HCL Technologies makes partial change to its controversial bonus clawback policy

Recovery of one out of two bonuses will stop, but what about those already affected?


Indian IT services giant HCL Technologies has quietly removed some of the controversial clauses from its HR policy revealed by The Reg last week, which required resigning employees to pay back bonuses.

According to the policy, employees who resign are responsible for paying back all the bonus they've received from their last appraisal cycle until their last working day (LWD).

A company email detailed that the LWD would be taken as 31 March 2022, so if a staff member leaves on 3rd March 2022, the amount paid from 1st April 2021 through to 28th February 2022 would be recovered.

The bonus recovery policy was communicated to the workforce in November of 2021 for bonuses that went back as far as April 2021. HCL began informing employees serving notice and former employees of their debt on 2 January this year.

The policy affected two different bonuses: an Employee Performance Bonus (EPB) and an advance monthly performance bonus (APMB) that is a project-specific bonus and which is not paid to every employee.

The policy drew outrage as IT labor organisations condemned the action as immoral and illegal.

Pune-based IT labor rights nonprofit Nascent Information Technology Employees Senate (NITES) president Harpreet Singh Saluja told The Register the policy was an attempt to prevent company attrition as most employees would face an undue financial burden when presented with an unexpected debt.

NITES said it had begun receiving 20 to 30 complaints per day from employees serving their notice. The complaints detailed financial hardships caused by requirements to return sums upward of $2,000 that had already been spent to receive release documents and final pay.

The labor rights org filed an official government complaint against HCL Technologies on January 5 alleging that the tech giant was in violation of India's 1965 Payment of Bonus Act. The Labor Ministry has acknowledged its receipt.

Since then, many employees serving their notice or who had already left the company took to Twitter and other social media to vent their frustrations.

"Well, we have paid it back. It was a trap that I myself & every HCLite had fallen into," said another Twitter user.

Amid the backlash, the clause mysteriously disappeared from an internal HCL EPB webpage without any internal announcement.

An HCL spokesperson told The Register:

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. 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 per cent 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 [with effect from] 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.

HCL's statement seems to say that the policy is justified because the company gave full bonuses ahead of time, regardless of performance from 2021 onward, and included employees with less than 10 years experience in the bonus scheme.

The company did not say whether it would be refunding bonuses to those who'd already been affected by the bonus reversal, whether the waiving off of recoveries was temporary or permanent, or whether it would also halt the policy for the other affected bonus – the AMPB.

Furthermore, HCL did not detail if there would be any change for those affected by the policy before December 22, 2021.

According to Saluja, NITES is still receiving regular complaints, mostly regarding the AMPB. The NITES prez told The Register employees were still seeing deductions stemming from the EPB bonus reversal at the onset of this week.

Saluja added:

[This is the] first step towards the success in resolving bonus issue of HCL Technologies employees. NITES' hard work & efforts have forced HCL Technologies to revoke EPB recovery policy for all employees across India. We will continue to strive hard and fight till the other advance monthly performance bonus (AMPB) bonus recovery policy is not revoked.

We are in process of filing a court case against HCL Technologies against illegal bonus recovery policy and for refund of the bonus amount deducted to all employees. NITES thanks all the IT Sector Employees for supporting this campaign and request for continuous support in future.

Yesterday, three of India's top IT service giants reported their Q3FY22 results, with all three hosting analysts' calls. Tata Consultancy Services, Infosys and Wipro all detailed high attrition rates over the past three years that forced them to raise hiring targets amid a boom in incoming deals. Those attrition rates ranged from 25.5 per cent for Infosys to 15.3 per cent for TCS.

HCL Technologies is scheduled to report its Q3 in a call tonight at 1930 ICT (1230 UTC). The Economic Times reported anticipation for attrition trends and the prediction of up to 20 per cent year on year drop in profit for the company. The company reported an attrition rate of 15.7 per cent in Q2FY22.®

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