Dear Seniors,
One of our employees will be going on maternity leave soon. Her salary has two components: Fixed CTC and Variable CTC. While Fixed CTC includes basic HRA, TA, etc., VCTC is like target-based incentives paid monthly. The payment varies based on slabs L1, L2, L3 achieved, depending on the revenue target met in that particular month.
Question on Maternity Leave Payment
Now, my question is: will she be paid the fixed CTC during the leave period, or will the variable also be paid? If the variable is paid, will it be based on the highest or lowest slab?
It would be great if you could elaborate on your answers with the thought behind it and any relevant sections of the Act.
Thank you.
From India, Delhi
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1One of our employees will be going on maternity leave soon. Her salary has two components: Fixed CTC and Variable CTC. While Fixed CTC includes basic HRA, TA, etc., VCTC is like target-based incentives paid monthly. The payment varies based on slabs L1, L2, L3 achieved, depending on the revenue target met in that particular month.
Question on Maternity Leave Payment
Now, my question is: will she be paid the fixed CTC during the leave period, or will the variable also be paid? If the variable is paid, will it be based on the highest or lowest slab?
It would be great if you could elaborate on your answers with the thought behind it and any relevant sections of the Act.
Thank you.
From India, Delhi
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If a person goes on authorized leave with wages, the leave salary would comprise only of the basic, D.A, and other fixed allowances, and not any money relatable to performance.
Maternity Benefits
Maternity benefits include the average wages the woman would have earned but for the leave of absence due to maternity as described under Section 5(1), as well as other benefits conferred under the Maternity Benefit Act, 1961. Therefore, the variables relatable to actual performance need not be taken into account for the payment of wages for the leave of absence due to maternity.
From India, Salem
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Maternity Benefits
Maternity benefits include the average wages the woman would have earned but for the leave of absence due to maternity as described under Section 5(1), as well as other benefits conferred under the Maternity Benefit Act, 1961. Therefore, the variables relatable to actual performance need not be taken into account for the payment of wages for the leave of absence due to maternity.
From India, Salem
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Thank you, sir Umakanthan.M. Even I felt so, but the confusion is in the Maternity Act where wages are defined. It is written that it includes 'incentive bonus' but not any other bonus. This 'incentive bonus' is confusing me. What does this term mean? Can monthly target-based performance pay fall into this category or be treated as any other bonus, as she won't be meeting any performance-based targets during this duration?
I would really appreciate insights on this.
Extract of Act:
(n) "wages" means all remuneration paid or payable in cash to a woman, if the terms of the contract of employment, express or implied, were fulfilled and includes:
(1) such cash allowances (including dearness allowance and house rent allowance) as a woman is for the time being entitled to;
(2) incentive bonus; and
(3) the money value of the concessional supply of food grains and other articles, but does not include:
(i) any bonus other than the incentive bonus.
From India, Delhi
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I would really appreciate insights on this.
Extract of Act:
(n) "wages" means all remuneration paid or payable in cash to a woman, if the terms of the contract of employment, express or implied, were fulfilled and includes:
(1) such cash allowances (including dearness allowance and house rent allowance) as a woman is for the time being entitled to;
(2) incentive bonus; and
(3) the money value of the concessional supply of food grains and other articles, but does not include:
(i) any bonus other than the incentive bonus.
From India, Delhi
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In my opinion, the incentive bonus mentioned in the act refers to the incentive amount linked to the performance of the company. For example, production incentives for workers. Even though she has no role in achieving the production incentive target, she will still be eligible for incentive pay.
Srikanth V
From India
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Srikanth V
From India
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Understanding Incentive Bonuses in Maternity Benefits
In my view, an incentive bonus is nothing but a production bonus. A production bonus can be a fixed or variable amount depending on production. The incentive bonus mentioned in the Maternity Benefits Act refers to a fixed incentive that is available to all employees who were personally or physically present for production. Typically, an employee on authorized leave will be treated as present, and thus they would also be entitled to a production incentive unless otherwise agreed upon as part of a settlement or contract of employment.
From India, Kannur
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In my view, an incentive bonus is nothing but a production bonus. A production bonus can be a fixed or variable amount depending on production. The incentive bonus mentioned in the Maternity Benefits Act refers to a fixed incentive that is available to all employees who were personally or physically present for production. Typically, an employee on authorized leave will be treated as present, and thus they would also be entitled to a production incentive unless otherwise agreed upon as part of a settlement or contract of employment.
From India, Kannur
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If your policy provides for any minimum incentive or the criteria for any of the slabs is met by her even when she is on maternity leave, then VCTC will have to be paid to that extent, otherwise not.
- Shobhit Mittal
Industrial & Labour Law Advisor
Email: skmittal.labourlaw@gmail.com
Phone: 8077779793, 9319956443
From India, Faridabad
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- Shobhit Mittal
Industrial & Labour Law Advisor
Email: skmittal.labourlaw@gmail.com
Phone: 8077779793, 9319956443
From India, Faridabad
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Performance Management System and Leave Considerations
The primary objective of the Performance Management System (PMS) is to reward employees based on specific, quantifiable, and assigned targets. The monetary value linked to each assigned target is determined when Key Result Areas (KRAs) are finalized at the beginning of the financial year. If an employee is on maternity leave or extended sick leave, it may not be possible to achieve the assigned targets. Therefore, the employee should not be considered eligible for PMS/VPP incentives during the corresponding KRAs. Initially, when an employee proceeds on maternity leave, the consideration should be on other salary components excluding PMS incentives.
Regards,
RDS Yadav
Director, Future Institute of Engineering and Management Technology, Bareilly and Director, NAVTARANG HR SERVICES
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From India, New Delhi
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The primary objective of the Performance Management System (PMS) is to reward employees based on specific, quantifiable, and assigned targets. The monetary value linked to each assigned target is determined when Key Result Areas (KRAs) are finalized at the beginning of the financial year. If an employee is on maternity leave or extended sick leave, it may not be possible to achieve the assigned targets. Therefore, the employee should not be considered eligible for PMS/VPP incentives during the corresponding KRAs. Initially, when an employee proceeds on maternity leave, the consideration should be on other salary components excluding PMS incentives.
Regards,
RDS Yadav
Director, Future Institute of Engineering and Management Technology, Bareilly and Director, NAVTARANG HR SERVICES
[Phone Number Removed For Privacy-Reasons]
WhatsApp: [Phone Number Removed For Privacy-Reasons]
Email: [Email Removed For Privacy Reasons]
From India, New Delhi
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While agreeing with our senior, Mr. Umakanthan, a position also supported by many, including another senior, Mr. Madhu T.K., I would like to know from you what you do when any employee proceeds on any other kind of leave. Do you pay them target-based incentives?
If the answer is yes, then you must also pay this incentive to women on maternity leave. I have observed some profit-linked incentives being paid to employees even when they are on paid leave.
Secondly, you should ensure that there is no discrimination.
Thank you.
From India, Mumbai
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If the answer is yes, then you must also pay this incentive to women on maternity leave. I have observed some profit-linked incentives being paid to employees even when they are on paid leave.
Secondly, you should ensure that there is no discrimination.
Thank you.
From India, Mumbai
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