Employee previously entitled to retention bonus but poor performance

Hello everyone,
My name is geetanjali and i am in to training for becoming a human resource manager. I have come across a case of an employee resigning after 7 month.... we had entitled him for a retention bonus, however he was quite poor at his performance and now after resigning he is asking for the retention bonus. He was not much beneficial for the company and as it is rightly said that retention bonus is to retain an employee...so wanted to know shall we release his retention bonus....

Dear Geetanjali,
Your query is about retention bonus and not statutory bonus. About latter, the rules are quite clear but in case of former, it is the internal matter of your company. Therefore, the first question comes to our mind is have you read Policy on Disbursement of Retention Bonus? Going further if this policy is well in place then has it been communicated to the employees? Under what clause, employee says that he is eligible to get the retention bonus?
Therefore, the first thing is to read the policy on retention bonus. If he is eligible then pay him. If not then call him to the HR department and explain him about ineligibility.
Thanks,
Dinesh Divekar

Dear Geetanjali.

poor performance in respect of payment of remuneration or any additional remuneration is irrelevant. what is retetion bonus payment policy check the eligibility as per policy terms difened in the employee service agreement. further as per sec 2 of payment of wages act. 1936 wages include :- any remuneration under any award or settlement between parties or order of court, any additional remuneration (whether called bonus or any other name. Hence any remuneration paid to employee by way of award, incentive or any bonus shall comes within the preview of wages under payment of wages act. 1936. if employee is in the coverage of the said act. Therefore retetion bonus should be also be paid monthly as defined in sec 5 of payment of wages act. 1936. Holding wages by way of incentive or retetion bonus is illegal.

Thanks & Regards

V SHAKYA

HR & Labour, Corporate Laws Advisor

Hi Geeatnjali,
First, try to get information on retention bonus policy of your company. Generally, employees are eligible for retention bonus after few years of service in the company then only they can get this bonus.

Hi Geetanjali,

In General the retention bonus shall be paid on completion of 01/02/03 yrs basing on the policy of the company and this is being clearly mentioned in the appointment letter & those employees who is going to leave the company with out completion of the set norms are not eligible for the retention bonus.

Retention bonus / incentive, production bonus / incentive etc., are need to be earned by the employees specifically meeting the targets hence the employees who are not fulfilling the set targets are not eligible for the amount. I opine that an employee who worked for 7 months and leaving on his own and even management is not interested to retain him basing on his performance may not be entitled for the said bonus / incentive. However suggested by our HR professionals the eligibility / applicability is purely based on the terms & conditions of the employment or the policies of the company.

Regards

kamesh