if basic + DA is less than 7000/- then on what we calculate bonus??
From India, Rewari
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if the bonus is less than the 7000 take the basic what ever the basic is ie ex. 6500 take it as the basic + DA .
From India, Hyderabad
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But bonus amendment said whichever is higher either minimum wage or 7000/- My understanding is 7000/- Hemraj Yadav

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Dear Manu Taneja, In your case, since basic+DA is less than 7000, as per statutory obligation, you have to make min.rs.7000/- as bonus.
From India, Thane
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Hemraj,

Bonus is to be paid on the actual wages for the year (basic + DA paid each month for the entire financial year). The act provides a ceiling. The ceiling is that if the wages are higher than ₹7000 per month, or higher than the minimum wages where the minimum wage is more than ₹7000 per month, the bonus will be paid as if the employee had wages of ₹7000 (or the minimum wage rate, whichever is higher). I hope you are now clear about the distinction between the two of them.

From India, Mumbai
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Dear Saswata ji,

Ceiling and actual wage words are not mentioned nor used in the bonus act anywhere. It is written in the act to calculate bonus on actual wages for those earning less than 7000/-. This is an individual understanding and is clearly written in the amendment as 7000/- or minimum wage, whichever is higher.

Please check.

Regards,
Hemraj


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Dear D.srihari, Kindly go through the amendment once again and then comment on the issue please. Your interpretation is contrary to the amendment. P K Sharma
From India, Delhi
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Dear Manu Taneja,

The objective of the ceiling limit of 7000 is to reduce the burden on the employer and to provide a reasonable bonus to all eligible employees/workers. Therefore, irrespective of the actual Basic plus DA, calculate the annual bonus either on 7000 or on your state's minimum wages for scheduled employees, whichever is higher as per Section 12.

Calculating the bonus on actual Basic plus DA in case of less than 7000 is just to avoid statutory dues, which are subjected to punishment and penalties as defined in Section 28 of the Bonus Act. Hence, even if Basic plus DA is less than the ceiling limit, always calculate the bonus either on the ceiling limit or on the state minimum wages for scheduled employees, whichever is higher.

Thanks and Regards,
Devesh Chauhan
Practicing in Accounts, Finance, Taxation, and Labour Laws

From India, Basti
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Dear Manu Bhai,

I don't know why there is doubt or confusion. For individuals earning higher than Rs. 7000/- but up to Rs. 21000/-, their bonus will be calculated based on a salary of Rs. 7000/- or the minimum wages, whichever is higher. For those earning less than Rs. 7000/-, their bonus will be calculated based on the actual pay (basic plus DA) they receive.

BS Kalsi
Member since August 2011

From India, Mumbai
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Daer all, My Question is: If a Workmen worked for 20 days in a month and Get a Basic Salary of 6000/ , then what amount to be considered for calculation in bonus?? 6000 or 7000???
From India, Kolkata
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Dear Srihari,
Dear Srihari,
In continuation to the discussions, I would like to once again bring to your notice the Calculation of bonus in the light of amendment:
The Act provides that the bonus payable to an employee will be in proportion to his or her salary or wage. However, earlier if an employee’s salary is more than Rs 3,500 per month, for the purposes of calculation of bonus, it was assumed to be Rs 3,500 per month. The amendment raised this calculation ceiling to Rs 7,000 per month or the minimum wage notified for the employment under the Minimum Wages Act, 1948 whichever is higher.
I could not understand how you interpreted " if the bonus is less than the 7000 take the basic what ever the basic is ie ex. 6500 take it as the basic + DA . 15th October 2016 From India, Hyderabad D.srihari Manager-HR- cell-08686193637 Bulk Drug APIs.Hyderabad"
I may be corrected if my submissions are wrong.
P K Sharma

From India, Delhi
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Dear all,

Rs. 7000/- is not a maximum ceiling limit, but it is the minimum limit. So, if an employee is drawing a salary less than Rs. 7000/-, then he should be paid a minimum of Rs. 7000/-. If his salary is more than Rs. 7000/-, then he should be paid at the rate of minimum wages fixed for that category in the state. Hope it is now clear to all.

From India, Mumbai
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Dear Mr. AL Gupta,

Thank you for your insight into the new bonus act. It is evident that many colleagues find it confusing, so your interpretation is valuable.

To clarify:
1. If the minimum wage is less than 7000, it should be considered as 7000 for bonus calculation.
2. If the minimum wage is between 7000 and 21000, 8.33% of the minimum wage is considered as the bonus.
3. The maximum ceiling for the bonus is set at 20% of the minimum wage earned, meaning workers cannot claim more than 20% as a bonus.

I hope this explanation is clear and understandable.

Regards,
P. L. Kanthan

From India, Thane
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When (basic+da)>7000 then it 7000 when(basic+da)<7000 then it actual earning And the % may be 8.33 to 20 % of (basic+da) Max up to 20% with union agreement for workers
From India , Gurgaon
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I think it is important for members to read the Bonus Act and understand it properly, so as not to pass wrong information to the readers on this forum.

Sec 10 defines the minimum bonus:

Payment of minimum bonus.- Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 per cent. of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year.

So, it's 8.33% of salary or wages.

Sec 12 talks about the bonus for certain employees:

Calculation of bonus with respect to certain employees.- Where the salary or wage of an employee exceeds [two thousand five hundred rupees] per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were [two thousand five hundred rupees] per mensem.

This limit of Rs. 2,500 was increased to Rs. 2,500 and now increased to "Rs. 7,000 or minimum wages, whichever is higher".

So, an employee gets a bonus (min bonus) at 8.33% of his actual wages (which is defined as basic + DA) and if his salary or wages are more than Rs. 7,000 then the bonus will be computed as if his salary is Rs. 7,500.

If the company has made more profit and money is available in the allocable surplus account (working provided in Sec 5), then the bonus will be higher, subject to a maximum of 20% of salary or wages. And again, if someone's salary or wages are more than Rs. 7,000 then he gets 20% of the ceiling (20% of Rs. 7,000 X 12 months).

Rs. 7,000 is not the minimum bonus; it is not necessary for the company to pay Rs. 7,000 as a bonus to someone whose basic and DA are less than Rs. 7,000 per month.

From India, Mumbai
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Hi Members, There has been frequent quries/doubts/misinterpretations about the latest Amendment in Bonus Act. The amendment is : - " Where the salary/wage of the employee
From India, Thane
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Sorry, friends, my PC misbehaved. Please find attached a scanned copy of the Bonus Act Amendment 2016. Kindly read sentence 3.(i) - "three thousand and five hundred rupees" at both places where they occur, the words "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government," and "whichever is higher" shall respectively be substituted. This clearly states that even if the minimum wage is less than 7000, a minimum of 7000 should be paid as a bonus. In other words, everyone is assured of a minimum of 7000 as a bonus; it does not mean that if anybody's wage is less than 7000, the calculation should be based on that low wage.
From India, Thane
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Dear Priyabrat,

In reference to your query, you are advised to refer to Section 13 of the Payment of Bonus Act, 1965, which states that if an employee has not worked for all the working days in an accounting year, their bonus amount will be proportionally reduced.

BS Kalsi,
Member since August 2011

From India, Mumbai
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I agree with the contention of Sh. Saswata Banerjee that the limit of Rs 7000/- has been fixed for the employees who are drawing a salary of more than Rs 7000/- and up to Rs. 21000/- per month. The employees who are getting less than Rs 7000/- shall be eligible to get the bonus calculated based on their basic plus DA drawn by them in that accounting year. Section 11 clearly provides that an employee shall be eligible to get an amount in proportion to the salary or wage earned by him during the accounting year where allocable surplus exceeds the amount of the minimum bonus.

BS Kalsi,
Member since August 2011

From India, Mumbai
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Dear All Members,

I would like to know in which section of the Bonus Act it is written that if basic plus DA is less than 7000, then the bonus would be calculated on the actual basic drawn by the employee. If basic plus DA exceeds 7000, then the bonus is to be calculated on 7000 or the minimum state wages fixed by the appropriate government for scheduled employment.

Also, I would like to ask the basic question to all members: what was the object of the government for inserting this act? Whether to provide benefits to employees or anything else? Why has the government extended the threshold limit from 10000 to 21000? Whether to bring more employees within the purview of the Bonus Act or anything else? What was the object of the government to extend the ceiling limit from 3500 to 7000? Whether to provide a higher amount as a bonus to employees or to provide a benefit to employers.

Now let me tell you all, a few months back, I met with my range labor commissioner and asked the same question. If basic plus DA is less than 7000, then on what amount is the bonus to be calculated? He said this act was inserted to provide benefits to employees, and drafting salary structure depends on the company's policy. An employer may divide the salary into allowances just to avoid the bonus. Therefore, even if basic plus DA is less than 7000, the bonus would still be calculated on 7000. If employees fall under the scheduled category and the state minimum wage is higher than 7000, then the state minimum wage will be taken into account.

Thanks,

From India, Jaipur
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Dear AMTGPT,

I fully agree with your submissions and have reiterated this interpretation many times in these threads. However, some contributors are presenting it in their own ways, which contradict the true meanings of the amendment.

P K Sharma

From India, Delhi
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Employee who has worked for less than 30 days in FY is not entitled to receive bonus.
From India, Mumbai
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Employee who has worked for 30 or more days in FY is entitled to receive bonus.
From India, Mumbai
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I think this is my third post on the same query, and still, my understanding is that if basic + DA is less than 7000/-, then the bonus will calculate on 7000/-, whichever is higher to calculate the bonus. Please understand the meaning of whichever is higher, either 7000/- or the state minimum wage.

Thanks to all.


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If you deliberately chose to ignore what the act actually says, then no amount of posts on this thread will make any difference.
From India, Mumbai
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Then, calculate the month's bonus as follows:
{7000 / (month days x working days)} x bonus %
For example, if the number of working days is 20, the month is January, and the bonus percentage is 8.33,
then
7000 / 31 x 20 = 4516 bonus calculation wage
and the bonus is = 4516 x 8.33% = 376/-

From India, Roorkee
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The calculations of the bonus are made on the earned wage, which includes weekly offs and holidays as well. As such, it is paydays, not actual working days, for making calculations. Actual working days are calculated for checking the 30-day working qualification purpose.

P.K. Sharma

From India, Delhi
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Actual Calculation Bonus 7000 or 8.33% and paid bonus working days (26) or Actual working (30) please give details

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The Payment of Bonus Act, 1965 - FAQ

Is an employee entitled to get a bonus on the basis of his entire salary or wage? If an employee is drawing a salary or wage not exceeding ₹3,500.00 per month, he is entitled to get a bonus on his entire salary or wage. If an employee is getting a salary or wage exceeding ₹3,500.00 per month, but not exceeding ₹10,000.00 per month, the bonus payable to him is to be calculated as if his salary or wage were ₹3,500.00 per month. An employee getting a salary or wage exceeding ₹10,000.00 per month is not entitled to get a bonus. {Section 12}

Regards, Narendra

From India, Chennai
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Dear Sir, How can we calculate bonus working days from financial year 2018-19. Please give an example. Amit Gaur
From India, Jaipur
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Dear All ++++++++++++++ Thanks for your inputs. Wish a happy and prosperous festival of lights, DIWALI +++++++++++++
From India, New Delhi
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