Can We Withhold Bonus and LTA for Employees Resigning During Probation?

Can we deny any employee their Bonus and LTA (Leave Travel Allowance) if they resign within their probation period, considering that both the Bonus and LTA are a part of the CTC and are fixed at Rs. 10,000/- per annum in the CTC?

Regards, Sanjeev Bansal Adv.

A statement of CTC given along with the offer letter or appointment order of an employee cannot per se form part of the contract of employment unless it is specifically stated so and accepted by the employee. Even if it is to be treated as part and parcel of the contract, the conditions mentioned therein about any statutory payment cannot run counter to the provisions of the concerned law, if applicable.

Bonus under the Payment of Bonus Act, 1965

Bonus is a payment made to the person falling within the definition of the term 'employee' under the Payment of Bonus Act, 1965, based on the performance of the establishment in every accounting year if the establishment is covered under the Act and the employee has actually worked for a minimum period of 30 days in the accounting year.

If the statement of CTC is enclosed with the letter of intent/appointment, then the company is liable to pay the same.

Regards, Sumit

Bonus Eligibility

A bonus is a deferred wage, and if the employee worked for a minimum of 30 days during the accounting year for which the bonus will be paid, the employee will be eligible for the bonus proportionately.

Gratuity Payment

Now, concerning gratuity payment, in my opinion, the employee will not be eligible even if it is part of the CTC (no legal sanction). CTC calculation is a management tool to control individual employee costs related to employment. Every payment is conditional. For example, if an employee was absent for the whole month and is requesting a salary when there is no leave due but it is mentioned in CTC, it is an illogical claim.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] http://www.usdhrs.in

Bonus and LTA Provisions

Bonus is mandatory as per the provisions of the Payment of Bonus Act. However, LTA is not mandatory; it can be part of the CTC. Only one can avail of tax benefits as per IT rules.