Resignation and Unmet Targets: Is Your Company Obligated to Pay Last Year's Bonus?

As per practice, if an employee has resigned and the target is not met, is the company liable to give the last year's performance-linked variable? Also, are there any legal implications on a pro-rata basis because targets are not achieved?

Hi, payment of any variable component like performance-linked pay, apart from the fixed salary, will be at the discretion of the employer.

Whether it is mentioned in the contract of appointment terms that "in case of resignation and if the target is not achieved, performance-linked pay will not be paid," it should not be a last-minute surprise for the employee. If the terms and conditions for the payout of performance-linked pay are mutually agreed upon at the time of joining, there will not be any ambiguity. Also, the employer should be ready to substantiate with proper data that the target is not achieved.