Confused About Variable Pay Eligibility After Resignation? Let's Discuss Your Rights and Options

I have searched Google and didn't get much information about the variable payout system in India. I work in a software firm. Variable pay is a component in my offer letter, and it is based on the company's performance as well as individual performance from the period (Jan to Dec 2012).

Questions About Variable Pay Eligibility

I would like to know the following things:

1. If I resign from the company in 2013 after working for the above-mentioned period (Jan to Dec 2012) and performed well, am I eligible for variable pay? Since I have worked for the period during which variable pay is calculated and the same is mentioned in the offer letter of that year, I believe I should be eligible for variable pay.

2. As per the company, only employees who are on the payroll while rolling out the variable pay are eligible for the same. The company will be rolling out incentives only in August 2013. Can the company insist on this after calculating variable pay based on the performance from Jan to Dec 2012?

3. The problem that an employee is facing is, if an employee resigns during the period, say Jan to July 2013, they will not get variable pay for the last year (2012) since the company will roll out the variable pay only in August 2013. Additionally, they are not eligible for variable pay for the current year 2013.

Is there a labor law to solve this issue? Please provide me with answers to the above points.

Thank you

Understanding Variable Pay in India

Firstly, do let us know whether you are employed in a foreign company or an Indian company. Usually, in India, variable pay is accounted for as per the financial year and not the calendar year.

With regards to your query, you have to contact the HR department, who will be the right person to guide you. In a nutshell, if your company is a professional one, they would not withhold your variable pay. You are eligible for variable pay for every single month for which you have worked with them; it's a part and parcel of your emoluments.

Regards

Thank you for the fast reply. I work in an Indian company. In my company, variable pay is calculated based on the performances from January to December. Could you please provide me with more detailed explanations for each of my queries? Thank you very much.

I would like to know the following things:

Eligibility for Variable Pay After Resignation

(1) If I resign from the company in 2013 after working for the above-mentioned period (Jan to Dec 2012) and performed well, am I eligible for variable pay? Since I have worked for the period during which variable pay is calculated and the same is mentioned in the offer letter of that year, I believe I should be eligible for variable pay. Yes, you are eligible for Variable Pay.

Company Policy on Variable Pay Rollout

(2) As per the company, only employees who are on the payroll when the variable pay is rolled out are eligible for the same. The company will be rolling out incentives only in August 2013. Can the company insist on this after calculating variable pay based on the performance from Jan to Dec 2012? If you are rolled out before the variable pay is declared, the company may hold the incentive until your FNF.

Challenges with Variable Pay Timing

(3) The problem that an employee is facing is if an employee resigns during the period, say Jan to July 2013, he will not get variable pay for the last year (2012) since the company will roll out the variable pay only in August 2013. Also, he is not eligible for variable pay for the current year 2013. If there is any standing order for the same, then the employee is not eligible; otherwise, the employee is eligible to get the variable pay until his last date of working with the company.

Thank you for the reply. In point 3, "If there is any standing order for the same, then the employee is not eligible; otherwise, the employee is eligible to receive the variable pay until their last day of working with the company."

Can you tell me what exactly "Standing order" means? Is it the company policy or a government labor law?

Thank you

I would like to know whether it is legally correct to have a policy as I mentioned in point 2.

Do you have a variable pay policy in your company? Please refer to it; if these terms are mentioned in it, then you cannot contest. Didn't you ask your recruiter about the variable percentage and the payout cycle at the time of joining?

Most IT companies have a similar variable policy; they don't pay variable pay if the employee is on notice at the time of disbursement. The only way to safeguard against this is to negotiate for a higher fixed salary when you switch your job.

Regards,
Ritesh Shah

I have a similar issue. I would like to make a few points:

1. While joining, I checked the policies of the company, and they had a variable payout policy that allowed a variable payout every quarter.

2. The company changed from Limited to Pvt Limited, and the policies were also changed, including the variable payout policy, which was changed to a variable payout to be paid annually on a date declared by the management.

3. Also, the variable payout would be paid to employees on the company's rolls as of the payout date.

4. Now, my question is, it is an open-ended situation since the date of payout is at the discretion of the management, and they can extend it until almost Q3 of the subsequent year. How ethical is that? Is there any way out in case of disagreement with such policies without quitting the job?