Can My Company Deduct My Appraisal Bonus After Resignation Due to Changing HR Policies?

I received an appraisal in May and resigned in August. Now the company has withdrawn the appraisal and deducted the appraisal amount from my August salary, citing an HR policy that states if I resign within six months of the appraisal, they will recover the appraisal. Can they do this by citing an HR policy that they keep changing? My contract does not mention anything related to this.

Please check whether there is a clause in your offer, appointment order, or contract of service that states you will be governed by the rules and regulations issued from time to time. The company may introduce or amend the rules and regulations through circulars that they will make public. Nevertheless, withdrawing a benefit after granting it is in poor taste and is reprehensible.

Dear iamsjs, A senior colleague has given an apt reply. However, there needs to be clarification in your post. "Performance Appraisal" (PA) is conducted to measure the quantum of work done. After the PA, a salary increment is given. Therefore, what you received in May 2022 was a "salary increment." The PA and salary increment are independent terms, and you cannot use them interchangeably.

The previous learned member has described the withdrawal of a salary increment as "bad in taste and is reprehensible." It is the most appropriate description. Anyway, you are quitting an unprofessional company. Therefore, let it go and move on!

Thanks,

Regards, Dinesh Divekar

Hi, Please check your appraisal letter (increment letter). Normally, in the increment letter, there will be a clause stating that "in case of resignation within __ months, the company reserves the right to revoke the increment amount." You should have signed the increment letter, and the employer will present it as your acceptance. Performance appraisal reviews the past period, but it has become very common among employers, especially in the IT sector, to revoke increments in case of resignation.

Hi all, thank you for your replies.

To provide a response to everyone:

1. The performance appraisal and salary increment mean the same thing in the company where I work. An appraisal means you receive a salary increment in our company.

2. The increment (appraisal letter) is sent as a PDF file via email, and we do not sign it. Additionally, there is no clause mentioned in the appraisal letter I received regarding rolling back appraisals in case of resignation.

3. There is a clause in my appointment letter stating that HR policies can be changed at the company's discretion, and changes in standard terms of employment may be communicated to employees through any medium. However, such communication has not been made in any way. The company faces various issues with employees and changes policies accordingly. Therefore, there is no clear notification of policy changes, and we must constantly monitor for any updates.

From all the replies, it seems there is nothing I can do regarding the actions taken by the employer.

If you are looking at the legal validity of the employer's actions, the following regulations will apply.

1. The terms of appointment that were there when you joined.
2. Changes to the terms of employment that you agreed to (including deemed acceptance by continuing to work or not replying that you do not accept the terms). However, this means it must be explicitly communicated to you.
3. If the organization has more than 50 employees at that location, the Standing Orders will apply. In that case, none of the HR policies or procedures can be contrary to the standing orders, though they may be more favorable to the employees. This will never be allowed in standing orders.

Now, if it is a small office and standing orders do not apply, then obviously, you need to see whether you were informed of the changes. If not, the deduction is invalid. If standing orders apply, then the deduction is invalid anyway.

If your salary is below ₹18,000, then you are also covered by the Payment of Wages Act, under which such a deduction is illegal.

What options do you have?

You can go to the local Labor Commissioner and complain. He may help you unless you are at a managerial level. You can go to a lawyer and have him issue a notice to the company. Many times the notice is enough to make the company do the right thing.

You can also go to the labor union, NGOs, or political parties who may help you, but in each case, there is a cost, which is basically the company will give a negative BVG reply when your new employer calls to check your employment history.

It means I have to accept and continue working until the notice period is over?

It means you need to decide whether you wish to fight it or let it go. You could even contest it by leaving without notice (or without completing the remaining notice period). The decision needs to be based on your needs and constraints.

Performance-related increments

Performance-related increments can be withdrawn if management finds that the employee is not going to serve the rest of the period. On the other hand, if the increment is a time-scale increment prefixed in the offer letter itself, as it happens to be in the case of offer letters of PSUs and major establishments, then the same is a right of the employee and should be given unless there are any comments to hold it due to any punishment imposed on the employee.

Before initiating such withdrawal of an increment, which implies a reduction to a lower grade, the employee should be given sufficient opportunities to be heard. The employer can quote the company policy in this regard, which states that increments shall be withdrawn if the employee submits his resignation within the prescribed period.

Legal considerations

Changing the company policies regarding service conditions without complying with Section 9A of the Industrial Disputes Act is unlawful and can be challenged. However, nothing will be maintainable if you have been working as a manager with functional authority of supervision and control.