UK court has ordered Wipro to pay full bonus to the former employee. The company’s $150,000 limit was rejected, forcing it to pay an additional $547,000 (₹4.58 crore). According to the court, the rules cannot be changed after the bonus is approved.
IT giant Wipro has received a big blow from a UK court. The court has ordered the company to pay the full amount of performance bonus to one of its former sales executives. Wipro had tried to impose an upper limit (cap) of $ 150,000 (about ₹ 1.25 crore) on the bonus amount, which was rejected by the court. After this decision, Wipro will now have to pay an additional $ 547,000 (ie about 400,000 pounds, which is approximately ₹ 4.58 crore in Indian Rupees).
This whole matter is related to former Wipro employee P. Chandrashekarappa is associated. He played an important role in finalizing a big deal for the company with the big UK retailer ‘John Lewis Partnership’ (JLP). According to the rules, he was to get 1% of the first year’s earnings from this deal as a bonus. The Appeal Court held that Chandrashekarappa was entitled to the entire amount. Earlier, the lower court (Employment Tribunal) had given a verdict in favor of Wipro, which has now been overturned.
What is the whole controversy?
A 1% share of first-year earnings from the John Lewis deal works out to £516,082 (about ₹5.85 crore or about $697,000). But Wipro had imposed a cap on the bonus and paid Chandrashekarappa only $150,000 (about ₹1.25 crore). This entire legal battle was fought only for the remaining $547,000 (approximately ₹4.58 crore).
Actually, in March 2020, Wipro had started a scheme named “Kitty Bonus” to reward employees who bring new business and customers. Under this, 1% of the first year’s earnings from new customers were to be given to the sales staff, on which the approval of the sector head was required. When this scheme was told to the employees, there was no mention of any upper limit (cap) in it.
Chandrashekarappa, who works in Wipro’s Cloud and Infrastructure Services division, completed the deal in June 2020. On the recommendation of his manager, the then Senior Vice President and Global Head Kiran Desai even approved giving him the full 1% bonus.
HR team changed the rules
After the deal was finalized, Wipro’s HR and compensation teams added new rules to it. He said larger amounts would require top-level approval and the bonus would be capped at $150,000. The court investigation also revealed that some people within the company had expressed concern through emails that the rules were being changed after the scheme was announced.
The trial court had accepted Wipro’s contention that “until the bonus is officially received by the employee, it is at the company’s discretion to impose a cap.” But the appeal court rejected this argument. The court said, “Once Kiran Desai approved the bonus under the basic rules, the employee became legally entitled to the entire amount.”
Judge Bruce Carr Casey clearly said, “Once the decision is taken and approved, Wipro cannot change the rules (move the goalposts).” The court has directed to repay the outstanding amount immediately. This decision is a big warning to those companies who try to change the rules after giving bonuses. Till the time of writing this report, Wipro has not responded to the questions sent through email.