Dear Mahadeva, As per payment of bonus act 1965, if any employee is getting basic wages upto Rs. 10,000/- will be covered under payment of bonus act, 1965..
From India, New Delhi
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19From India, New Delhi
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Dear Minakshi,
The Bonus Act fixed the percentage of Bonus, i.e., a minimum of 8.33% and a maximum of 20%. An employer can pay any percentage between the two limits. However, it should be a part of collective bargaining through a union or any other negotiation platform.
Thanks & Regards,
Subhas
From India, Mumbai
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The Bonus Act fixed the percentage of Bonus, i.e., a minimum of 8.33% and a maximum of 20%. An employer can pay any percentage between the two limits. However, it should be a part of collective bargaining through a union or any other negotiation platform.
Thanks & Regards,
Subhas
From India, Mumbai
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Dear Friends,
A company is giving a 20% bonus to all the employees on Diwali festival. However, the resigned employees are only receiving 8.33% (i.e. statutory only). Is this correct?
Additionally, one employee has completed 2.6 years of service and then resigned. In the first year, he received a 20% bonus, and in the second year, he should have received a bonus as well. If he had worked until the Diwali festival, he would have been eligible for a 20% bonus for the second year. Unfortunately, he resigned before the festival.
Now, the management wants to give him 8.33% only for a total of 1.6 years. Is this the correct approach?
Please clarify my query.
Thanks & Regards,
KAR
From India, Hyderabad
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A company is giving a 20% bonus to all the employees on Diwali festival. However, the resigned employees are only receiving 8.33% (i.e. statutory only). Is this correct?
Additionally, one employee has completed 2.6 years of service and then resigned. In the first year, he received a 20% bonus, and in the second year, he should have received a bonus as well. If he had worked until the Diwali festival, he would have been eligible for a 20% bonus for the second year. Unfortunately, he resigned before the festival.
Now, the management wants to give him 8.33% only for a total of 1.6 years. Is this the correct approach?
Please clarify my query.
Thanks & Regards,
KAR
From India, Hyderabad
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Dear Meenakshi,
As per the Bonus Act, it is correct that the minimum bonus is 8.33% and the maximum bonus is 20%. However, the percentage of bonus depends on the profitability of the company, which comes from Bonus registers A and B usually maintained by Finance personnel. First, allocate the bonus amount from registers A and B, then calculate the percentage of the bonus. If the company is in a loss, then it must be 8.33%, but in case the company is in profit, then the percentage amount needs to be calculated, which is basically derived from registers A and B.
Regards,
Arun
From India, Delhi
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As per the Bonus Act, it is correct that the minimum bonus is 8.33% and the maximum bonus is 20%. However, the percentage of bonus depends on the profitability of the company, which comes from Bonus registers A and B usually maintained by Finance personnel. First, allocate the bonus amount from registers A and B, then calculate the percentage of the bonus. If the company is in a loss, then it must be 8.33%, but in case the company is in profit, then the percentage amount needs to be calculated, which is basically derived from registers A and B.
Regards,
Arun
From India, Delhi
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Dear Sir,
Thank you for your reply.
Further to this, I wanted to ask: can we pay the bonus between 8.33% to 20% as per the company's profitability? How exactly is the percentage of the bonus correlated to profitability, i.e., at which amount of company profit can we decide on the 15% bonus?
Regards,
Minakshi
From India, Delhi
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Thank you for your reply.
Further to this, I wanted to ask: can we pay the bonus between 8.33% to 20% as per the company's profitability? How exactly is the percentage of the bonus correlated to profitability, i.e., at which amount of company profit can we decide on the 15% bonus?
Regards,
Minakshi
From India, Delhi
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Hi Minakshi,
Let me clarify about the bonus.
Conditions:
1. The bonus will be calculated based on basic+da.
2. If an employee withdraws basic+da exceeding 10k, they cannot claim the bonus.
3. An employee must have worked at least 30 days in the assessment year to be eligible for the bonus.
4. The minimum bonus percentage is 8.33%.
5. The maximum bonus percentage is 20%.
6. The bonus is not mandatory for the first 5 years if the company is in a loss. However, the company's accounts department must maintain Form A and Form B, where they state the reason for the loss.
7. After 5 years, regardless of profit or loss, the company is obligated to pay the bonus as per the prescribed percentage.
8. Form C is maintained by the company for bonus distribution.
9. Form D is used for the annual return of the bonus.
10. The minimum bonus amount is 3500.
11. The maximum bonus amount is 8400.
12. If the company decides to offer more than 8400, it will be termed as ex gratia.
13. Here, I am explaining the formulas or calculations for the bonus.
Suppose your basic salary is 6000, and your company provides an 8.33% bonus. If you work full days every month, you will earn 72000 as the basic salary annually. According to the bonus percentage, 72000*8.33% = 5998.
However, the company only offers 3500 as the bonus, which might be confusing to you.
The reason for this is that the standard bonus basic is considered 3500 as per the act. Even though your basic salary is 6000, the bonus basic will be 3500 if you are present for a full day every month.
So, the calculation is 3500*12 = 42000.
42000*8.33% = 3500.
42000*20% = 8400.
Ultimately, it is entirely at the company's discretion whether they choose to provide the bonus based on your actual basic salary.
I hope, Minakshi, that this concise explanation clarifies the concept of the bonus.
Thanks and regards,
Vikas Khatter.
From India, Chandigarh
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Let me clarify about the bonus.
Conditions:
1. The bonus will be calculated based on basic+da.
2. If an employee withdraws basic+da exceeding 10k, they cannot claim the bonus.
3. An employee must have worked at least 30 days in the assessment year to be eligible for the bonus.
4. The minimum bonus percentage is 8.33%.
5. The maximum bonus percentage is 20%.
6. The bonus is not mandatory for the first 5 years if the company is in a loss. However, the company's accounts department must maintain Form A and Form B, where they state the reason for the loss.
7. After 5 years, regardless of profit or loss, the company is obligated to pay the bonus as per the prescribed percentage.
8. Form C is maintained by the company for bonus distribution.
9. Form D is used for the annual return of the bonus.
10. The minimum bonus amount is 3500.
11. The maximum bonus amount is 8400.
12. If the company decides to offer more than 8400, it will be termed as ex gratia.
13. Here, I am explaining the formulas or calculations for the bonus.
Suppose your basic salary is 6000, and your company provides an 8.33% bonus. If you work full days every month, you will earn 72000 as the basic salary annually. According to the bonus percentage, 72000*8.33% = 5998.
However, the company only offers 3500 as the bonus, which might be confusing to you.
The reason for this is that the standard bonus basic is considered 3500 as per the act. Even though your basic salary is 6000, the bonus basic will be 3500 if you are present for a full day every month.
So, the calculation is 3500*12 = 42000.
42000*8.33% = 3500.
42000*20% = 8400.
Ultimately, it is entirely at the company's discretion whether they choose to provide the bonus based on your actual basic salary.
I hope, Minakshi, that this concise explanation clarifies the concept of the bonus.
Thanks and regards,
Vikas Khatter.
From India, Chandigarh
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Hi Minakshi,
Thank you for your response, Vikas. Would you please review my query once again? It's quite different from what you told me. My question is, how is the bonus percentage of either 8.33%, 15%, or 20% correlated to the company's profit?
Regards,
Minakshi
From India, Delhi
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Thank you for your response, Vikas. Would you please review my query once again? It's quite different from what you told me. My question is, how is the bonus percentage of either 8.33%, 15%, or 20% correlated to the company's profit?
Regards,
Minakshi
From India, Delhi
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Dear Minakshi,
Reply to your query is given in Section 11 of Payment of Bonus Act which reads as under:
“Payment of maximum bonus.
11. (1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.”
Hence you have to calculate allocable surplus of your unit and work out bonus payable accordingly.
From India, Hyderabad
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Reply to your query is given in Section 11 of Payment of Bonus Act which reads as under:
“Payment of maximum bonus.
11. (1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.”
Hence you have to calculate allocable surplus of your unit and work out bonus payable accordingly.
From India, Hyderabad
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Dear Minakshi,
As per the provisions of the act, the percentage of bonus is entirely at the employer's discretion (8.33% - 20%).
Bonus is a statutory obligation, and ex-gratia is optional. I do not agree with Mr. Suresh's opinion.
It is rightly said by Ms. Manasi that there is a provision for set on and set off to address the loss situation.
According to the provisions of the Bonus Act, if your salary is less than Rs. 10,000 (Basic) and you have worked for 30 days in an accounting year, you will be entitled to a bonus. The bonus will be calculated on an amount less than or equal to Rs. 3,500 per month (sec 12) at a minimum rate of 8.33% (sec.10) and a maximum of 20% (sec.11). The percentage depends on the allocable surplus of the company, but an employer must pay a mandatory 8.33% even if they are not making a profit. There is also a provision that for a new company, the act provides a 5-year relaxation. However, if the company earns a profit during the year, it must pay a bonus for that particular year (sec.16).
With Regards,
Sandip Saha
sandisaha@gmail.com
From India, Kolkata
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As per the provisions of the act, the percentage of bonus is entirely at the employer's discretion (8.33% - 20%).
Bonus is a statutory obligation, and ex-gratia is optional. I do not agree with Mr. Suresh's opinion.
It is rightly said by Ms. Manasi that there is a provision for set on and set off to address the loss situation.
According to the provisions of the Bonus Act, if your salary is less than Rs. 10,000 (Basic) and you have worked for 30 days in an accounting year, you will be entitled to a bonus. The bonus will be calculated on an amount less than or equal to Rs. 3,500 per month (sec 12) at a minimum rate of 8.33% (sec.10) and a maximum of 20% (sec.11). The percentage depends on the allocable surplus of the company, but an employer must pay a mandatory 8.33% even if they are not making a profit. There is also a provision that for a new company, the act provides a 5-year relaxation. However, if the company earns a profit during the year, it must pay a bonus for that particular year (sec.16).
With Regards,
Sandip Saha
sandisaha@gmail.com
From India, Kolkata
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Hi Minakshi,
I wanted to let you know that there is no specific criteria for distributing the percentage of bonus based on profitability. It entirely depends on the employer's discretion. The employer can choose to give any percentage of bonus.
Thank you.
From India, Chandigarh
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I wanted to let you know that there is no specific criteria for distributing the percentage of bonus based on profitability. It entirely depends on the employer's discretion. The employer can choose to give any percentage of bonus.
Thank you.
From India, Chandigarh
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