HCL Tech revokes one contentious bonus recovery policy, ex-employees mull legal action

India’s fourth-largest IT services company HCL Technologies has removed the controversial clause of recovery of Employees Performance Bonus or EPB from its HR policy, the updated policy document on the company's portal shows, after some of its former employees threatened to go to court.

HCL Tech will announce its December quarter results on Friday.

“HCL Technologies is an employee-friendly organization with global best practices.  Amongst its several unique initiatives,  HCL Technologies differentiated itself in the India market with a unique compensation structure for its junior employees’ (typically under 10 years of experience) with an aim to maximize their take home pay package. For more than a decade, all junior management employees were paid the variable pay in advance, as a supplement to their fixed salary,"HCL Tech told BT in response to a query

The IT services major added that the employment contract/policy very clearly stated the terms of payment. During the pandemic, beginning last year, the organization decided to waive off all the performance conditions attached to this component and pay 100% in advance to reward the employees. "This advance variable payout (much like standard sign-on bonus terms and conditions) would be deducted if any employee left ahead of the completion of performance review cycle, in the final settlement. Going forward, we will continue with the advance variable payout for our employees and have also waived off the recoveries w.e.f December 22, 2021. Our endeavor has always been to engage, enable and empower as we continue to work in a fair and equitable manner towards all,” it added.

However, the firm has not revoked another contentious clause that pertains to the recovery of the advance monthly performance bonus or APMB, Harpreet Saluja, president of Nascent IT Employees Senate, a body representing employees of IT/ITES sector, told Business Today.

While EPB is applicable across all bands of employees, AMPB is a project-specific bonus that is not paid to every employee, Saluja explained.

Also, former HCL Tech employees who had already repaid the bonus, are mulling approaching the labour court against the tech major and will be supported by the employee union.
 
According to emails seen by BT that were exchanged between the HR department of HCL Tech and outgoing employees who have been asked to repay the bonus components of salaries before quitting the firm, such a policy was implemented from April 1, 2021 onwards; a time when India’s IT services sector was grappling with concerns over massive employee resignations, which impacted the supply side and delayed delivery timelines.

According to this policy, the company had stated that it will recover the employee performance bonus from those who quit the firm between September 21 and March 22. The HR department had also sent a broadcast email to its employees on November 18, 2021, detailing the same.
 
However, it seems the EPB bonus recovery clause has now been removed from the policy document after an outcry. The company, like the other industry peers, has seen its attrition rate peaking to 15.7 per cent in Q2FY22, up from 11.8 per cent in Q1, FY22.

Moreover, a point to be noted here is that despite the resignations, the company has continued to add a record number of employees, with the addition of 11,135 people during Q2 -- the highest in 24 quarters.

Saluja argued that, as per law, payment of bonus is the statutory liability on the employer and receipt of the bonus amount is the legal right of the employee, and all this has been enshrined in the Payment of Bonus Act, 1965.

“The employer cannot unethically amend the bonus scheme, [thereby] depriving bonus to its employees. The employees who resigned from the service also are entitled to a bonus for their tenure. The said policy implemented by the company to recover bonus already paid to its employees forcefully is iniquitous, arbitrary and harsh. It is also to be noted that such a recovery policy without any statutory approval is resulting in a hardship and it far outweighs the equitable balance of the employer’s right to recover,” Saluja pointed out.