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Sunday, 28 April 2013

Frequently asked questions on Payment of Bonus Act, 1965, in India



Payment of Bonus Act, 1965


As per this act, employer, employing 20 or more employees at any day of financial year is bound to pay bonus provided wages of employee should be below or equal to Rs 10,000/- per month. Every employee should get minimum of 8.33% of wages, capped at Rs 3500/-, even if there is loss and maximum of 20% of wages, capped at Rs 3500/-, in an accounting year. Download Payment of Bonus Act 1965.

Q  : Who are eligible for Bonus?


Every employee whether on probation, part time, contractual, permanent, supervisor or manager whose wage is less than or equal to Rs 10000/- and has completed 30 days in an accounting year is eligible for bonus. Apprentice under Apprentice act are not eligible.

Q: On which salary components Bonus is calculated?


Bonus is calculated on Basic and DA.

Q :  Do a start up organization need to pay bonus?


In the first five accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this act in relation to that year but the concept of set off and set on will not apply.

Q : When should a new unit be considered as separate unit for the purpose of taking Bonus exemption for new establishment.


As per Supreme Court judgement, any unit where Profit and Loss account and Balance sheet are maintained separately should be considered as separate establishment.

Q : What is the concept of set on and set off.


(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment, then, the excess shall, subject to a limit of 20% of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilized for the purpose of payment of bonus.

(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment, and there is no amount of sufficient amount carried forward and set on which could be utilized for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year.

Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.


Example:

In the Example, the total amount of bonus equal to 8.33 per cent of the annual salary or wage payable to all the employees is assumed to be Rs. 1,04,167. Accordingly, the maximum bonus to which all the employees are entitled to the paid (twenty per cent of the annual salary or wage of all the employees) would be Rs. 2,50,000.


Year
Amount equal to sixty per cent, or sixty seven per cent, as the case may be, or available surplus allocable as bonus
Amount payable as bonus
Set on or set off of the year carried forward
Total set on or set off Carried forward
(1)
(2)
(3)
(4)
(5)

Rs.
Rs.
Rs.
Rs.  of       (year )
1.
1,04,167
1.04,167**
Nil
NIl
2.
6.35,000
2,50,000*
Set on 2,50,000*
Set  on           
2,50,000*       (2)
3.
2,20,000
2,50,000*
(inclusive of 30,000 from year –2)
Nil
Set  on           (2)
2,20,000
4.
3,75,000
2,50,000*
Set on 1,25,000*
Set  on          
2,20,000         (2)
1,25,000         (4)
5.
1,40,000
2,50,000*
(inclusive of 1,10,000 from year-2)
Nil
Set  on            (2)
1,10,000
1,25,000         (4)
6.
3,10,000
2,50,000*
Set on 60,000
Set on
Nil+                 (2)
1,25,00           (4)
  60,000          (6)
7.
1,00,000
2,50,000*
(inclusive of 1,25,000 from year–4 and 25,000 from year-6)
Nil
Set on
35,000            (6)
8.
Nil (due to loss)
1,04,167**
(inclusive of 35,000 from year -6)
Set off 69,167
Set off
69,167            (8)
9.
10,000
1,04,167**
Set off 94,167
Set off
69,167            (8)
94,167            (9)
10.
2,15,000
1,04,167**
(after setting of 69,167 from year-8 and 41,666 from year-9)
Nil
Set off
52,501            (9)
Notes-
* Maximum.
+ The balance of Rs. 1,10,000 set on from year-2 lapses.
** Minimum


Q : What is the time limit to pay bonus?


Bonus should be paid within 8 months from end of financial year.

Q : Can Bonus be paid on monthly basis?


Many company follow the practise of paying bonus on monthly basis, some pay minimum 8.33% of Rs 3500 i.e Rs 292/- or some 20% of Rs 3500/- i.e Rs 700/- per month.

They do it for achieving following purpose:

  • In hand salary of employee will increase as we are paying statutory bonus up front on monthly basis.
  • Company liability of bonus payment is taken care of.
Now the question is whether this is a right practise or not? If you go out to find out answer of this question you will get two opinions as follows:

  1. Yes, we can do this as there is no mention in the act that we can not pay it on monthly basis.
  2. No, we can not do this. How can company calculate percentage of bonus to be paid in the starting of financial year? Also when you pay any money on monthly basis it becomes part of your salary which means statutory bonus is yet to be paid. ESI will also be deducted on such payments.
If you ask me, I would not recommend to pay bonus on monthly basis as it can create problem in future and employer pay need to pay statutory bonus again.

Q : What are the circumstances when an employee is not eligible for bonus?


An employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for -- 
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment.


Q : Which institutions are exempted from payment of bonus?


Hospitals, Social welfare institutions, Chambers of the Commerce , Indian Red Cross society or other institutions of a like nature, universities and educational institutions. 

Q: How working days of an employee calculated for computing bonus?


Computation of number of working days.—An employee shall be deemed to have worked in an establishment in any accounting year also on the days on which-- 

(a) he has been laid off under an agreement;
(b) he has been on leave with salary or wage;
(c) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and 
(d) the employee has been on maternity leave with salary or wage, during the accounting year.

Q : Can interim bonus paid to employee be adjusted against statutory bonus payout?


When:

(a)    an employer has paid any puja bonus or other customary bonus to an employee; or
(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable.

then, the employer shall  be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance.

Q: Can an organization pay different percentage of bonus to different set of employees?


No, bonus percentage should be same for every employee who is eligible under the act. No discrimination.

Request you to post you queries on HR SUCCESS TALK Forum regarding Payment of Bonus Act, 1965. 
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107 comments:

  1. Very informative article. Quite useful for all HR/Finance & Accounting professionals. Thank you very much for your sharing.

    ReplyDelete
  2. I have a query regarding the eligibility. As said above "Every employee whether on probation, part time, contractual, permanent, supervisor or manager whose wage is less than or equal to Rs 10000/- " . Has this limit been revised? I ask because the limit was Rs 3500 p.m.

    ReplyDelete
    Replies
    1. Dear Aparna,

      Current limit is Rs 10,000/- and there is no information regarding its revision. Limit of Rs 3500 is to determine amount of bonus to be paid and it is still applicable. Same is mentioned in the post. Hope this answers your query

      Delete
  3. dear mr negi,

    pls advise section under the act /judgements to establish that only Basic and DA needs to be included for bonus computation.

    we understand HRA too needs to be included in bonus calculations.

    ReplyDelete
    Replies
    1. Dear Friend,

      Please refer bare act of Bonus and refer definition of wages. Also request you to post your further queris on www.hrsuccesstalk.com forum

      Delete
  4. A company has not paid Bonus for the last 5 years. instead the company has paid production incentives to all the employees.. Can the company claim those production incentives to be bonus given by them now???

    ReplyDelete
    Replies
    1. Production incentive can not be considered as Statutory bonus.Also please note that your eligibility for statutory bonus depends upon your Basic salary.

      Delete
  5. Is the employer liable to pay minimum bonus even in case of lass in the establishment?

    ReplyDelete
    Replies
    1. In the first five accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this act in relation to that year but the concept of set off and set on will not apply.

      Else Employer is liable to pay bonus. In case of loss minimum bonus should be paid. Also seton and setoff should be kept in mind.

      Delete
  6. Language is simple and easy to understand.Better than that contained in study materials of ICAI !!

    ReplyDelete
    Replies
    1. Thanks pawan and good that it helped you

      Delete
  7. Dear Govind,
    In my increment letter for the 2012-13, the company has mentioned that there is a performance bonus if the company meets the target. At the month of April 2013, company told that due to some reason - the performance bonus and increment may delay from 3 to 6 months.

    After that I have resigned my job on 30th June 2013. On beginning of September 2013, company has provided the performance bonus to all the employees for 2012-13. Let me know, will i eligible for that performance bonus?

    ReplyDelete
    Replies
    1. Dear Prem,

      You need to have a look at company policy on performance bonus and see what it says about employee who resigns. In your case, you have completed your period for which you should be given performance bonus but company delayed and then you left. Now company has paid it to others for same tenure. Hence you are eligible for the bonus. Please write back to company demanding for money.

      Delete
  8. If the employer can show Bones in Employee CTC then it should be calculated as per working days or The bones has to be fixed as per CTC norms.

    ReplyDelete
    Replies
    1. Dear Gaurav,


      Bonus is paid basis working days of an employee in financial year.

      Delete
    2. sir hum 10 persion ek shop me kaam kar rahe hai last 25 years se magar aaj tak hame diwali ka boues nahi mila aap hame batae kya karna chaiye thanku

      Delete
    3. 20 or more employees should be there for statutory bonus

      Delete
  9. Dear sir,
    Our company has only 18 employees whether it is eligible to pay bonus, it renders a service in engineering field.

    ReplyDelete
    Replies
    1. Dear Friend,

      Company should have 20 or more employees in any month of year. Eg. Lets say in a particular month company has 20 or more employee but later on two employees left. Now 18 employees are working. Even then company will fall under Bonus act

      Delete
  10. If an employees' Basic + DA exceeds 120000-00 per annum, is he eligible to get bonus on only 120000-00 or on actual full amount of Basic + DA ? If it is the first case, the maximum bonus any employer needs to pay will be restricted to 10000-00 ( on minimum 8.33 % ) in a year.
    Are there any special provisions for IT companies ?

    ReplyDelete
  11. Dear Friend, It is not on annual basic payment but on monthly Basic eligibility. If an employee's Basic is equal to or less than 10000 then that employee becomes eligible for Bonus.

    But for the payout of bonus, capping is at 3500/-. Rules are same for IT company also.

    ReplyDelete
  12. On what amount is the 8.33% or 20% charged at?
    Is it charged on your salary or Rs. 3500?

    ReplyDelete
    Replies
    1. Dear Friend,

      Minimum is 8.33% of Basic and maximum is Rs 20% of Basic. It depends upon company profitability. Yes, it is on maximum Rs 3500

      Delete
  13. i resigned from a company . my basic salary was 8800 . but company gave me diwali bonus according to rs 3500 as basic .HR told me according to payment of bonus act this is the rule .so i just want to know this is right ..? or wrong? because i read all act but there is no such kind type of rule . plz give me sugestion asap . thanks

    ReplyDelete
    Replies
    1. Dear Gaurav,

      It is correct. Bonus is paid on Basic capped to maximum Rs 3500 Basic.

      Delete
    2. dear sir
      this is with all employee or 3500 basic for resigned employees only .another question is compnay gave ex gratia with diwali bonus ,which is not given in year end of 2012-13. am i eligible for that gratia..? plz reply
      thanks for last reply

      Delete
    3. Dear Gaurav,

      It is for every employee both including Resigned and working.

      Ex gratia is as per company policy. You need to refer company policy for this.

      Delete
    4. Dear sir
      but every working employee got bonus according to his current basic,working employee whose post is equivalent to my post got bonus as basic rs 8800.my basic & his basic is same.
      thanks sir for replying & suggestion

      Delete
    5. Dear Gaurav, It may be policy of the company to give bonus as ex gratia where employee is paid on more basic. There is nothing wrong if it is the company policy

      Delete
  14. Suppose,
    CASE 1. My salary is Rs. 50000, then on what amount is the bonus calculated at. And,
    CASE 2. My salaray is Rs. 2000. What amount would the bonus be calculated at?

    ReplyDelete
    Replies
    1. Dear Friend,

      First of all please note that Bonus is calculated on Basic +DA and not on salary. I am assuming that here you referring salary as Basic

      Case 1 : You are not eligible for Bonus as Employee's whose basic is less than or equal to 10000 are eligible for Bonus rest are excluded.

      Case 2: It will be calculated on 2000.

      Delete
  15. Dear Sir,
    Our company is celebrating 25th year on 08th Feb 2014 .My seniors want hr dept to send 30 emails to employees starting from 08th Jan 2014
    Can I have any suggestions/ formats for sending invitations to the employees.

    Regards,
    Geeta

    ReplyDelete
  16. Dear Geeta,

    You can post all such question on our HR Forum.

    Link below

    www.hrsuccesstalk.com/forum

    ReplyDelete
  17. Hi Govind,
    Currently i am serving my notice period in a organization, my last day is on 3rd march, my pay out of bonus for the year 2013 will be on 25th March, by that i will be leaving the organization, so can i eligble for the bonus?

    ReplyDelete
  18. Dear Raj,

    Company has to pay you bonus for number of days you have worked with the organization in a financial Year. They can either pay you as part of your Full and Final or they have to pay when they make payment to all i..e 25th March

    ReplyDelete
  19. Thanks Govind ,But my company says that to get the bonus eligibility i should be there in the organization as employee till payout date, i.e on 25th march, but my last date is on 3rd March. What should be my next step, please guide me

    ReplyDelete
  20. Dear Gaurav,

    I have a bonus component in my salary and I have given my resignation. The time period will remains till the end of financial yera. Do I am eligible for bonus? Also is there any legal description for this as well. Your help will be highly appreciated.

    ReplyDelete
  21. Dear Raj,

    You should show them Bonus Act.

    Else write a letter and submit. Give reference of Bonus Act. As per Bonus Act they are suppose to pay you.

    ReplyDelete
  22. Dear Friend,

    Your case is also similar to Raj case.

    You are eligible for bonus provided you have worked for minimum 30 days in the company.

    Bonus should be paid within 8 months of Financial year end.

    ReplyDelete
  23. Dear Friend,

    Your case is also similar to Raj case.

    You are eligible for bonus provided you have worked for minimum 30 days in the company.

    Bonus should be paid within 8 months of Financial year end.

    ReplyDelete
  24. Hi Govind ,

    2 quick doubts :

    1. What do you mean by CAPPED to 3500/-

    ReplyDelete
  25. 2. A co gives bi yearly increment !
    If the first basic falls below 10k!
    and the next above 10k .. How to manage such situation

    ReplyDelete
  26. Dear Swaps,

    Capping of Rs 3500 means even if an employee is falling under Bonus (Basic is less than or equal to 10000), he will be paid bonus on maximum Rs 3500/-.

    Example : If an employees Basic is Rs 5000 then he is eligible for Bonus but he will be paid Bonus on maximum Rs 3500 and not on Rs 5000

    Regarding your second query. Please note, Employee will be paid bonus only for those months when his basic was equal to or less than 10000.

    ReplyDelete
  27. Thanks Govind ! Your initial brief about Bonus Act has been very much clear and helped lot of us !

    Few people in the other forums have doubts if the bonus to be paid on Master (Basic + DA) or Earned (Basic + DA).... Eg:A person might have earned few day's extra working and the Basic + DA increases . How to manage this .

    ReplyDelete
  28. Thanks Govind ! Your initial brief about Bonus Act has been very much clear and helped lot of us !

    Few people in the other forums have doubts if the bonus to be paid on Master (Basic + DA) or Earned (Basic + DA).... Eg:A person might have earned few day's extra working and the Basic + DA increases . How to manage this .

    ReplyDelete
  29. Thanks Govind ! Your initial brief about Bonus Act has been very much clear and helped lot of us !

    Few people in the other forums have doubts if the bonus to be paid on Master (Basic + DA) or Earned (Basic + DA).... Eg:A person might have earned few day's extra working and the Basic + DA increases . How to manage this .

    ReplyDelete
  30. Hi Govind,
    Thanks for your informative answers.

    If the company pay the bonus on January ie., they have calculated based on calendar year. Is it correct or not. Pl inform.

    Thanks
    Kannan

    ReplyDelete
  31. Dear Swaps,

    Bonus should be calculated on earned Basic + DA

    ReplyDelete
  32. Dear Kannan,

    You will get this answer from the company. Statutory bonus should be paid on financial year and not on calendar year.

    ReplyDelete
  33. Hello Sir,
    our factory has started on sep 13. we are showing profit in closing year 2014, please advise me can we entitle for payment of bonus ?


    Regards
    Rajvir Singh Rawat

    ReplyDelete
  34. Dear Rajvir,

    You have to pay bonus as your company has started making profit.

    ReplyDelete
  35. Hello Govind,
    My basic is 15000 per month. I have worked from 1st April 2013 to 31st March 2014. I resigned after that on 11th April.

    Am i eiligible for bonus?

    I will be serving till 30th of June 2014 as notice period.
    will i get bonus for 3 months in 2014-15 FY?

    Please clarify.

    Rakesh

    ReplyDelete
  36. dear sir,
    as per the act the company has to pay a minimum of 8.33% bonus even if it is in loss. is there any condition that to receive such minimum bonus an employee should be taking less than or equal to Rs. 10,000/- as Basic + DA.

    ReplyDelete
  37. Hello Govind,
    I have the following doubt - The Payment of Bonus Act applies to all establishments employing 20 or more 'employees'. Does 'employees' here means total number of employees or only eligible employees. By eligible employees, I mean to say such people getting not more than Rs 10000 per month.
    Please reply at the earliest. Thank you in advance.

    ReplyDelete
  38. Dear Rakesh,

    You are not eligible for Bonus as your basis is less than Rs 10000

    ReplyDelete
  39. Dear Om Prakash,

    To be eligible for Bonus, your Basic +DA should be less than or equal to Rs 10000/-

    ReplyDelete
  40. Dear Friend,

    Total number of employees means all employees including excluded or included employees as per definition of bonus

    ReplyDelete
  41. Mr Govind,

    Recently i have resigned from my job and at the time final settlement my company ahs not settled my 2013-14 year bonus,as i have completed last financial year.As per them as my salalry was more than 40,000/- i am not eligible for bonus, but in my appointment letter it was clearly mentioned that the bonus is part of my salary package.
    kindly suggest.

    ReplyDelete
  42. Dear Friend,

    If your basic is less than or equal to Rs 10000 in year 13-14 then you are eligible for Bonus else not

    ReplyDelete
  43. Hi ,

    recently i resigned from a company where my gross salary was 48,000.
    in my ctc they have shown the bonus,now i completed financial for 2013-14. now company people is not ready to release the bonus for that financial year.
    guide me on this.
    Kulkarni

    ReplyDelete
  44. Hello Mr. Negi,

    Just Want to Know, Basic Average Salary is Considered on Working days or Basic salary in My Salary Structure to be considered for applicability of Bonus Act.
    I Mean to Say
    if As per Salary Structure my Basic Salary + DA is 11,000 per month but
    My (Yearly Basic Salary/365)* 21 i.e. Average Working days per Month = 7594
    so as per this Calculation is Bonus Act Applicable to me or Not?

    ReplyDelete
  45. dear govind,
    I was worked in a hotel from oct 2012 to oct 2013, my basic salary was 18000, in 2013 company gave 10% on basic as bonus for 2012-13 accounting year,do i eligibil for 2013-14 bonus( remaning 7 months),because company will give to other emplooye,who is currently workomg there with same basic salary, please advice

    ReplyDelete
  46. If an employee join company in July 2013 at Rs. 5000/- and in February 2014 his salary increase to 10000/-.He is eligible for diwali bonus and how to calculate their bonus.

    ReplyDelete
  47. Dear Mr Kulkarni,

    you can file a case against company. Before that write a letter to company mentioning bonus mentioned your letter and non payment. Mention that you will take legal action if you do not get your money.

    ReplyDelete
  48. Dear Sahantanu,

    Your Bonus eligibility will be based on your salary structure and not based on working days.

    ReplyDelete
  49. Dear Brijesh

    If Bonus payment is part of your agreement with company then they will pay the bonus to you

    ReplyDelete
  50. Dear Mr. Govind, would like to know if the Principle Employer is bound to pay bonus to Contract Workers if the Contractor does not pay ? Legally will it bind the PE or the Contractor ?

    ReplyDelete
  51. Hi I have searched a lot for an answer to my question, but have not found it.

    Scenario is. Company has made significant losses during 1st 4 years of operation. In years 5 and 6 it is profitable, however the total losses in 1st 4 years exceeds total profits in years 5+6 i.e. there is still a net loss if all 6 years are considered.

    Is bonus payment for year 6 based on minimum bonus because of net loss over 6 years, or is it based on maximum bonus based on allocable surplus only in year 6

    ReplyDelete
  52. Dear Sir,

    I left my previous company on 12 oct. 2014.(this month) my previous company deducted some amount as diwali bonus.(each year). they are giving bonus before 3 days of diwali.
    but my hr says now i am not employee of their company and they will not give bonus to me.

    how i will get my money(bonus)?

    ReplyDelete
  53. Dear Govind Sir,
    I am working with Gold Finance company since 25th Nov, 2013 as Customer Service Executive Grade B. i get stipend as 7400/- p.m. conveyance allowance 800/-pm and special compensatory allowance 800/- gross salary Rs.9000/-.
    Can i eligible for bonus???
    plz guide me...

    ReplyDelete
  54. Hi Govind,

    Statutory Bonus is calculated if monthly basic is less than or equal to Rs.10000 per month.

    I have some queries related to this..

    Query 1 : If some employees salary is less than 10000 per month for about 3 months in the financial year & becomes Rs.11000 per month.

    My understanding in the above query is he becomes eligible for statutory bonus coz he has been in the company for about 30 days in the financial year and his monthly basic salary was less than Rs.10,000 for 3 months. So we need to prorate his bonus for 3 months only,is this correct.

    Query 2: For calculating statutory bonus should we consider his monthly master basic component or the actual paid basic component. Because we might have paid the employee some arrears or not paid him due LOP so should we consider his paid basic or master basic?

    Thanks in advance..

    ReplyDelete
  55. Dear Selavaj,

    Principal employer is legally bound to pay bonus in case contractor does not pay.

    This is the reason that principal employer should ensure that contractor is complying with all applicable laws.

    This is also applicable for PF, ESI and Gratuity

    ReplyDelete
  56. Dear AT,

    In your case company has made the profit in 5th year hence company should pay bonus based on profitability of that year. There is no link with previous 4 years loss.

    For 6th month company can apply set on or off concept

    ReplyDelete
  57. Dear Vishal,

    There are many possibilities in your case.

    If you are talking about statutory bonus which range from 292 to 800 then you will be getting it without any doubt. It is as per Bonus Act.

    What is your Basic salary?

    In case you are talking about any other bonus than Statutory Bonus that I would like to know company policy on same. In case company policy says that employee should be working with organization at the time of disbursement of bonus then company is correct.

    ReplyDelete
  58. Dear Hemu,

    Yes you are eligible for Bonus as your stipend is less than Rs 10 K

    ReplyDelete
  59. Dear Friend,

    Query 1: You are correct

    Query 2 : Bonus should be paid on actual basic paid

    ReplyDelete
  60. My company pay bonus @ 19% of Basic to all staff/workers since starting of company, now they are planing to pay bonus only whom salary less then 10000 @ 8.33%.even company profitability is in growing condition.
    can they do it ?
    please help

    ReplyDelete
    Replies
    1. Dear Amit,

      percentage of Bonus payment depends upon amount of profit in balance sheet. It can be minimum 8.33% to maximum 20%.

      Company has rights to limit statutory bonus payout to employees whose Basic is less than or equal to 10,000

      Delete
  61. Dear Govind,

    is maximum bonus of 20% mandatory when we have allocable profits ? [The Company is paying 8.33%, does this mean we have to pay 20% now ?]

    The act uses the language "Shall" and "be bound". So does it make it mandatory ?

    ReplyDelete
    Replies
    1. Dear Teja

      Company should pay Bonus more than 8.33% if there is allocable profit

      Delete
  62. Dear Amit,

    Earlier your company was paying bonus as per company policy.

    As per Bonus Act, any employee whose Basic is less than or equal to 10000 is eligible for statutory bonus.

    Now your company is planning to move to this.

    They can very much do so.

    Under Statutory law, company need to pay minimum 8.33% to maximum 20% bonus based on company profitability.

    Company can not fix 8.33% if company is making profit

    ReplyDelete
  63. Dear sir,

    We have paid bonus for all employees including those who worked less than 30 days and also we have paid the bonus less than Rs.100.

    Is there any issue and shall we include these details in bonus annual returns?.


    Thanks and Regards,
    Paramesh

    ReplyDelete
    Replies
    1. Dear Paramesh,

      You have not done anything wrong as per Law. Infact, you have done more than law stated. You may include the same in return if there is any provision to do so.

      Delete
  64. If a company wants to pay Bonus more than 20% of Salary/wages, can it do so? If yes what are the legal implications?

    ReplyDelete
    Replies
    1. As per Bonus Act, employee should be paid maximum 20% bonus. Employer should keep more than 20% as allocable surplus which should be used next year when profit is less.

      If company wants to pay more than 20% then it should be paid as ex gratia rather than statutory bonus

      Delete
  65. Can Company deduct salary advance amount from bonus amount if employee working in the Company?

    Please give information.

    ReplyDelete
  66. Dear Govind,

    We are a retail shop, having more than 20 employees in Mumbai + Delhi and all the employees have been paid basic salary more than 10k. Do we still need to maintain the registers?

    Thanks in anticipation.

    Best Regards
    Kevin
    cskevingala@gmail.com

    ReplyDelete
    Replies
    1. You should only maintain a register which show no one eligible for Bonus as per act.

      Delete
  67. My company has granted bonus to daily waged staff for the past years as per directions of the Hon'nle High Court of Himachal Pradesh. The company has not been paying bonus to its regular employees for a long time. Previously the company had allowed bonus to its employees @ 8.33 % of the monthly salary/wages of Rs.3500/-. Kindly clarify what is the latest limit of the salary/wages to calculate the bonus @ 8.33%. And also what is the maximum limit of bonus payable as per latest bonus Act. Kindly clary as early as possible.

    ReplyDelete
    Replies
    1. Dear Uttam,

      Company should pay minimum 8.33% and maximum upto 20% bonus if employee's Basic plus DA is less than or equal to 10K

      Delete
  68. sir i have one query in my company all employee get yearly bonus from january to december.i have given resignation on 9 january and now servicing notice period in same company .is i am eligible for bonus please tell me

    ReplyDelete
    Replies
    1. Dear Sunny,

      Any employee who has served a company for minimum 30 days in a financial year is eligible for Bonus. You will get your bonus amount.

      Delete
  69. Dear Sir,


    Thank you so much for the important information.

    Please tell us on Payment of wages act.

    ReplyDelete
    Replies
    1. Dear Shampa,

      Thanks for your appreciation. you can post your query on payment of wages act in our HR Forum i.e. www.hrsuccesstalk.com/forum

      Delete
  70. Sir, I have joined company in feb-14, next month company gives bonus, do I get bonus for 13-14 or 14-15 financial year, fyi, may-14 I didn't get any bonus

    ReplyDelete
    Replies
    1. Dear Friend,

      You will get bonus for FY 13-14

      Delete
  71. Dear Sir,

    I have joined Company in Dec 13 as a contractual employee. at the time of my CTC is 2 Lac per annum. Computation of Monthly salary is BASIC - 6922/- ALLOWANCES :- ADDITIONAL ALLWANCE -4452/- CONVEYANCE ALLOWANCE - 800/- HRA 3461/- EDUCATION ALLOWANCE 200/-. GROSS TOTAL 15835/-. After one year I got increment and get ctc of rs. 2.50 lac as on 12 dec 2014 as a regular employee. Computation of Current CTC is BASIC - 8333/- , HRA -4167/- , EDUCATION ALLOWANCES - 200/- ADDITIONAL ALLWOANCES - 6333/- , GROSS TOTAL 19833/- . Now my question is that I got bonus from company as a prorated based (4 Months Only) of Regular Employee. Am I not eligible for getting bonus of Contractual employee? Because I have complete and over achieved my annual target as per company expectation. Kindly give me advise.

    ReplyDelete
    Replies
    1. Dear Friend,

      you are eligible for bonus both as contractual and regular employee

      Delete
  72. itz really a good post..and easy to understand

    ReplyDelete
    Replies
    1. Dear Sammu

      Thanks for your appreciation. It means a lot to us

      Delete
  73. THANKS FOR INFORMATION

    REALLY A GOOD INFORMATION ABOUT BONUS OF MIN. 8.33% OR MIN. AMOUNT OF BONUS RS. 3500

    I APPRECIATE FOR THIS INFO..

    KEEP CONTINUES...

    CSBSANJEEV :)

    ReplyDelete
    Replies
    1. Thanks Sanjeev for your appreciation. It means a lot to us.

      Delete