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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 21,000/- per month. Every employee should get minimum of 8.33% of wages, capped at Rs 7,000/-, even if there is loss and maximum of 20% of wages, capped at Rs 7,000/-, in an accounting year. Download Payment of Bonus Act 1965.

Q  : Who is eligible for Bonus?


Every employee whether on probation, part time, contractual, permanent, supervisor or manager whose wage is less than or equal to Rs 21,000/- 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 7.000 i.e Rs 583/- or some 20% of Rs 7,000/- i.e Rs 1,400/- 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. 
You can also join us on Facebook. Our face book page is HR SUCCESS TALK face book page.

If you are really serious about learning HR and want to grow then visit our web page LEARN HR THROUGH PRACTICAL IMPLEMENTATION

157 comments:

Sridhar Raman said...

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

Govind Negi said...

Thanks Sridhar

Aparna Goel said...

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.

Govind Negi said...

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

Anonymous said...

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.

Govind Negi said...

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

Saurabh Mantri said...

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???

Govind Negi said...

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

Nishant said...

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

Govind Negi said...

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.

pawan bhattarai said...

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

Govind Negi said...

Thanks pawan and good that it helped you

Prem Anand said...

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?

Govind Negi said...

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.

Gaurav Singh said...

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.

Govind Negi said...

Dear Gaurav,


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

Anonymous said...

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

Anonymous said...

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

Govind Negi said...

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

Govind Negi said...

20 or more employees should be there for statutory bonus

Anonymous said...

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 ?

Govind Negi said...

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.

Anonymous said...

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

Gaurav Nain said...

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

Govind Negi said...

Dear Gaurav,

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

Govind Negi said...

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

Anonymous said...

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?

Govind Negi said...

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.

Gaurav Nain said...

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

Govind Negi said...

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.

Gaurav Nain said...

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

Govind Negi said...

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

Anonymous said...

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

Govind Negi said...

Dear Geeta,

You can post all such question on our HR Forum.

Link below

www.hrsuccesstalk.com/forum

Raj said...

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?

Govind Negi said...

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

Raj said...

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

Anonymous said...

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.

Govind Negi said...

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.

Govind Negi said...

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.

Govind Negi said...

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.

Swaps said...

Hi Govind ,

2 quick doubts :

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

Swaps said...

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

Govind Negi said...

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.

Swaps said...

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 .

Swaps said...

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 .

Swaps said...

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 .

Kannan Smart said...

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

Govind Negi said...

Dear Swaps,

Bonus should be calculated on earned Basic + DA

Govind Negi said...

Dear Kannan,

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

rajvir singh said...

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

Govind Negi said...

Dear Rajvir,

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

Anonymous said...

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

om prakash said...

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.

Anonymous said...

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.

Govind Negi said...

Dear Rakesh,

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

Govind Negi said...

Dear Om Prakash,

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

Govind Negi said...

Dear Friend,

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

Anonymous said...

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.

Govind Negi said...

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

Anonymous said...

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

Shantanu Joshi said...

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?

brijesh bhadana said...

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

Anonymous said...

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.

Govind Negi said...

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.

Govind Negi said...

Dear Sahantanu,

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

Govind Negi said...

Dear Brijesh

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

Govind Negi said...

From July 13 to Jan 14

Selvaraj said...

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 ?

AT said...

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

vishal kadam said...

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)?

Hemu said...

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...

Anonymous said...

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..

Govind Negi said...

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

Govind Negi said...

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

Govind Negi said...

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.

Govind Negi said...

Dear Hemu,

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

Govind Negi said...

Dear Friend,

Query 1: You are correct

Query 2 : Bonus should be paid on actual basic paid

Amit Chirania said...

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

Teja said...

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 ?

Govind Negi said...

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

Amit Chirania said...

Thanks Mr Govind,

Anonymous said...

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

Anonymous said...

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

Anonymous said...

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

Please give information.

Kevin Gala said...

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

Uttam Chand Khitta said...

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.

Sunny Sharma said...

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

Shampa Sharma said...

Dear Sir,


Thank you so much for the important information.

Please tell us on Payment of wages act.

Anonymous said...

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

raz said...

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.

sammu sapi said...

itz really a good post..and easy to understand

Sanjeev Kumar said...

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 :)

Govind Negi said...

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

Govind Negi said...

Dear Teja

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

Govind Negi said...

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.

Govind Negi said...

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

Govind Negi said...

Not sure. May be yes.

Govind Negi said...

Dear Kevin,

No need.

Govind Negi said...

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

Govind Negi said...

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

Govind Negi said...

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.

Govind Negi said...

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

Govind Negi said...

Dear Friend,

You will get bonus for FY 13-14

Govind Negi said...

Dear Friend,

you are eligible for bonus both as contractual and regular employee

Govind Negi said...

Dear Sammu

Thanks for your appreciation. It means a lot to us

Govind Negi said...

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

sharad said...

I have resigned from private bank, now they ar asking to pay exgratia which is given to me in Oct 2014 and June 2015 which includes bonus also, my basic is 11600, Kindly advice is right

Pankaj Kumar Gupta said...

I want to ask that, an employee who joined central govt service with grade pay Rs. 4200/-pm since 01 Dec 2015 is eligible to get bonus or not??????

Anonymous said...

Hi. Govind. I want to ask that, an employee who joined a company with basic 6000/- pm since 12 May 2014, is eligible to get bonus or not?????? N what amount will be paid??

H R Needs 2011 said...

Q: Can an organization pay different percentage of Ex-Gratia to different set of employees this year, when the Ex-Gratia was paid equal to all the employees in the previous years?
Hemachandra
Bangalore

Sonam Saini said...

Hello Everyone!
I have a query, If any company who has just started Up ,i.e 2 years old, where no. of employees are less then 10, is eligible to pay bonus to employees? And if the salary of employees is more than 10000, then what amount should be paid as bonus to employees also tell the eligibility criteria of employee.

Please clarify

Anonymous said...

Q. An enterprise has 21 employees; 20 employees getting a salary of 50,000pm and 1 peon getting a salary of Rs.8,000pm. Now will Payment of Bonus Act will apply to such enterprise as it has employed 21 person? Please guide me

Pravin Yadav said...

Hi negi,
my question is I had worked last financial year i.e 2014-15 and left the organisation on 30th April 2015, will i get bonus of 2014-15. and my gross salary was 9000/-.

please clarify

Anonymous said...

Hi

Your post is very informative and simple in understanding Bonus concept.

but still I have one doubt..

there is any clause that decides the percentage of Bonus to disburse i.e. 8.33% or 20% ? for example.. My company is 25 years old and profit making. our management has decided to give statutory bonus on 8.33% only not on 20%.

please let me know whether it can be done or not. And not then whether is any method of calculation which decides the percentage of Bonus.

Thanking you in anticipation :)


Gaurav Rane said...

If company changes CTC structure of present employee for eg.
Present CTC Structure:
Basic =15000Rs
HRA=3000Rs
PF=1800Rs

Revised CTC Structure:
Basic =15000Rs
Bonus = 2500Rs.
HRA =500Rs.
PF=1800Rs

i.e.HRA amount splits in HRA+BONUS

What is the benefit/loss of company/employee in restructuring of CTC as above?

Please help..!!!

Murari Kumar said...

dear friends my salary was 19200/ CTC last year bur it revised in Jan 2015 to 25000/- am i eligible to receive bonus for nine month of last year 2014-15

Enquiry said...

Hi I am confused suppose a company paid a bonus amount higher than the amount to paid based upon a wrong calculation and later realises its mistake can it thereafter rectify its mistake and make a change in the bonus amount to the actual amount which was supposed to be paid?

Enquiry said...

Hi I am confused suppose a company paid a bonus amount higher than the amount to paid based upon a wrong calculation and later realises its mistake can it thereafter rectify its mistake and make a change in the bonus amount to the actual amount which was supposed to be paid?

Neetu Sharma said...

Hi,

I had worked in my last company till 8th oct-2015. My basic was 13500 and the in hand salary was 24470. Am I eligible to get my bonus for last Diwali? Every employee gets bonus Rs. 8400 there. Please inform me.

Thanks:

Neetu

Unknown said...

Normally my ex commpany pay statutory bonus on November and this last year I have not got the bonus. Is this because I was on notice period and my last working day was 26th Nov 2015. Please advise am I eligible or not

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Unknown said...

Exactly. ...when the salary paid is more than rs.3500...bonus is calculated on rs.3500 only

Lokeshwar Reddy said...

Exactly. ...when the salary paid is more than rs.3500...bonus is calculated on rs.3500 only

C B SEHGAL said...

Is it mandatory to maintain Register A & B under Payment of Bonus Act in case we are always paying maximum bonus of 20% every year?

Saravanan P said...

Hi,
Im working for a building operation and maintenance company. Iam posted in a site (IT park) in chennai. My company employs manpower through some its manpower supplier/sub-contractor/vendors.

1. Sec 32 of Bonus Act - excludes employees working for building operations. what is real meaning of "building operations" in this act. Am I excluded or eligible for this bonus? Does this Construction or O&M or Both.

2. whether the employees employed under sub contractors role are eligible for bonus?

Request to Please clarify.

Thanks

Saravanan

Siddharth said...

Hello Sir,

I recently received bonus from my company on 1st Feb. After that i got an opportunity in an MNC and I resigned and currently in Notice period. Now my management is asking me to pay back the bonus amount as I am leaving. Please suggest.
Also, let me know when I can find bonus act that supports me on this issue.

-Siddharth.

Anonymous said...

Hello Sir,

I am working in private organization as team lead past 4.4 years and I am not even got any single bad feedback and the company paid bonus recently to most of the employees not for all (as per my knowledge). But I am not received a single rupee from the organization.

Shall we go and take legal action to the company and please let me know if I take legal action against the company what are problem we may face.
Please give me an idea.

Thanks
Thangasamy

Yasotha said...

sir i have one query.. in my company all employee get yearly performance bonus from january to december. But performance bonus will credit on 31st March. i resigned on 4th March and got relieving letter on 4th march from my previous company .is i am eligible for bonus please tell me.

Yasotha said...

sir i have one query.. in my company all employee get yearly performance bonus from january to december. But performance bonus will credit on 31st March. i resigned on 4th March and got relieving letter on 4th march from my previous company .is i am eligible for bonus please tell me.

Sneha Jadhav said...

Hi Mr. Govind,

Thanks for information.I have recently joined startup company where more than 40 employees are working since company has registered but till date we have not paid bonus to employees.As company is self funded and it is in the phase where profit is not yet started , so are we eligible to pay bonus to employees?Please guide.

Sneha Jadhav said...

Hi Mr. Govind,

Thanks for information.I have recently joined startup company where more than 40 employees are working since company has registered but till date we have not paid bonus to employees.As company is self funded and it is in the phase where profit is not yet started , so are we eligible to pay bonus to employees?Please guide.

maninder singh said...

Hi Sir,

I have an enquiry , I joined xyz company on 6 may 2015 to 30 NOV 2015 my basic was 10,107 and from 1 December 2015 to till now my basic is 12,774 . 1)My question is bonus calculate on the basis from the 6 may 2015 to 30 NOV 2015 as 8.33% of 10,107 and 8.33% of 12774 from 1 Dec 2015 to 31 march 2016 . is it correct .2) The bonus calculate on maximum salary 12774, 8.33 % of 12774 from 6 may 2015 to 31 march. which methods is correct.

maninder singh said...

Hi Sir,

I have an enquiry , I joined xyz company on 6 may 2015 to 30 NOV 2015 my basic was 10,107 and from 1 December 2015 to till now my basic is 12,774 . 1)My question is bonus calculate on the basis from the 6 may 2015 to 30 NOV 2015 as 8.33% of 10,107 and 8.33% of 12774 from 1 Dec 2015 to 31 march 2016 . is it correct .2) The bonus calculate on maximum salary 12774, 8.33 % of 12774 from 6 may 2015 to 31 march. which methods is correct.


Sun!ta said...

Hello,

I have a doubt,
actually i am working in a private company , and this is my first job and i have completed 1 year here now its time to get bonus. now here my boss give bonus on percentage of our monthly salary on the basis of our performance in last year. To some people he gives 110% of his monthly salary for e.g. if some one's monthly basic salary is Rs.10000 and boss gives him 110% bonus then he will earn Rs.11000 and if percentage goes down then vice versa. I just wanted to know to which extent this is right or wrong ?

gamshan said...

Hello,

I have joined a company in Bangalore and got joining bonus. In offer letter it mentioned as if I don't serve for a year I have to repay the joining bonus. Now I have completed 10 months and 5 days. If I resign now I have to serve 2 months notice period. While relieving company I have 1 years and 5 days experience in that company. Do I have to repay the joining bonus?

Unknown said...

If my company pay bonus on the basis of rating ..n if the company policy is that no bonus if rating is MSE -meet some expectation then according to bonus act can I claim my bonus??

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shan said...

1) company have enough profit to pay more than 20% of salary as bonus but Whether the maximum bonus @ 20% is obligation for a company to pay or optional. In my understanding 8.33% is obligation for a company to pay bonus irrespective of the financial position.

2) Assume if a company paying bonus excess of 20% on salary whether the same allowed as expenses for income tax purpose?

3) if an employee earn salary more than Rs.21,000/- p.m i.e say Rs. 50,000/- per month whether the provisions of bonus act applicable?. May i know what is the minimum and maximum bonus payable for this employee.

Much appreciated If any revert on query at the earliest.

Unknown said...

My Wife works in XYZ College and she receives salary below 21000. They don' t give any pay slips. How do we check if they get bonus

Anonymous said...

Dear Sir I have a small doubt in sec 12 applicability.the act says sec 12 applies only when the employee salary exceeds 7000 or minimum wages whichever is higher so bonus must be calculated on 7000 or minimum waged whichever is higher.so for the employees who are not covered under sec 12 should we be paying bonus on actual wages of the employee or on minimum wages as fixed by the govt if it is higher than actual wages

rajan r said...

Dear Sir Salary (Basic + DA) is Rs.15500/- , is eligible for bonus ? in this payment (Rs.15500/-) in my company paid bonus Rs.3500/-(Every year) since last 5 years , is it wrong/if doing so ? please explain my calculation.

... with regard
Rajan Rao

Sharad Devidasan said...

Dear sir if i joint a company on 21st september 2015 what would be my bonus in 2016 how hr will calculate my bonus please help me out in this matter

Anonymous said...

Dear sir ,

I want clarification of a question ..

Is Bpo employee is eligible for payment of bonus ?

Vandana Sagvekar said...

Dear Sir,

my basic salary is Rs.15000/-, am i eligible for bonus?

Anonymous said...

Please suggest, can an employee eligible under bonus act claim for bonus if his/her salary structure contains ex-gratia

Jasmeet Singh said...

Dear Sir,

I had given resign from my company on 12/09/2016 , my date of joining was 27/01/2015 , right now I am working in other company.So my question is that am i eligible for the diwali bonus,I haven't received my 2015 diwali bonus as well.Or going to the Labour Court is a better option???

With Regards Jasmeet

Elesh Koshti said...

Dear Sir,

My Self Ilesh Koshti, my company was told me that bonus is calculated on the basis of total present days of employee (excluding Sunday and Festival Holidays declare by company) not on total working days of company (including Sunday and festival holiday declare by company)

so please tell me is this right or wrong? if they are wrong then please tell me what can i do by legal ways

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Hello ser
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Thank you

praveen waghmare said...

Can the Govt ask for Balance sheet details like calculations of allocable / available surplus, etc. if the employer is paying a Maximum Bonus @ 20 % as stipulated under the Act.

Dipendra Kumar said...


Sir,

I have another question related with Bonus Act.

We are going to fill Form "B" applicable under Bonus Act but the query is relates to SET ON AND SET OFF OF ALLOCABLE SURPLUS as the company is operating since FY 2000-01 but going to fill for the FY 2015-16 & further. The problem is "From which financial year we need to compute Allocable surplus" as required in Form-B ?

Shobhit Kamal Saxena said...
This comment has been removed by the author.
Sk Saxena said...

As per the law every employee whose wage is less than or equal to Rs 21,000/- and has completed 30 days in an accounting year is eligible for bonus. The maximum amount of bonus payable is Rs 7000/- for a year.
What if the salary of an employee during the calculating year gets increased beyond the upper capping of Rs 21000/-. Should the amount of Rs 7000 be divided as per the months in which employee’s salary was below Rs 21000, or full amount of Rs 7000 shall be payable.
Example:
An employee is getting salary (Basic+DA) of Rs 19500 for the month of Apr-15 to Aug-15 (5 Months), and Rs 21500 for the month of Sep-15 to Mar-16 (7 Months).
The amount of bonus payable should be as per below options:

Option A :
Rs 19500 X 5 months = 97500
Rs 97500 X 8.33 % = 8122/-
Maximum Bonus Payable is = 7000
Hence Rs 7000 shall be paid as bonus.

Option B :
Since employee’s salary was below Rs 21000 in 5 months only. The amount of bonus payable shall be paid for 5 months.
Bonus Payable is (7000*5)/12 = Rs 2917/-
Hence Rs 2917/- shall be paid as bonus.

Kindly suggest which option is correct as per bonus act.

pradeep jadhav said...

Hi, could you please tell me to whom we need to contact or file complaint if company refusing to pay this bonus. Any specific email Id or contact details to contact govt inspector to file the complaint.

pradeep jadhav said...

I approached to my company to get the payment bonus and they said, Mumbai court has given stay on retroactive bonus. Therefore we can't give the bonus to any employee until hear the final judgment. What action should I take?

pradeep jadhav said...

I approached to my company to get the payment bonus and they said, Mumbai court has given stay on retroactive bonus. Therefore we can't give the bonus to any employee until hear the final judgment. What action should I take?

Anonymous said...

Hello Sir,

I had resigned from my previous company in April'2016 and left it in June'16. I had worked about 2.5 years in that company. In first couple of years of joining my basic + hra was under 10000 till march'15.

Please let me know whether I can ask them to give me bonus ????

And IF yes, then let me know what evidences from government I need to show them ?

Please help

Ashwin Shah