If you are stuck in such a situation, here is what to do.

Mr. Anand Sharma had been a dedicated employee at “Innovate Solutions Pvt. Ltd.” in the city of Aadityapur for nearly four years. He decided to move on and formally resigned in June 2025, with his last day of employment being July 31, 2025. The issue arose concerning his variable bonus. His appraisal revision letter, dated August 2024, explicitly stated, “With effect from 1st August 2024, your variable bonus will be ₹1,20,000 for the year 2024–2025 and your annual compensation will be revised to ₹18,00,000.” Mr. Sharma had successfully completed the entire bonus cycle, from August 1, 2024, to July 31, 2025.

However, after his departure, the company’s HR department refused to release the bonus payment. They provided conflicting and inconsistent reasons for this refusal. Initially, they claimed the variable pay was “discretionary” and was “cancelled due to resignation,” referring to a clause in the resignation acceptance letter. Later, they changed their stance, stating that the payout was performance-based and depended on ratings, a system that was never communicated to Mr. Sharma at any point during the appraisal year. The appraisal letter itself made no mention of any performance linkage; it simply promised a “variable bonus of ₹1,20,000.”

Crucially, Mr. Sharma never signed any full and final settlement agreement or any document explicitly waiving his right to this bonus. The clause about the “cancellation” of the bonus was introduced only in the resignation acceptance letter, well after the bonus had been formally granted in the appraisal letter.

Advice in such cases

• Review Your Employment Contract: Carefully examine your appointment letter and the company’s HR policies for any clauses related to bonuses, variable pay, and the conditions for payment upon resignation.
• Gather All Documentation: Collect all relevant documents, including the appointment letter, the appraisal letter confirming the bonus, salary slips, your resignation email, the company’s acceptance letter, and any other written communication with HR or your manager about the bonus.
• Formal Written Communication: Send a formal, written demand for the unpaid bonus to the HR department and senior management. Clearly state the facts, refer to the appraisal letter, and set a deadline for the payment.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

Such disputes are primarily governed by contract and labour laws. The key legal provisions include:

• The Indian Contract Act, 1872: The appraisal letter constitutes a formal offer, and your continued service acts as acceptance, forming a binding contract. The employer’s refusal to pay can be considered a breach of this contract.
• The Code on Wages, 2019: This code consolidates laws related to wages and bonuses. The definition of “wages” is broad and can include bonuses that are part of the remuneration terms. Non-payment can be challenged under this code.
• The Industrial Disputes Act, 1947: If the employee qualifies as a ‘workman’ under this Act, they can raise an industrial dispute for non-payment of dues.
• The Specific Relief Act, 1963: This Act can be invoked to seek performance of the contract, i.e., to compel the employer to pay the promised amount.
• Bharatiya Nyaya Sanhita (BNS), 2023: If it can be proven that the employer had a dishonest intention from the beginning and induced you to work by making a false promise, a criminal complaint for cheating under Section 318 of the BNS could potentially be filed, although this is a higher threshold to prove.

If you are the complainant

• Send a Legal Notice: The first formal step is to have a lawyer draft and send a strong legal notice to the employer. This notice will detail your claim, cite the breach of contract, and warn of legal action if the dues are not cleared within a specified period. Often, this is enough to compel the employer to settle.
• File a Complaint with the Labour Commissioner: You can file a complaint before the concerned Labour Commissioner for recovery of unpaid wages/bonus. This is a relatively faster and less expensive route.
• Initiate a Civil Suit: A suit for recovery of money can be filed in a civil court. This is a more formal and lengthy process but is effective for enforcing contractual rights.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

• Do Not Sign Any Waivers: Be extremely cautious about signing any “Full and Final Settlement” (FnF) documents. Read the fine print carefully. Do not sign if it includes a clause waiving your right to the bonus or any other outstanding dues unless you have received them.
• Maintain a Communication Log: Keep a detailed record of all interactions with the company regarding this issue. Note down the date, time, the name of the person you spoke with, and a summary of the conversation.
• Preserve All Evidence: Ensure all emails, letters, and messages are saved securely. This written communication is powerful evidence of the company’s changing stance and admissions.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

This is predominantly a civil dispute arising from a breach of an employment contract. The police generally do not intervene in such matters. If you approach a police station, they will likely advise you to seek remedy through the Labour Court or a Civil Court. Police involvement would only be warranted if there is clear evidence of a criminal offense like cheating (Section 318 BNS) or criminal breach of trust, which is difficult to establish in bonus disputes. Their role is limited as the core issue is the enforcement of a civil right, not the investigation of a crime.

FAQs people normally have

Can an employer arbitrarily call a promised bonus “discretionary”?

While some bonuses are discretionary, if a specific amount is promised in a formal document like an appraisal letter without any attached conditions, it becomes a contractual obligation. The employer cannot unilaterally declare it discretionary after the service period is complete.

Does resigning from the job automatically disqualify me from receiving a bonus?

Not if you have completed the period for which the bonus is applicable. If the bonus was for the performance year you fully worked, you have a strong claim to it unless your contract explicitly states that you must be on the company’s payroll on the date of payout to be eligible.

Is the clause in the resignation acceptance letter legally binding?

A clause introduced in a resignation acceptance letter that takes away a right previously granted in an appraisal letter can be legally challenged. It can be argued that this is a unilateral and arbitrary change to the terms of employment, especially since it was introduced after the bonus was earned.

What evidence is required?

• The Employment Agreement or Appointment Letter.
• The Appraisal Revision Letter that explicitly mentions the bonus amount.
• All email correspondence with HR and your manager regarding the bonus, both before and after your resignation.
• Your resignation letter and the company’s acceptance letter.
• Your final salary slips.
• The company’s bonus policy or HR manual, if you can access it.

How long will the investigation take?

The timeline varies depending on the legal path you choose. A legal notice may resolve the issue within 15-30 days if the employer decides to settle. A case before the Labour authorities can take anywhere from 6 months to a couple of years. A civil suit for recovery is the longest route and can take several years to reach a final verdict. The strength of your evidence plays a crucial role in expediting the process.

Advocate Sudhir Rao, Supreme Court of India