Respected Sir(s),
I have a few queries regarding Bonus calculation:
1) The minimum wage rate that will be applicable for calculating Bonus will be:
(a) The city in which the employee is working or (b) The city where the Head Office of the company is located.
2) As per the new amendment, the maximum limit of Bonus is Rs. 20,000/- and the minimum is Rs. 7,500/-. What does this mean in relation to wages consideration?
Regards,
Yogesh
From India, Gurgaon
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I have a few queries regarding Bonus calculation:
1) The minimum wage rate that will be applicable for calculating Bonus will be:
(a) The city in which the employee is working or (b) The city where the Head Office of the company is located.
2) As per the new amendment, the maximum limit of Bonus is Rs. 20,000/- and the minimum is Rs. 7,500/-. What does this mean in relation to wages consideration?
Regards,
Yogesh
From India, Gurgaon
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1) Place of employment is the most important determinant factor for the fixation of basic salary/wages and other allowances payable to the employee. Based on this, other derivative compensations of employment, like bonuses, are computed. Even in the case of employment disputes, only the place of employment determines jurisdiction. Therefore, the place of the head office has no relevance in such matters unless the employee is employed in the head office itself. If the questioner focuses his attention on the basics of the fixation of minimum wages under the Minimum Wages Act, 1948, he would understand that the same is done with respect to scheduled employments by the Appropriate Governments only on a regional basis across the states or the entire country, as the case may be.
2) I am not able to find the particulars relating to the maximum bonus and minimum bonus mentioned in the query in the Gazette of India notification no. 6 dated 01-01-2016 bringing the new amendment into force. So, let the questioner elucidate his point.
From India, Salem
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61852) I am not able to find the particulars relating to the maximum bonus and minimum bonus mentioned in the query in the Gazette of India notification no. 6 dated 01-01-2016 bringing the new amendment into force. So, let the questioner elucidate his point.
From India, Salem
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Place of business must be Determination for the rate of minimum wage , maximum bonus is 20% and wages not exceeding 7000 or minimum wage should be taken into account.
From India, Bangalore
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From India, Bangalore
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Dear sir,
As per the new amendment in bonuses, amounting to 7000 and minimum wages, whichever is higher, we calculate the bonus based on that amount. If you provide the bonus to an individual whose salary is more than 20000, determine the category they belong to. Obviously, they belong to the high-skilled category. Therefore, check your state's minimum wage. If it's greater than 7000, calculate the bonus based on the minimum wage. If it's less than 7000, calculate it based on 7000.
From India, Panipat
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As per the new amendment in bonuses, amounting to 7000 and minimum wages, whichever is higher, we calculate the bonus based on that amount. If you provide the bonus to an individual whose salary is more than 20000, determine the category they belong to. Obviously, they belong to the high-skilled category. Therefore, check your state's minimum wage. If it's greater than 7000, calculate the bonus based on the minimum wage. If it's less than 7000, calculate it based on 7000.
From India, Panipat
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Recent Notification of Bonus Act only focuses on a few key points as follows:
Eligibility Criteria & Coverage: Employees earning a salary up to 21,000/- per month are covered under this revision.
Bonus Calculation Criteria: The calculation will be based on either 7,000/- or the minimum wages for a particular category of employment, whichever is the higher value. Calculations will be done on a monthly basis and will be based on the employee's earnings in that month.
From India
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Eligibility Criteria & Coverage: Employees earning a salary up to 21,000/- per month are covered under this revision.
Bonus Calculation Criteria: The calculation will be based on either 7,000/- or the minimum wages for a particular category of employment, whichever is the higher value. Calculations will be done on a monthly basis and will be based on the employee's earnings in that month.
From India
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Let me elaborate on the impact on the liability of the employers to pay the statutory bonus consequent on the recent amendment as follows:
1) Revision of wage-threshold for eligibility [Sec.2(13)]: Earlier Rs.10,000/= raised to Rs.21,000/=
2) Revision of wage/salary ceiling for calculation purpose (Sec.12): Earlier Rs.3,500/= raised to Rs.7,000/= OR minimum wages, whichever is higher
3) Retrospective effect from 01-04-2014
Now, coming to the query:
a) Since the raise in the threshold wages to claim bonus, more employees earning up to Rs.21,000/= become eligible for bonus.
b) Revision of salary/wage ceiling for calculation purpose increases the liability of the employers because of the caveat of "whichever is higher" clause introduced in the amended provision. It implies that in case though the industry wages are more than the minimum wages but less than the notional wages of Rs.7,000/=, hereinafter bonus has to be calculated on the basis of 8.33% to 20% of the notional higher wages only and NOT on the actually earned wages. The logic is that when the actual wages received at the rate of MW is less than the notional wages, the employee should get a higher bonus based on the higher notional wages.
Similarly, in case, the employee crosses both the statutory ceiling of Rs.7,000/= as well as the MW fixed for his employment, for calculation purposes, his notional wages should be Rs.7,000/= only for the reason it is higher than the relevant MW. The logic here is that but for the amendment of Sec.12, he would have received a lesser bonus at Rs.3,500/= only depending on the actual percentage of bonus decided between 8.33% and 20%.
From India, Salem
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1) Revision of wage-threshold for eligibility [Sec.2(13)]: Earlier Rs.10,000/= raised to Rs.21,000/=
2) Revision of wage/salary ceiling for calculation purpose (Sec.12): Earlier Rs.3,500/= raised to Rs.7,000/= OR minimum wages, whichever is higher
3) Retrospective effect from 01-04-2014
Now, coming to the query:
a) Since the raise in the threshold wages to claim bonus, more employees earning up to Rs.21,000/= become eligible for bonus.
b) Revision of salary/wage ceiling for calculation purpose increases the liability of the employers because of the caveat of "whichever is higher" clause introduced in the amended provision. It implies that in case though the industry wages are more than the minimum wages but less than the notional wages of Rs.7,000/=, hereinafter bonus has to be calculated on the basis of 8.33% to 20% of the notional higher wages only and NOT on the actually earned wages. The logic is that when the actual wages received at the rate of MW is less than the notional wages, the employee should get a higher bonus based on the higher notional wages.
Similarly, in case, the employee crosses both the statutory ceiling of Rs.7,000/= as well as the MW fixed for his employment, for calculation purposes, his notional wages should be Rs.7,000/= only for the reason it is higher than the relevant MW. The logic here is that but for the amendment of Sec.12, he would have received a lesser bonus at Rs.3,500/= only depending on the actual percentage of bonus decided between 8.33% and 20%.
From India, Salem
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Thanks Umakanthan Sir, Nice and detailed description of each part of notification and logic.
From India
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From India
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I’m working in a public Ltd. If my gross is 30,000 p.m. And I’m in the system for 4 years. So, what would be my Bonus for 2015 - 2016(As per new policy)?
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No, Not at all, under the provisions of Bonus Act and recent Notification
From India
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From India
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Bonus Calculation.xls
BONUS CALCULATION RULE (1).pdf