Linking variable pay to attendance: What's the TCS row over bonus pay?

Tata Consultancy Services has recently introduced a policy that links a portion of the variable pay (bonus) to an employee's office attendance. Employees with attendance between 60-75% of the time receive 50% of their variable pay. Those attending 75-85% get 75% of the variable pay, and only employees with attendance exceeding 85% qualify for the full variable pay.

The  latest policy update comes months after the IT services giant mandated employees to work from office five days a week.

This policy change has sparked concerns among some TCS employees who might prefer or require a more flexible work arrangement (like work-from-home options). Some might argue that productivity is not solely dependent on physical office presence.

Here's a breakdown:

Return-to-work mandate: TCS has mandated a return to the office for employees.

Office attendance linked to variable pay: A portion of the variable pay (bonus) is now tied to how often employees come to the office. Employees with lower attendance (60-75%) receive a reduced variable pay. Only those exceeding 85% attendance qualify for the full amount.

Example: Let's say the company offers a variable pay bonus of Rs 1,00,000 per year.

They set an 80% office attendance expectation for the full bonus amount.

Employee A: Maintains 90% office attendance throughout the year. They would likely receive the full bonus (Rs 1,00,000).

Employee B: Manages 70% office attendance. They might receive a reduced bonus amount, perhaps 50% (Rs 50,000) for meeting some attendance requirement but not reaching the full expectation.

Employee C: Only has 50% office attendance. They might receive a very small bonus or none at all depending on the specific policy (e.g., Rs. 0 or a minimum threshold for qualification).

Office attendance linked to promotions: Apparently, working from home compliance is monitored, and frequent absences can negatively impact promotions. Promotions are likely based on a system where grades are assigned, and these grades might consider office attendance alongside other performance metrics.

TCS was following a hybrid work model post pandemic, which it ended from October 1, 2023, asking employees to work from office five days a week.

In February, TCS had sent out an email to employees informing them that their variable pay will be linked to their attendance at their office site.

Variable pay
A variable pay is given to employees on the basis of their performance over and above their base salary on a quarterly and/or an annual basis. The amount of variable pay varies from period to period and is decided by the company.

The concept of variable pay itself is a common practice in many companies. It's the linking of this variable pay to office attendance that has sparked discussion and might have mixed reactions from employees.

Point to note: This development will make TCS the only Indian IT company to link variable payouts to its return-to-office mandate.