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Vibhay (HR Manager)     09 July 2012

Proration of salary based on targets acheived

Wanted to know if it's leagal to hold/prorate an employees salary based on the targets acheived by him/her. We have issued the appointment letters to them and have a written concent from them on the same with the clause stating non acheivement of targets shall account for proration of salary.



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 4 Replies

Kumar Doab (FIN)     09 July 2012

Wages and salary can not be blocked. Non achievement of target can be related target related awards/rewards/incentives. In case of  Non/poor/low performance company is duty bound to assess the reasons and provide training to better the performance. Company can proceed to terminate the contract in a lawful manner by issuing communications, notice, show cause notice etc.

The under taking obtained from employees can be contested. The contract is probably not based commission.You may obtain opinion from your legal cell, labor consultant, lawyer.

Valuable advice of learned experts/members is sought.

KAMESWARARAO S (General Manager - HR)     09 July 2012

The structuring of the salary you would have done differently instead of making the performance bonus part of salary you would have divided in to two sections. Fixed and variable then the variable can be based on performance. you should make necessary arrangements in the pay structures.

Regards - kamesh

Ajit Singh Cheema (practising Advocate)     09 July 2012

In this world of cut throat competition ,a new system payment of wages is evolved and that is  they fix the salary at bare minimum level ,and the rest they make it a performance bonus .The payment is related to fixing of targets and achievement , and it is got agreed in the form of an agreement.

Kumar Doab (FIN)     09 July 2012

There are other clauses that if the employee is not in employment at the time of disbursement, or is serving notice period at the time of disbursement, he shall be in eligible for payout, even if the employee has performed/achieved set parameters and has been in service during the defined  period of contests etc. While the company derives current and future benefit from the efforts of employee. The HR point of view is that company formulates such plans to derive enhanced performance in future also and if the employee separates after getting the payment there is inadequate return on the investment i.e. performance linked bonus/incentive.

The question arises who is at loss and who gains: obviously employee and employer respectively. It is high time that employee start becoming firm on getting adequate and excellent fixed pay and reject performance linked pay. It is also high time that employees unite at all levels and thwart selfish and self centered demands of employer.

Then there are other issues of FNF settlement, PF, gratuity, relieving letter, reference check, bonds, service agreements etc…There must be a scrutiny of such cases for each company and each employee must start logging the grievances and complaints and highlight such employers.

Look at the cost and hardships involved in getting educated, experienced and be ready to earn ands support the family.

Performers have been and shall remain in demand.

Some of the senior managers have frankly admitted that they have organized themselves in such a manner that attrition dose not affect them and employees who have worked with them flock back to them.

They follow some good mantras:  

 

 

 

 

 

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