Understanding Bonus Eligibility and CTC Components Upon Resignation

Dear Seniors,

I work in an MNC IT company. I have recently resigned from my company and am currently on my notice period. I resigned in November 2013, and my last working day is February 14th. Now HR is informing me that I am not eligible for any bonus as I resigned in November 2013. This bonus is part of my CTC for the year 2013 (January to December 2013).

I am unsure if HR is correct or if they are trying to withhold my bonus. There is no information provided in my offer letter regarding the bonus in case of resignation. Although I aim to resolve this issue amicably, I would like to know if I have any legal standing if HR does not cooperate.

Please advise.

If you are talking about the bonus given as per the Bonus Act, then you are eligible to receive the same if your basic pay plus DA is less than ₹10,000 per month. The bonus is calculated on a financial year basis.

Eligibility for Bonus as Part of CTC

If it is a part of the CTC, then the company is bound to pay you the bonus. Any component mentioned in the CTC is a part of the salary, and the employee is eligible for such a component. In my opinion, you can claim the bonus (part of CTC) until the last date of working, i.e., until February 2014.

Greetings Friends,

In my opinion, if I am not mistaken, you are referring to the incentive being paid to employees, which is also indicated as part of CTC. Though there is no specific mention of this in your offer letter, there could be a clause in the offer letter that states the incentive scheme will be as per policy guidelines laid down by the management from time to time. In that case, the company may use this as a reference point.

I am aware of MNCs following such policies wherein even if the employees quit on December 30th, they are ineligible for this incentive. However, in your case, you seem to have served the company for the whole calendar year. Perhaps you could seek the guidelines/policy of the company.

Regards

Hello friends,

When you raise a problem, you need to mention much more information in order to examine the same. However, a gist of the Payment of Bonus Act, 1965 is given below from where, I hope, you will be able to judge your eligibility for the payment of bonus.

1. Payment of Bonus Act, 1965 is applicable to (a) every factory; and (b) every other establishment in which twenty or more persons are employed on any day during an accounting year.

2. All the employees employed on a salary or wage not exceeding ten thousand per month in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical, or clerical work for hire or reward are covered under the Act.

3. "Salary or wage" means all remuneration capable of being expressed in terms of money, including dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living).

4. Eligibility for bonus: Every employee shall be entitled to be paid by his employer in an accounting year provided he has worked in the establishment for not less than thirty working days in that year.

5. Calculation of bonus with respect to certain employees: Where the salary or wage of an employee exceeds 3500 rupees per month, the bonus payable to such employee shall be calculated as if his salary or wage were 3500 rupees per month.

6. Time-limit for payment of bonus: All amounts payable to an employee by way of bonus shall be paid within a period of eight months from the close of the accounting year.

7. The minimum bonus under the Act is 8.33% of the salary or wage, and the maximum is twenty percent.

BS Kalsi

Member since Aug 2011

I assume you are talking about a bonus that is in the form of an incentive not covered under the Payment of Bonus Act. Just because an item is in your CTC does not mean you will get it. You need to check your terms of employment (your appointment letter, HR Policy, Employee Handbook, and Standing Orders - if any) to see if there is any clarity on the matter. If there is nothing stated, then the company is free to take any justified stand. And this can be justified both ways.

You can approach the HR team again and explain that you should get the bonus as you worked in that year, met your targets (I assume), and worked sincerely. You can also speak to your Manager / HOD and ask them to intervene so that you can leave with a good impression of the company and its fairness. If that does not work, I would suggest that you let it go as you need to leave on good terms to receive proper feedback during future background checks.