Am I Eligible for Performance Pay After Leaving My Job? Seeking Advice on HR Policy Confusion

Dear All, I hope you are doing well. My query is regarding the Performance Pay component of my CTC. I was relieved from my duties on 31st March 2025, and as per my appointment letter, the performance pay is included as part of the total compensation, with disbursement scheduled every six months.

It was recently communicated to me that only employees on the rolls at the time of disbursement are eligible for this component. However, I would like to highlight the following points:

- At the time of joining, no such condition was communicated to me either verbally or in writing.
- This clause was not specified in the appointment letter or any documentation shared during onboarding.
- The HR Manual clearly states that employees who are on the rolls up to 31st March are eligible for performance pay.

As I was on the company rolls through 31st March 2025, I believe I fulfill the eligibility criteria as outlined in the HR policy.

Please suggest what to do in such a situation.

In this situation, it is essential to address the discrepancy between the communicated eligibility criteria and the actual policy outlined in the HR Manual. Here are the steps you can take to resolve this issue:

1. Review Documentation: Gather all relevant documents including your appointment letter, HR Manual, and any other communication regarding the performance pay eligibility criteria.

2. Request Clarification: Schedule a meeting with the HR department to seek clarification on the discrepancy between the communicated condition and the policy outlined in the HR Manual.

3. Present Evidence: Present the documentation that supports your claim, highlighting that there was no mention of the eligibility condition at the time of joining.

4. Seek Resolution: Request a review of your case and ask for the performance pay that you believe you are entitled to as per the HR policy.

5. Escalation: If the HR department does not provide a satisfactory resolution, consider escalating the matter to higher management or relevant authorities within the organization.

6. Legal Consultation: If necessary, seek legal advice to understand your rights and options under labor laws or company policies.

By following these steps, you can address the situation professionally and work towards a resolution that aligns with the policies and agreements in place.

Performance Pay and Its Implications

Performance Pay, when standing alone as a fixed amount without any precondition for eligibility and payment, shall form part of the salary. At the same time, if the amount is not mentioned in the contract of employment but it is stated that "apart from salary, you will be entitled to a variable pay depending upon your performance," then it is purely a management prerogative. The payment will depend upon past performance and the possibility of the employee maintaining the same performance in the forthcoming period as well.

In such a scenario, a performance evaluation will occur before the amount is fixed, and in no way would the amount appear in the pay structure. However, in your case, the amount seems to be fixed, and a part of it has already been paid to you. Therefore, it is part of the remuneration. The only thing is that the periodicity of payment is six months or one year.

You are in the right place to discuss the Performance Pay, as per your posting. My opinion is quite logical and legal because the Performance Pay is a component of your CTC, and employees on the roll till 31st March 2025 are eligible. The clauses of the appointment letter should not differ from the HR policies of the company. The HR department has issued a letter stating that (employees on the rolls at the time of disbursement are eligible for this component). Thus, this is in violation of the clauses of the appointment and HR policy.
Mostly, the HR without ethical values resort to such illegal practices when employees are leaving the company.

Solution to the Dispute

The solution is to take legal action due to the clear dispute. However, the legal course is not that easy; consult an advocate. In first hand you should send a lawyer's notice referring to the clauses of the appointment and the HR manual. Let ensure that the amount receivable is much higher than the legal expenses or other wise,it's futile. Do as you feel is best.

Thank you for your guidance and response. I would like to seek further clarification regarding the performance pay component of my compensation. Upon reaching out to management, I was referred to an old policy which states that only active (on-roll) employees are eligible for performance pay, and that employees serving their notice period are not entitled to this benefit.

However, I have carefully reviewed my appointment letter and found that there is no mention of this condition. Additionally, the performance pay is clearly included as part of my Cost to Company (CTC), which leads me to believe that I should be eligible for it, especially since I have fulfilled my performance responsibilities during the applicable period.

Could you please clarify whether I am eligible for performance pay under these circumstances?

In the event that the management maintains its current position, I would appreciate your advice on the next steps I can take to address this matter appropriately.

Regards,
Mahesh Parmar

As already advised, performance pay as part of CTC with the amount payable mentioned in it is part of your remuneration only. However, if it is not paid, you have to raise an industrial dispute or file a civil suit on the grounds of breach of contract. The former is possible only if your salary was not more than Rs 24,000. Naturally, your salary would be much higher than Rs 24,000, and it is rare that performance pay is offered to those getting a salary of less than Rs 24,000. Suppose that your salary exceeds Rs 24,000, and at the same time, you were not having any supervisory or managerial powers in the establishment. In that case, you can try to get the matter settled by approaching the Labour Officer, who will act as a conciliation officer under the relevant sections of the Industrial Disputes Act.

At the same time, if you were having managerial powers, such as the authority to take decisions like sanctioning leave, initiating disciplinary action, appraising performance, etc., then you will have to file a civil suit to recover it. It will be a time-consuming act. Both these actions will make your career a bit difficult because no employer would prefer to give a positive note about an employee who had filed a case against them in any reference or background check. Therefore, if the matter could be settled amicably, do it.

Yes, you are eligible. However, it is important to be present during the appraisal process. If you leave before the appraisal, companies typically do not consider candidates for appraisal.

You may still approach the company with a comparison of your targets and achievements during your tenure and request that your performance be reviewed.