Loading page
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Also called sign-on bonus
A one-time payment made when a new employee joins, often to offset a bonus forgone at the previous employer. It is taxable as salary in the month paid and usually carries a clause requiring repayment if the employee leaves within a stated period.
A joining bonus is agreed in the offer letter and paid through payroll, usually with the first or second salary, or in parts over the first months. It is taxable salary in the month paid, so payroll includes it in that month's TDS computation, which often makes a new joiner's first payslip look unexpectedly low.
Most offers attach a clawback: if the employee leaves within a stated period, part or all of the bonus is recoverable. Example with illustrative figures: a ₹1,00,000 bonus with a 12 month clawback, where the employee leaves after 7 months, may be recovered in full or pro rata, depending entirely on what the offer letter says.
The mistake is writing a vague clawback and then trying to recover it from the full and final settlement. Recovery against wages is restricted by wage law, so spell out the amount, period and method in the offer, and get the employee's written agreement at joining.
Yes. It is part of salary income and is taxed through payroll in the month it is paid, like other earnings.
A one-time joining bonus is generally kept outside the PF wage, which is basic plus dearness allowance. Check how the offer letter describes it, since the label alone does not decide the treatment.
Many employers pay it with the first salary or after probation, with a written clawback if the employee leaves within a set period. Paying later reduces the need to recover it.
Through the clawback clause, usually by adjusting it against dues in the full and final settlement. The recovery can be pro-rated by the time served if the clause says so.
14-day free trial · Full access to all 12 modules · Zero implementation fee · Cancel anytime