Hi, I left my company in December 2012. At the time of leaving, I had a bonus payment due with the company. Therefore, despite receiving the severance check, I did not sign the release letter indicating I have received full and final settlement. My employment contract is under Indian jurisdiction, but my special bonus contract falls under US jurisdiction. In February/March 2013, my company approached me and offered to pay 60% of the bonus if I signed the release letter. I declined at that time as I believed I deserved the full 100% bonus as per the exceptional documentation I had filed with them. Following discussions in June/July 2013, I agreed to accept the 60% bonus to maintain good professional relations. However, I requested that they consider the current exchange rate and account for it in the new financial year starting April 2013. Not accounting for this in the new tax year and at the prevailing exchange rate results in almost a 15% loss for me.
To my surprise, when they sent me the calculations for my Form-16 in May 2013, I discovered that the 60% bonus had already been accounted for in my income for the last financial year, and taxes had been paid to the government. Currently, my company is neither paying me the post-tax money nor correcting my Form-16. They stated that they must deduct the TDS and deposit it when the payment is accrued. However, they mentioned that they would only pay me if I signed the release letter. I have the following questions:
1. Can my company withhold the payment of the overdue bonus (I fulfilled the requirements in June 2012 to earn the payment) until the release letter is signed?
2. If the release letter is a condition for releasing the final payment, is their decision to consider the accrual in the last financial year valid?
3. I held a senior management position in the company but had no supervisory responsibilities (no one reported to me from an HR perspective). Which laws in India would be applicable if I were to pursue legal action?
4. To which government authority should I first address my concerns?
Thank you,
KP
From India, Bangalore
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To my surprise, when they sent me the calculations for my Form-16 in May 2013, I discovered that the 60% bonus had already been accounted for in my income for the last financial year, and taxes had been paid to the government. Currently, my company is neither paying me the post-tax money nor correcting my Form-16. They stated that they must deduct the TDS and deposit it when the payment is accrued. However, they mentioned that they would only pay me if I signed the release letter. I have the following questions:
1. Can my company withhold the payment of the overdue bonus (I fulfilled the requirements in June 2012 to earn the payment) until the release letter is signed?
2. If the release letter is a condition for releasing the final payment, is their decision to consider the accrual in the last financial year valid?
3. I held a senior management position in the company but had no supervisory responsibilities (no one reported to me from an HR perspective). Which laws in India would be applicable if I were to pursue legal action?
4. To which government authority should I first address my concerns?
Thank you,
KP
From India, Bangalore
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Suggestions for Resolving Bonus Payment Issues
Suggestion 1: Please settle the issue amicably because it is the best way to preserve the professional image. Organizations don't suffer due to litigations; it is the employee who gets affected mentally and financially during the course of litigation.
Suggestion 2: As you are in the Senior Management cadre and likely have some authority in the organization, such as making decisions, signing cheques, and entering into contracts, you have the option to go to civil court to sort out the matter.
I left my company in December 2012. At the time of leaving, I had a bonus payment due with the company. Therefore, despite receiving the severance check, I did not sign the release letter indicating I have received full and final settlement. My employment contract is under Indian jurisdiction, but my special bonus contract falls under US jurisdiction. In February/March 2013, my company came back to me and said they would pay me 60% of the bonus if I signed the release letter. I refused at that time because I believed I deserved the full 100% bonus as per the documentation I filed with them. After discussions in June/July 2013, I indicated I would accept the 60% bonus to maintain good professional relations. However, I asked them to consider the current exchange rate and account for the new financial year starting April 2013. Not accounting for the new tax year and using the prevailing exchange rate causes me almost a 15% loss. To my surprise, when they sent me my Form-16 calculations in May 2013, I found that the 60% bonus was already accounted for in my income for the last financial year, and taxes were paid to the government. Now, my company is neither paying me the post-tax money nor correcting my Form-16. They stated they must deduct the TDS and deposit it when the payment is accrued. However, they mentioned they would pay me only if I sign the release letter. Here are my questions:
1. Can my company hold the payment of the overdue bonus (I fulfilled the requirements in June 2012 to earn the payment) to have the release letter signed off?
2. If the release letter is a condition to release the final payment, is their decision to consider the accrual in the last financial year valid?
3. I held a Senior Management position in the company, but I had no supervisory responsibilities (no one reported to me from an HR point of view). Which laws in India will be applicable if I were to pursue legal action?
4. Whom in government authority should I approach first?
Thank you,
KP
From India, Delhi
Acknowledge(0)Amend(0)
1Suggestion 1: Please settle the issue amicably because it is the best way to preserve the professional image. Organizations don't suffer due to litigations; it is the employee who gets affected mentally and financially during the course of litigation.
Suggestion 2: As you are in the Senior Management cadre and likely have some authority in the organization, such as making decisions, signing cheques, and entering into contracts, you have the option to go to civil court to sort out the matter.
I left my company in December 2012. At the time of leaving, I had a bonus payment due with the company. Therefore, despite receiving the severance check, I did not sign the release letter indicating I have received full and final settlement. My employment contract is under Indian jurisdiction, but my special bonus contract falls under US jurisdiction. In February/March 2013, my company came back to me and said they would pay me 60% of the bonus if I signed the release letter. I refused at that time because I believed I deserved the full 100% bonus as per the documentation I filed with them. After discussions in June/July 2013, I indicated I would accept the 60% bonus to maintain good professional relations. However, I asked them to consider the current exchange rate and account for the new financial year starting April 2013. Not accounting for the new tax year and using the prevailing exchange rate causes me almost a 15% loss. To my surprise, when they sent me my Form-16 calculations in May 2013, I found that the 60% bonus was already accounted for in my income for the last financial year, and taxes were paid to the government. Now, my company is neither paying me the post-tax money nor correcting my Form-16. They stated they must deduct the TDS and deposit it when the payment is accrued. However, they mentioned they would pay me only if I sign the release letter. Here are my questions:
1. Can my company hold the payment of the overdue bonus (I fulfilled the requirements in June 2012 to earn the payment) to have the release letter signed off?
2. If the release letter is a condition to release the final payment, is their decision to consider the accrual in the last financial year valid?
3. I held a Senior Management position in the company, but I had no supervisory responsibilities (no one reported to me from an HR point of view). Which laws in India will be applicable if I were to pursue legal action?
4. Whom in government authority should I approach first?
Thank you,
KP
From India, Delhi
Acknowledge(0)Amend(0)
Hi, thanks for the reply. No, I do not have any of the authority you mentioned. I was responsible for a project that is run globally. Around 100+ people were assigned functionally to me. So, in that way, I am an individual contributor even though my title was Sr. Director.
Yes, I am trying to resolve it amicably. I tried to let go of 40% of my bonus for that reason. But, I have to draw the line somewhere. So, I indicated I will accept at the prevailing exchange rate and in the current tax year (to save on tax slabs). I am hoping that they will step forward to close. But, in case they do not, I have a question: What laws are applicable to me in India? Why is it only the Civil Court? Given that the special contract has US jurisdiction, can I go for arbitration in India? (They are paying me in India after the conversion to the local currency).
Thanks again,
Ashok
From India, Bangalore
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Yes, I am trying to resolve it amicably. I tried to let go of 40% of my bonus for that reason. But, I have to draw the line somewhere. So, I indicated I will accept at the prevailing exchange rate and in the current tax year (to save on tax slabs). I am hoping that they will step forward to close. But, in case they do not, I have a question: What laws are applicable to me in India? Why is it only the Civil Court? Given that the special contract has US jurisdiction, can I go for arbitration in India? (They are paying me in India after the conversion to the local currency).
Thanks again,
Ashok
From India, Bangalore
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After having tried all means of getting the matter resolved and if you have not been able to find a resolution, I suggest you file a complaint before the area ALC for unfair employee practices. Regardless of your valid jurisdictional legal remedy, I recommend seeking assistance from a lawyer in this regard.
In your particular case, I suggest refraining from issuing a legal notice to the company. If the company receives a legal notice from your lawyer, they may be prepared with legal assistance beforehand. However, if they are asked to appear before the ALC directly, they may not have enough time to consolidate their position. This could potentially put more pressure on them, especially when they need to be represented solely by their officers. You, on the other hand, can represent yourself with the assistance of a lawyer before the ALC. This approach has proven effective in most cases with my clients.
If you require further assistance, please do not hesitate to communicate.
Regards,
From India, Chennai
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In your particular case, I suggest refraining from issuing a legal notice to the company. If the company receives a legal notice from your lawyer, they may be prepared with legal assistance beforehand. However, if they are asked to appear before the ALC directly, they may not have enough time to consolidate their position. This could potentially put more pressure on them, especially when they need to be represented solely by their officers. You, on the other hand, can represent yourself with the assistance of a lawyer before the ALC. This approach has proven effective in most cases with my clients.
If you require further assistance, please do not hesitate to communicate.
Regards,
From India, Chennai
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