TCS cuts variable pay of senior staff, even those who played by work-from-office rule

Tata Consultancy Services (TCS) has lowered bonus payments for some employees for the July-September quarter, despite adhering to the stringent work from office policies of the tech giant, Moneycontrol has reported.

While junior employees still received their full quarterly variable allowance, some senior employees saw reductions between 20-40 per cent, with some receiving no bonus at all.

This comes after a 70 per cent variable payout in the previous quarter.

“For Q2FY25 we have paid out 100% QVA (Quarterly Variable Allowance) to junior grades across the company. For all other grades, the QVA depends on their unit’s business performance. This is in line with our standard practice across quarters," a TCS spokesperson was quoted as saying in the media report.

TCS determines bonuses based on both office attendance and the performance of individual business units. The company has been encouraging employees to return to the office, previously stating that consistent non-compliance with attendance policies could lead to disciplinary action.

Earlier in July the company had said that 70 per cent of its employees are back in office and the number is increasing every week, following its policy to link variable pay to work from the office.

Updated Variable Pay Policy
In April 2024, TCS had introduced a revised variable pay policy that integrates employees' office attendance as a key factor. The updated policy established four attendance slabs dictating the variable pay for employees.

According to the new policy, employees working from the office for less than 60 per cent of the time will not receive any variable pay for the quarter.

Those with an office attendance between 60-75 per cent will receive 50 per cent of the variable pay, while employees attending the office 75-85 per cent of the time will be eligible for 75 per cent of the variable pay.

Only those with office compliance levels above 85 per cent will receive the full variable pay for the quarter.

TCS' Q2 show
TCS reported slower revenue growth in the second quarter, mirroring similar trends across the sector. Despite this, the company anticipates an improvement in business by the fourth quarter.

India's largest IT services company reported a 5.5 per cent year-on-year revenue growth in constant currency terms in the second quarter.

“We expect the headwinds to stabilise in Q3 and return to growth in Q4,” the company told analysts in its post-earnings call last month.