Can Companies Withhold Variable Pay if You Leave Before Year-End? Seeking Advice on Salary Compensation Policies

Dear Sir,

I have a query on salary compensation being paid by the organization. These days companies are bifurcating the salaries into Fixed & Variable parts. The Fixed part is being paid on a monthly basis, while the variable part is to be paid at the end of the year based on the Company's performance & Individual performance. Normally, the variable part of the salary is kept at 10-15% of the total package. If anybody leaves the organization before the financial year closing, then the companies are not paying the variable part of the salary.

I wish to seek your help in this regard. Since the variable pay is part of an individual's salary, can the company deny paying it to the person for the period the person has served the organization?

Thanks & Regards,
Sanjay Bansal

Dear Vivek,

I think the question was only about the variable component and not about flexi. The variable component is not paid if the employee is not on the rolls as of the date of disbursement. This methodology is correct, and I do not see anything wrong with this system.

Siva

Hi,

The variable pay should be paid if the employee is on the rolls at the time of disbursement of the VP. If he is not on the rolls, the same will not be paid out. Your question is a mixture of two questions, wherein I was confused!!

There are fixed compensation plans and flexible compensation plans. The fixed compensation plan is fixed for the whole year, wherein if the employee is under a flexible compensation plan, he can allocate his CTC under whatever heads he would like to. If the employee of a flexible compensation plan has resigned, it is computed based on the heads he has allocated. This has nothing to do with the variable pay.

You can take my answer, whichever is applicable to you.

Regards,
Vivek

Hi Siva,

What I've mentioned is the same. Anyways, if the author understands the scenario, he can clarify the same with the concerned department.

Regards,
Vivek