Company giving bonus with a imposed condition. Can they do that?

In Labour & Service Law

My company is giving me an extra bonus of 1 lakh for good performance for financial year 2013. However they are mentioning that if I leave organization within March 2015, I will have to pat back that money in final settlement.

They are taking back a signed-off letter for this statement. Can this be challenged if I leave at any time in the coming year.

Answers (1)

413 votes

In private contracts, the Court generally refrain from interfering with the same unless the same is proved to be arbitrary or having unreasonable condition.

When it comes to employment bonds, the Companies incur a loss and therefore are entitled to claim compensation and this compensation has to be reasonable. Usually, the court determines the reasonable compensation amount by computing the actual loss incurred by the employer having regard to all circumstances of the case.

Even if the bond stipulates payment of any penalty amount in the event of breach, it does not mean that the employer shall be entitled to receive the stipulated amount in full as compensation on the occurrence of such default; rather the employer shall be entitled only for reasonable compensation as determined by the court.

Therefore, if you quit before March 2015, you can challenge this provision in the competent court and the court shall determine as to whether the payment of the entire bonus amount of Rs. 1 lakh can be claimed by the Company as the compensation for the loss incurred by them due to your resignation. 

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