Code on Wages, 2019Updated June 2026

FnF Demand Letter Bonus Not Paid —Bonus Recovery Letter Generator India 2026

If your FnF demand letter for bonus not paid is overdue, you are not asking for a favour — you are recovering a due. Annual bonus, performance bonus, sales incentive, or variable pay that was earned and approved before your exit forms part of your Full & Final Settlement, and a statutory bonus is independently protected under the Code on Wages, 2019. This page explains exactly when a bonus is legally payable, what to do if your employer is refusing to pay, and lets you generate a legally cited demand letter in under 3 minutes.

✓ Cites the current Code on Wages, 2019✓ Covers statutory, performance & incentive bonus✓ 15-day response deadline built in✓ Labour Commissioner escalation clause✓ Works alongside salary, gratuity & leave FnF claims
Last updated: June 2026Reviewed by: OfficeDraft Legal TeamLegislation: Code on Wages, 2019 · State S&E Acts

Key numbers

Minimum statutory bonus8.33% of wages
Maximum statutory bonus20% of wages
Statutory payment deadline8 months from year-end
Labour complaint cost₹0 (free)
Max compensation on claimUp to 10×
Generator price₹49 only
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Bonus missing from your FnF statement? An earned bonus does not disappear because the payout date falls after your exit. Scroll to Labour Remedies or generate your demand letter now.

Can an Employer Refuse to Pay a Bonus?

Sometimes — but only on narrow, specific grounds. Whether refusal is lawful depends entirely on what kind of bonus is in dispute. Find your scenario below.

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Statutory bonus, eligibility met

If your wages fall within the notified ceiling and you worked at least 30 days in the accounting year, the employer cannot lawfully refuse the minimum statutory bonus of 8.33% — this is owed even in a loss-making year. Refusal here has essentially no legal defence.

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Statutory bonus, disqualification claimed

An employer can withhold statutory bonus only on the specific grounds in Section 29 of the Code on Wages — dismissal for fraud, violent or riotous conduct, theft, misappropriation, sabotage of property, or conviction for sexual harassment. Poor performance or resignation are not valid grounds.

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Contractual or performance bonus, target met

If your appointment letter, offer letter, or incentive policy defines the bonus with clear, objective criteria and you met them, withholding payment is a breach of contract — even though this bonus sits outside the statutory bonus framework.

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Purely discretionary bonus, no defined criteria

If the bonus is explicitly discretionary ("at the sole discretion of management," with no defined formula or target), your legal position is weaker, but you can still demand a written explanation, especially if the bonus was paid consistently in prior years or already approved/communicated before your exit.

When Is a Bonus Legally Payable Under Indian Law?

Bonus law in India changed materially in late 2025. The Code on Wages, 2019 came into force nationwide on 21 November 2025, repealing the earlier Payment of Bonus Act, 1965, with Central Rules notified on 8 May 2026. The substantive bonus framework — the 8.33% minimum, the 20% maximum, the eight-month payment window — has carried over largely unchanged, but it is now governed by the Code rather than the old Act. If you see a demand letter or article online citing "Section 10" or "Section 11 of the Payment of Bonus Act," that citation is outdated.

Code on Wages, 2019 — Section 26

Basis: Very strong

Sets the eligibility criteria (minimum 30 days worked in the accounting year, wages within the government-notified ceiling) and the minimum (8.33%) and maximum (20%) bonus rates based on the employer's allocable surplus.

Code on Wages, 2019 — Section 39

Basis: Strong

Statutory bonus must be paid by crediting the employee's bank account within 8 months from the close of the accounting year, save for a limited extension the appropriate Government may grant to the employer for sufficient reason.

Contract of employment / Company policy

Basis: Contractual

Governs performance bonus, sales incentives, and variable pay. These are enforceable as contractual dues once the defined eligibility criteria are met, independent of the statutory bonus framework.

Code on Wages, 2019 — Section 60

Basis: Strong

Voids any agreement, settlement, or service contract clause under which an employee gives up a right to wages or bonus due under the Code — relevant if your employer asks you to "waive" a bonus claim as a condition of FnF.

Important: an earned bonus survives your exit

If a bonus had already accrued — meaning the qualifying period or target was completed, or the bonus was formally declared — before your last working day, your resignation or termination does not erase that entitlement. The employer's payroll cycle or internal approval timeline is not a legal basis to deny an already-earned bonus.

Types of Employee Bonuses in India

"Bonus" covers several distinct categories with different legal footing. Identify which one(s) apply to your situation before drafting your letter.

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Statutory Bonus

Code on Wages, 2019 — Sections 26–39

A mandatory annual bonus for eligible employees (wages within the government-notified ceiling, minimum 30 days worked in the accounting year), calculated between 8.33% (minimum) and 20% (maximum) of wages, depending on the employer's allocable surplus.

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Check your payslip and appointment letter for whether "statutory bonus" or an equivalent is listed as a separate component.

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Performance Bonus

Contract of employment / Appraisal policy

Tied to your individual performance rating, typically paid annually after the appraisal cycle. Payable if your appointment letter or HR policy defines clear eligibility criteria and you met your rating threshold.

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Save your appraisal email, rating communication, and any payout percentage table shared by HR.

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Sales / Target-Linked Incentive

Incentive policy / Contract terms

Paid for hitting sales, revenue, or delivery targets, usually on a monthly or quarterly cycle. These are often the most clearly quantifiable bonus disputes because targets and achievement are documented in CRM or reporting systems.

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Pull your target-vs-achievement reports directly from the sales or reporting tool, not just email summaries.

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Festival / Customary Bonus

Company custom / Code on Wages — Section 37

A bonus paid customarily around a festival (e.g. Diwali) that has become an established practice. The Code on Wages allows this to be adjusted against the statutory bonus, but a customary bonus that has been paid for years can itself become an enforceable expectation.

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Gather at least 2–3 years of payslips or emails showing the customary bonus was paid consistently.

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Joining / Retention Bonus (Pro-Rata)

Contract of employment

A signing or retention bonus tied to a service commitment. If you served the required period (or a pro-rata portion, depending on your contract's clawback clause), the corresponding amount remains payable on exit.

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Re-read the clawback clause carefully — some require full repayment if you leave early, others only a proportionate amount.

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Profit-Sharing / Ex-Gratia Bonus

Company policy / Board-approved scheme

A discretionary payment linked to company profitability, often communicated after annual results. If the scheme was formally announced or your share was specifically communicated to you before your exit, it becomes a demandable due rather than a pure gift.

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Keep the company-wide announcement email or memo, even if it wasn't addressed to you individually.

Bonus vs Incentive vs Variable Pay

These three terms are used loosely in offer letters and payslips, but they have meaningfully different legal footing. This comparison helps you frame your claim with the right citation.

AspectStatutory BonusIncentiveVariable Pay
Legal basisCode on Wages, 2019 (statutory)Contract / incentive policyContract / compensation structure
Mandatory?Yes, if eligibleOnly if contractually definedOnly if contractually defined
Calculation basis8.33%–20% of wagesTarget achievement %Company + individual performance
Payment frequencyAnnual (within 8 months of year-end)Monthly / quarterly / annualQuarterly / annual, typically
Can be forfeited for?Fraud, violence, theft, sexual harassment (§29)Missed targets onlyMissed targets / company performance

In practice, most disputes involve a mix — for example, a statutory bonus plus a separate sales incentive. List each component separately in your demand letter rather than bundling them into one figure.

When Should You Send a Bonus Demand Letter?

Send your letter as soon as one of these triggers applies — waiting rarely helps and can weaken your position if too much time passes.

  • →The statutory bonus has not been paid within 8 months of the close of the accounting year.
  • →Your performance or incentive bonus was approved or communicated in writing, but the payment date has passed with no payment.
  • →You resigned or were terminated, and your last FnF statement omits a bonus that you know was earned and approved before your exit.
  • →HR has given vague responses ("under process," "pending approval") for more than 30 days after the expected payout date.
  • →The employer disputes the amount but does not dispute that some bonus is owed — send the letter to lock in the undisputed portion while the dispute over the balance continues.

Documents You Should Collect

Gathering this evidence before you draft your letter makes the difference between a demand the employer can dismiss and one they have to take seriously.

DocumentWhy You Need It
Appointment letter / offer letterDefines whether your bonus is statutory, contractual, or discretionary, and any eligibility criteria or formula.
Appraisal rating communicationEstablishes that you met the performance threshold required for a performance bonus.
Target vs. achievement reportsQuantifies your entitlement for sales or incentive-linked bonuses with objective numbers.
Bonus declaration / announcement emailShows the bonus was approved or declared company-wide, converting a discretionary expectation into a specific due.
Last 3 payslipsConfirms your wage level for statutory bonus eligibility and calculation under the Code on Wages.
Resignation or termination letterEstablishes your last working day, which determines what had already accrued and was payable before exit.
Previous years' bonus payslipsUseful for customary or discretionary bonuses to show a consistent pattern of payment.
HR / manager correspondence on bonus statusDocuments any acknowledgment, delay explanation, or dispute raised by the employer.

Pro tip: download before access is revoked

Forward appraisal emails, target reports, and bonus announcement memos to your personal email before your last working day. Corporate access is often cut off immediately after exit, and these documents become much harder to retrieve afterward.

How to Draft a Bonus Recovery Letter

Follow these seven steps in order — each one builds the basis for the next, from identifying your bonus type through to sending the finished letter.

1

Identify which type of bonus is owed

Classify your claim as statutory, performance, incentive, customary, or discretionary using the comparison above. This determines which legal citation and argument carries the most weight.

2

Calculate the exact amount

For statutory bonus, apply 8.33%–20% to your eligible wages. For performance or incentive bonus, use your appraisal rating or achievement percentage against the documented formula. Avoid estimating — cite the source document for each figure.

3

Gather your supporting documents

Pull together everything from the documents checklist above before you start drafting, so the letter can reference exact dates and figures rather than approximations.

4

Cite the applicable legal or contractual basis

For statutory bonus, cite Sections 26, 29, and 39 of the Code on Wages, 2019. For contractual bonus, quote the specific clause from your appointment letter or policy (paraphrased accurately, not reproduced verbatim if it is a copyrighted internal document).

5

State the amount and the basis clearly

Show your calculation, not just a final number. A demand that shows its working is harder to dismiss and easier for a Labour authority to verify quickly.

6

Set a 15-day response deadline

Consistent with FnF demand letters generally, 15 days from the date of the letter is standard, fair, and defensible if you need to escalate later.

7

Send by a traceable channel

Send by registered post with acknowledgment due, and simultaneously by email to HR and your last reporting manager. Keep proof of both.

India · Code on Wages, 2019 · All States

Generate Your Bonus Demand Letter

Takes 3 minutes · State law auto-applied · ₹49 only

Legally valid in

All 36 States & UTs

⚖️

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Your details

These appear as the sender on the demand letter.

Sample Filled Example

A condensed illustration of how the facts and citations come together. Your generated letter will include your exact figures, dates, and the bonus type(s) that apply to you.

To: HR Department, [Company Name] From: [Your Name], Employee ID [XXXX] Subject: Demand for Payment of Unpaid Bonus — FY [2025–26] I worked at [Company Name] from [joining date] to [last working day] and completed more than 30 working days in the accounting year FY [2025–26], making me eligible for statutory bonus under Section 26 of the Code on Wages, 2019. As of today, the following amounts remain unpaid: 1. Statutory bonus (8.33% of eligible wages): ₹[amount] 2. Performance bonus (FY [2025–26] appraisal rating: [X]): ₹[amount] 3. Sales incentive (Q[X] target achievement: [X]%): ₹[amount] These amounts had accrued and were approved prior to my last working day and form part of my Full & Final Settlement. I request payment of the above within 15 days of this letter. If unresolved, I will file a claim before the authority under the Code on Wages, 2019, and/or a complaint with the Labour Commissioner, without further notice.

This is illustrative only. Use the generator above to produce your full, legally formatted letter with your own facts, exact figures, and applicable bonus type.

What If the Employer Refuses to Pay?

If your former employer refuses outright, gives vague excuses, or simply does not respond within your 15-day deadline, here is how to respond without weakening your position.

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Document the refusal in writing

If HR refuses verbally or over a call, follow up by email asking them to confirm the refusal and the stated reason in writing. A documented reason is far easier to challenge than an undocumented one.

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Separate disputed and undisputed amounts

If the employer disputes only part of your claim (e.g. the percentage applied), ask for immediate payment of the undisputed portion while the balance is resolved — there is no reason the whole claim should be held up by a partial dispute.

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Do not sign a waiver

Under Section 60 of the Code on Wages, 2019, any agreement under which an employee gives up a right to wages or bonus due under the Code is void. Do not sign an FnF acknowledgment that waives your bonus claim in exchange for a faster settlement of other dues.

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Preserve every communication

Save the refusal email, any verbal-refusal follow-up, and your original demand letter together — this becomes your evidence bundle for the Labour Commissioner or the Code on Wages claims authority.

Labour Complaint and Legal Remedies for Unpaid Bonus

If the employer ignores your demand letter, India's labour law system provides a clear escalation path under the Code on Wages, 2019. Most employees recover at Step 2 or 3, without ever needing to go to court.

1

Send the Bonus Demand Letter (15-day deadline)

First step

This is your documented first step. It states the amount owed, the calculation, the legal or contractual basis, and a clear deadline — exactly what a Labour authority expects to see before accepting your complaint.

2

File a Complaint with the Labour Commissioner

Free

Free of cost. Submit to the Regional Labour Commissioner in the district of your employer's registered office or your place of work, attaching your demand letter, payslips, and calculation basis.

3

Apply to the Authority Under the Code on Wages, 2019

Up to 10× compensation

File using Form II before the authority appointed under the Code. The authority can direct payment of the bonus due, along with compensation that may extend up to ten times the claim amount, and is expected to decide the claim within three months.

4

Labour Court — Section 33C(2)-Equivalent Recovery

For larger claims

For larger or contractually complex bonus disputes (e.g. profit-sharing schemes or retention bonus clawback disagreements), a money-recovery application before the Labour Court remains a faster route than a full civil suit.

5

Civil Court Suit (for high-value or purely contractual disputes)

High-value claims

If the bonus is purely contractual (e.g. a large profit-sharing or retention bonus dispute outside the Code's scope) and the amount is significant, a civil suit for breach of contract is available. Engage a lawyer for this step.

Legal provisions at a glance

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Code on Wages, 2019 — § 26

Minimum bonus of 8.33% payable to eligible employees regardless of profit

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Code on Wages, 2019 — § 29

Bonus can be denied only for fraud, violence, theft, sabotage, or sexual harassment conviction

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Code on Wages, 2019 — § 38

Employer may deduct proven misconduct losses, but must pay the balance

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Code on Wages, 2019 — § 39

Bonus must be paid within 8 months of the close of the accounting year

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Code on Wages, 2019 — § 60

Any agreement waiving your right to wages or bonus due under the Code is void

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Code on Wages, 2019 — Claims Authority

Can award the claim plus compensation up to 10× via Form II, generally within 3 months

Official government resources

↗Ministry of Labour & Employment — India↗Shram Suvidha Portal — Online Labour Complaint↗Code on Wages, 2019 — IndiaCode↗Code on Wages (Central) Rules, 2026 — Ministry Notifications↗Industrial Disputes Act, 1947 — IndiaCode↗eSHRAM — Unorganised Worker Registration

About This Guide

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Updated June 2026

This page reflects Indian wage and bonus law as currently in force — the Code on Wages, 2019 (effective 21 November 2025, Central Rules notified 8 May 2026) — and supersedes references to the repealed Payment of Bonus Act, 1965.

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All States & UTs

The guide covers employment law applicable to employees in all 28 states and 8 Union Territories of India, across IT, BPO, sales, manufacturing, and retail roles where bonus and incentive structures are most common.

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Educational only

This content is for information and education purposes and does not constitute legal advice. For large profit-sharing disputes, contested clawback clauses, or threatened litigation, consult a qualified employment lawyer.

Frequently Asked Questions — FnF Demand Letter for Bonus Not Paid

Can my employer legally refuse to pay my bonus?▾
It depends on the type. A statutory bonus under the Code on Wages, 2019 cannot be refused if you meet the eligibility criteria, except for the narrow disqualification grounds in Section 29 — dismissal for fraud, violent conduct, theft, misappropriation, sabotage, or a sexual harassment conviction. A contractual performance or incentive bonus depends on the specific terms in your appointment letter or policy; if it was earned and approved, withholding it without a valid contractual basis is generally not defensible. A purely discretionary bonus with no defined criteria carries a weaker legal claim, though a written explanation can still be demanded.
When is a bonus legally payable in India?▾
Under Section 39 of the Code on Wages, 2019, statutory bonus must be paid within 8 months from the close of the accounting year. Contractual or performance bonuses follow the schedule defined in your appointment letter, offer letter, or incentive policy — commonly annual or quarterly. If your company has no specific date defined, a reasonable period after the bonus is formally declared or approved applies.
What is the difference between bonus, incentive, and variable pay?▾
A statutory bonus is a wage-linked payment mandated by the Code on Wages, 2019, calculated between 8.33% and 20% of wages for eligible employees. An incentive is usually tied to specific, objective targets such as sales numbers or project delivery, and is contractual rather than statutory. Variable pay is a broader umbrella term for performance-linked compensation components, which can include both statutory bonus and incentive elements depending on how your company structures pay. All three can form part of your FnF dues if earned and approved before you left.
Is unpaid bonus included in Full and Final Settlement?▾
Yes. Any bonus, incentive, or variable pay that had accrued and was approved before your last working day forms part of your FnF dues, alongside salary, gratuity, and leave encashment. An employer cannot exclude an already-earned bonus from FnF simply because the scheduled payout date happens to fall after your exit — the entitlement, not the payout date, is what matters.
What can I do if my employer ignores my bonus demand letter?▾
If there is no response within your stated deadline (typically 15 days), file a free complaint with the Labour Commissioner, or apply directly to the authority designated under the Code on Wages, 2019 using Form II. The authority can direct payment of the bonus due plus compensation, which may extend up to ten times the claim amount, and the claim is expected to be decided within three months. For larger or purely contractual bonus disputes, a Labour Court application or civil suit remains available.

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Legal Disclaimer

This page is provided for educational and informational purposes only and does not constitute legal advice. The content summarises bonus and wage law applicable in India as at June 2026, primarily the Code on Wages, 2019 (in force since 21 November 2025, with Central Rules notified 8 May 2026), which has repealed and replaced the earlier Payment of Bonus Act, 1965. It may not reflect subsequent legislative, regulatory, or judicial changes, including further state-level rule notifications under the Code.

Reviewed by the OfficeDraft Legal Team — last updated June 2026. OfficeDraft is not a law firm and does not provide regulated legal services. For disputes involving large profit-sharing schemes, retention bonus clawbacks, or threatened litigation, consult a qualified employment lawyer or the Ministry of Labour & Employment, India.

Code on Wages, 2019 · All 36 States & UTs · State S&E Act auto-applied

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Covers: Statutory bonus · Performance bonus · Sales incentives · Variable pay · Customary bonus