Employers persistently seek to implement varied measures in order to retain their talented manpower. These measures can be non-monetary benefits like appreciation certificate, change in title, etc. and monetary benefits like bonus, gift cards, raise in salary, etc. These benefits are aimed to let the employee know that their hard work is recognized and valued by the company.
Incentives are a part of a bonus promised to employees, fundamentally used to motivate them to achieve more productivity and increase their efficiency. Employers offer incentives to their employers to drive them to complete a target or project within the set limit. Incentives comprise of additional benefits like salary raise, bonus, signing bonus, employee stock option and share in company profits.
Performance linked incentives are commonly used by new companies to increase their sales or production. Employees are paid incentives for generating target revenue for the company or completing the set limit of production in the given time.
There is no uniform law on incentives paid by employers in the private sector. The employment laws in India
allow employers to define their own incentive schemes and set their own goals and requisites for employees to earn incentives. Every company, plant, shop, and establishment has the flexibility to adapt its own incentive scheme.
However, this does not in any manner affect or reduce the liability of an employer for paying incentives to the employee when it is earned. There have been many cases when the employer has later refused to pay the incentive of an employee after the set goals or targets are achieved. In a situation when the employer refuses to pay incentives, an employee can take the following measures:
- Check the Employment Agreement: The employee is entitled to incentives stated in the appointment letter or the employment agreement drafted and issued by the employer and signed by both the employer and employee. The amount stated in the employment agreement as an incentive becomes a part of wages promised by the employer during the course of employment. If the incentive was increased at a later stage of employment, then the email or letter notifying the increase can also be used as evidence of incentive promised.
- Contact the HR Department: The employee can reach out to the HR department of the company about the non-payment of incentives. If the non-payment is resulted out of some miscommunication with the accounts department or any other internal issue, the matter gets resolved by contacting the HR. The HR may also ask for an employment agreement, salary slip, etc. to check the past incentives paid to the employer.
- Send a Legal Notice: If the HR department fails to resolve the issue of non-payment of incentive or fails in taking any action, the employee can contact a labor and employment lawyer to send a legal notice to the employer asking them to pay the due amount.
- File a recovery suit in Labour Court: If the employer fails to respond to the legal notice, a recovery suit can be filed by the employee in Labour Court against the employer. The court may award the due amount along with some interest on the total amount of incentive, calculated from the date it became due.
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