are not entitled to a bonus under the Act. If not, you are entitled to a statutory bonus, as suggested by the other learned members, since you have worked for more than 30 days in that accounting year.

Since you were on the rolls of the company until the expiry of the notice period, the termination of your services cannot have a retrospective effect. Therefore, you are entitled to claim the bonus guaranteed under the contract of employment. In case of refusal by your ex-employer, the only civil remedy available to you is indirectly suggested by Mr. Korgaonkar.

It does not appear to be a statutory bonus to me, having regard to the conditions laid down by the employer. It must be some incentive bonus under the contract of service which is payable on two conditions, namely:

1. The employee must be on the rolls of the company as of 31st December 2012.
2. He should not have decided to leave the company on or before 31st December 2012.

In fact, these two clauses cannot be read together. For example, if he does not declare his intention to leave on or before 31st December 2012 but leaves on 31st December 2012, then also, he will not be eligible for the bonus. Thus, if an employee incurs a debar clause under either of the two clauses, he will not be eligible for the bonus.

In the instant case, the querist resigned from the service on 20-11-2012 but was relieved on 17-1-2013 after serving the notice period. The purpose of an incentive bonus, as is this, is to induce an employee to continue his employment relationship till a certain period so that the employer is assured of service from such an employee for such a stipulated minimum period.

In respect of the clause which debars an employee from being eligible for a bonus if he decides to leave the organization on or before 31st December 2012, the date 31st December 2012 (having regard to the intent and purposes of the bonus scheme) refers to the point of time when he actually makes up his mind to leave the organization. In the instant case, the employee made up his mind to leave the organization on 20-11-2012, well before 31st December 2012. Thus, an employee who communicates his decision to leave the organization before 31st December 2012 is deemed to have already incurred the debar which cannot be undone by his getting relieved after 31st December. He cannot declare before 31st December that he will leave the organization and then also claim the bonus by getting relieved after 31st December. He cannot eat the cake and have it too. It is also not clear from the details furnished by the querist whether he was in active service of the company till 17-1-13. Thus, I endorse Aisha Sultana's view on this issue.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
[Phone Number Removed For Privacy Reasons]

Your remaining on the rolls of the company will be treated until the date you are released, not the date of the submission of the resignation letter.

Bonus/Ex-Gratia Payment

Regarding the second issue, i.e., bonus/ex-gratia, if this was applicable as per the company norms, then you were supposed to be paid at the time of full and final settlement.

Regards,
B.K. Mohanty
Director
Cypress Management Associates
[Phone Number Removed For Privacy Reasons]

Since I have a similar issue, I wanted to use this thread to post my query. Hope that should be OK.

Situation Overview

Here is the situation: I was eligible for the variable pay (or bonus) for the period of July to December 2014. I put in my notice (and communicated the notice period) on January 16, 2015. My last working day was February 13, 2015. However, when I received my final settlement, the variable component was not included. The reason given was that I needed to be on the payroll at the time of payout, which apparently occurred on February 28. I don't recall this condition being mentioned in my offer letter. I would appreciate your view on this as I am planning to challenge this decision (I am confident about the grounds).

Understanding Ex Gratia Bonuses

The bonus you mentioned is an ex gratia payment. It is not covered by any law and is therefore at the discretion of the company. Generally, it is paid to retain and incentivize employees. Since you have resigned and are leaving, most companies will not give you the bonus. Even if you were there on 28th February, I suspect you would still not receive it.

Legal Recourse and HR Discussion

There is no recourse to labor laws for you. The only legal option would be a civil suit claiming that the terms of your contract were not fulfilled. However, it's a waste of time and money to pursue it. Effectively, you have no legal recourse. Therefore, you need to discuss this matter with your HR team. If they are not willing to help, you can take up the matter with the HR head. Depending on your relationship with your reporting manager and your seniority in the company, you may also ask for intervention on the grounds that you have done good work and morally, the company should give you that money.