HCLTech recently updated its Engagement Performance Bonus policy for FY24, changing it from a fixed pay to a performance-rating based payment.
IT employee union the Nascent Information Technology Employees Senate (NITES) has filed a complaint with the Ministry of Labour and Employment against HCLTech, after the IT services firm updated its Engagement Performance Bonus (EPB) pay structure for FY24.
HCLTech had recently reverted to its pre-Covid format of paying the EPB as per quarterly performance rating basis, which was being paid out 100 percent during the pandemic and until now. Moreover, employees on the bench will not get this component at all. This did not go well with the employees who are now staring at reduced monthly salaries.
While this was implemented from April 1, the employees were intimated of this change only a day prior through email, sources told Moneycontrol.
This comes at a time when the Indian IT sector is cutting down on hiring and looking to optimise costs amid macro-economic uncertainties, global banking crisis, inflation and clients cutting down on tech spending.
In a statement, an HCLTech spokesperson said, “At HCLTech, we have always offered an Engagement “Performance” Bonus (EPB) as part of our total compensation package up to the E3 band. The EPB is typically 3-4 percent of total compensation, and the average payout is approximately 80 percent. Our employment contract identifies EPB as performance-linked variable pay, and this is governed by company policy.”
“To support employees during the pandemic, the company made a policy exception and paid 100% EPB irrespective of performance. Post-pandemic, the company is reverting to the original policy. This has been communicated to our employees,” the spokesperson added.
Harpreet Singh Saluja, president, NITES said, “Under the previous policy, HCL Technologies assured employees that the EPB would be paid at a fixed rate on a monthly basis, even if employees were on the bench. This guarantee provided a sense of stability and security to the employees. However, the company has abruptly altered the policy, implementing a quarterly performance review process to determine EPB payouts.”
He added, “The new policy bases the EPB payout on employee ratings, which range from 80-90percent for top performers and a mere 30-40 percent for the lowest performers.”
On June 2, NITES filed a complaint with the Labour Ministry on the same.
The concerns raised
“Although bracketed under the variable pay component in the CTC, the HR had confirmed during my joining that EPB would be a fixed pay and we will receive 100 percent of the money allocated there. I joined last year. Now suddenly they have made it performance linked,” one of the affected employees seeking anonymity told Moneycontrol.
The employee explained, “Now with this change, if I score 70 percent during quarterly evaluation for rating then I’ll be paid only that much and lose out on the remaining 30 percent pay. And the company follows a bell curve format for rating employees, which means only a fixed small number of people will be top performers in the 80-90 percent bracket. They too cannot get 100 percent pay.”
Changes made
According to the email sent to employees and seen by Moneycontrol, the policy is applicable to all employees in the bands of E0-E3 which include full-time delivery employees of digital business, digital foundation services, ERS and DPO divisions.
For Latin America Countries- Brazil. Mexico, Argentina, Colombia, Peru, Chile, Venezuela Guatemala, El Salvador, Costa Rica and Uruguay – EPB bonus in individual compensation structure will continue to administer based on the old EPB policy
“Europe Countries-Netherlands, Germany (continue to follow the Old EPB policy prior to Jul 2019),” the email said.
