Increment When Project Is Under Loss

Dear Seniors,
we have started a project during the year 2011 & hired team of 145 people , among that one who had taking care of administration as Asst.Manager Admin got increment and promotion within span of 6 months ,
over a period of time project was under loss and we have terminated the team by giving one month notice period and retained admin manager for some other issues .
last one and half year we are waiting for the project approval and we are paying him salary as committed , but we have not released incentive part due to there is no progress in the project and it is closed .
now my admin manager is asking for pending incentive and as well as annual increment .
I feel that when the project is not grown or successful , company will not be able to pay the hike or additional benefits .
am looking for advise to handle this good employee .

Pl. communicate the company's business position to the employee clearly so that he can understand, if he is satisfied and supporting the organization is ok otherwise he will leave but the organization should be prepared for that.
Regards - kamesh

Dear seniors ,

in continuation of above case file : I have communicated the situation of the project and asked him to take relive as per company norms , where as he has argued with me about his carrier with company , saying that last 2 years I have no increment and growth , if suddenly project is closed and asking to take with notice salary I will go legal as Ex-service man .

then I have transferred him from admin department to sales and marketing department , which is yet to accept by him.

his replay to my transfer letter is - as per DGR [ directorate general resettlement ] norms , he is eligible for 3 months notice period under DGR norms

another aspect is our company has 3 months notice term while his joining to the company , over period of under the circumstances we have amended the notice clues saying that notice period is 30 day from either side .

am bit confused about how a private limited should follow the DGR norms when company as appointed at own terms as under Karnataka shops and establishment act 1961.

kindly advise me.