Can My Ex-Employer Really Ask Me to Repay a Bonus After a Year? Seeking Legal Advice

Hi,

I resigned from a company almost a year ago, and now my employer has sent a legal notice asking me to repay the bonus paid on a pro-rata basis. Is it legally tenable? Please advise.

Dear Jeyavardhan, You could have complete information. Please confirm:

a) Your Date of Joining the company

b) Your Last Working Day in the company

c) When the bonus was disbursed and for what financial year

d) In the letter that is issued to you, has the company mentioned a clause under the provisions of which the recovery process has been initiated

As per the Payment of Bonus Act, 1965, "An employee is entitled to be paid by his employer a bonus in an accounting year subject to the condition that he/she has worked for not less than 30 working days of that year."

We need to find out why the disbursement of the bonus does not fit into the above definition. Secondly, I have attached a PDF copy of the Payment of Bonus Act, 1965. Go through the act and find out whether the notice contravenes with any clause of this act.

Thanks,

Dinesh Divekar

Thank you for your message. Your situation seems unique as it falls outside the scope of the bonus act. A portion of my Cost to Company (CTC) is classified as a variable component and is paid as a performance bonus. Within this variable component, a certain percentage is paid on a pro-rata monthly basis. The company now wishes to reclaim this money, citing my failure to complete the full 12 months. My contention is that I worked for 9 and a half months and received the monthly bonus as a result of my performance. Is it legally permissible for an employer to recover funds paid to an employee under the bonus category? I would like to discuss this matter with you further over a call.

Regards,
Jeyavardhan
[Phone Number Removed For Privacy Reasons]

Dear Jeyavardhan, In your second post, you have also not provided complete information. Please reply to points (a) and (b) above. Additionally, for what period is the company seeking a refund of the bonus? Why are you hesitant to mention the specific details? The tenability of their claim needs assessment under the provisions of the Payment of Wages Act and the clauses stated in your appointment letter. Furthermore, please specify the type of industry you worked in. This information will help us determine whether your company falls under the Factory Act or the Shops and Establishment Act.

Thanks,

Dinesh Divekar

Hi Dinesh,

I worked in a software company from 2008 to 2014. My last working day was 14th March 2014, and the employer wants to recover the monthly bonus paid from June 2014 to March 14, 2014. I think it's covered under the Shops and Establishment Act.

Regards