If an employee's gross salary is above 21000/- Rs., then how do we calculate the bonus?
As per the law, the maximum gross salary eligible for a bonus is 21000/- Rs. If the gross salary exceeds 21000/- Rs., then the bonus is not applicable.
For example, if the gross salary is 15000/- and the basic + DA is 8000/-, then the bonus calculation is: 8000 * 8.33% = 666/- Rs.
If the salary is 22000/-, how do we calculate the bonus?
From India, Chennai
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1As per the law, the maximum gross salary eligible for a bonus is 21000/- Rs. If the gross salary exceeds 21000/- Rs., then the bonus is not applicable.
For example, if the gross salary is 15000/- and the basic + DA is 8000/-, then the bonus calculation is: 8000 * 8.33% = 666/- Rs.
If the salary is 22000/-, how do we calculate the bonus?
From India, Chennai
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Dear Sunil,
When the monthly salary of an employee exceeds the threshold of Rs. 21,000.00, he escapes from the ambit of the definition of the term "employee" under Section 2(13) of the PB Act, 1965. From that point onwards, he is not entitled to the statutory bonus contemplated under the Act. Until that point, his bonus amount shall be calculated as per Section 12 of the Act, applying the notional monthly salary of Rs. 7,000/= or the statutory minimum wages for that job, whichever is higher.
From India, Salem
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When the monthly salary of an employee exceeds the threshold of Rs. 21,000.00, he escapes from the ambit of the definition of the term "employee" under Section 2(13) of the PB Act, 1965. From that point onwards, he is not entitled to the statutory bonus contemplated under the Act. Until that point, his bonus amount shall be calculated as per Section 12 of the Act, applying the notional monthly salary of Rs. 7,000/= or the statutory minimum wages for that job, whichever is higher.
From India, Salem
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As per PB Act, the definition of -“salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation. – Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to from part of the salary or wage of such employee.
As per the above definition, the salary for Bonus eligibility will be on Basic & DA. Therefore, it is not monthly gross salary.
Moreover, Bonus is deferred wages i.e. in 2021 the Bonus will be paid for 2020 depending on accounting year of the organization. Accordingly, the Basic & DA amount to be considered for 2020 not for the payable year 2021.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
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(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation. – Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to from part of the salary or wage of such employee.
As per the above definition, the salary for Bonus eligibility will be on Basic & DA. Therefore, it is not monthly gross salary.
Moreover, Bonus is deferred wages i.e. in 2021 the Bonus will be paid for 2020 depending on accounting year of the organization. Accordingly, the Basic & DA amount to be considered for 2020 not for the payable year 2021.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
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(Fact Checked)-[response] As per the Payment of Bonus Act, the bonus eligibility is based on Basic & DA, not gross salary. Bonus is paid for the previous accounting year. Thank you for sharing. (1 Acknowledge point)
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What should be taken as base to calculate the bonus amount?
From India
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From India
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(Fact Checked)-The base to calculate the bonus amount for employees with a gross salary above Rs. 21,000 is still their Basic + DA. This remains consistent regardless of the gross salary amount. (1 Acknowledge point)
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For bonus calculation, the base will be 7000/- or the minimum wages of the grade, whichever is higher. If the Basic & DA is less than 7000/-, it will be based on the actual Basic & DA.
The percentage of bonus will be calculated based on the available surplus, allocable surplus, set on & set off. The percentage of bonus varies between 8.33% to 20%.
S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions +91 98310 81531 USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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The percentage of bonus will be calculated based on the available surplus, allocable surplus, set on & set off. The percentage of bonus varies between 8.33% to 20%.
S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions +91 98310 81531
From India, New Delhi
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The information provided in the user reply is partially incorrect. The calculation of bonus based on a base of 7000/- or minimum wages is not accurate. Bonus calculations are typically based on the actual Basic and DA. The percentage of bonus mentioned (8.33% to 20%) is correct.
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(Fact Check Failed/Partial)-The user's reply contains inaccurate information. According to the Payment of Bonus Act, 1965, employees with a salary above Rs.21,000 are eligible for bonus calculation. The statutory bonus is calculated based on a notional monthly salary of Rs.7,000 or the minimum wages for the job, whichever is higher.