Is My Company Right to Withhold the Promised Diwali Bonus? Seeking Guidance

Dear Seniors,

I received an Appointment Letter from a healthcare hospital one year ago (on 20.05.2015), which included Basic salary, TA, Location Allowance, a Bonus of 2000, and Gratuity of approximately 2000 in my CTC.

During Diwali, the company refused to give the bonus to anybody, stating that it is not mandatory to provide a bonus to employees. It is at the company's discretion.

Based on my understanding, the company should provide Rs 2000 multiplied by the number of months I have served in the company.

Could anyone guide me in this matter?

Thanks,
Aanand Vegad

I think the amounts within parentheses are only provided by you for the purpose of illustration because CTC is generally projected by employers on an annual basis only. Since CTC is a general estimate or projection of the annual total cost incurred per employee in respect of his/her employment, whatever is mentioned in CTC cannot be claimed unless and until the occasion for such a claim arises.

Of course, it is mentioned in Sec.32(v)(c) of the Payment of Bonus Act, 1965, that the Act shall not apply to employees employed by institutions, including hospitals, established not for the purposes of profit. There is no mention in the post whether the said hospital is a charitable institution offering health care services on a non-profit basis or a regular Corporate Hospital. If it falls in the latter category, the management cannot deny the bonus to its eligible employees.

Moreover, since eligibility for a bonus is determined by the quantum of salary and the bonus is linked to the performance of the establishment every year, you cannot stake a straight claim based on the figure projected in the CTC.

Thank you.

Dear Mr. Aanand,

Thanks for the clarity provided by Mr. Umakanthan53. Normally, hospitals are considered and expected to be non-profit organizations. As per the bonus act referred to above, employees of such hospitals are not eligible for a bonus. Kindly go through the said act.

Best wishes

Mr. Anand, there appears to be some confusion here. You have specifically referred to 'Diwali Bonus', which is distinct from an industrial bonus. While the latter is a right of the workman, the former is merely a gift by the employer on the occasion of Diwali, totally dependent on his whims, fancies, and beliefs! You can request a Diwali bonus but cannot demand it!

Understanding CTC and Bonus Eligibility

There is a reason why HR professionals refer to CTC with a rude local slang, implying that you have been misled by your employer. Unfortunately, CTC is often used as a tool to make your earnings appear higher than they actually are. In this case, the bonus is part of your CTC, not a part of your gross earnings. CTC is not legally enforceable, and there is no reference to it under any law. The only potential action would be under the contract act or its extension in labor laws, both of which are uncertain grounds.

Whether you are eligible for an annual bonus or not depends on the specifics of the case and whether the institution and you personally are covered under the Payment of Bonus Act.

Regards