Hi Sir/Madam, Can you please help me with the bonus calculations? Is it calculated on the current minimum wage or the previous as per month?
From India, Pune
From India, Pune
Bonus is a deferred wages which means the Bonus for financial year 2023 -24 should be paid on the basis of minimum wages 2022-23.
S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
337S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
Bonus paid this year is the bonus earned during the last financial year, right? Then the amount of bonus should reflect the amount paid last financial year, ie, 2022-23.
From India, Kannur
From India, Kannur
Bonus Calculation has different steps which are as follows :-
1.0 % of Bonus is to be paid - From P & L account of Balance sheet has to find out Available Surplus first. Certain % of Available Surplus will be Allocable surplus. Then considering Set On & Set Off to find out % of Bonus. In most of the organizations it is done by Finance Department.
2.0 Base amount to calculate Bonus - If the Basic and DA of employees are 7000/- or more , then minimum wages of the employee has to be find out based on published minimum wages average data for the financial year for which Bonus has to be paid. That amount will be base amount on which Bonus has to be paid.
3.0 Individual employee eligibility - For the financial year Bonus has to be paid , the employee's Basic & DA should be less than or equal to 21,000/- and minimum 30 working days present during the financial year.
4.0 Based on individual presence in the year with pay ( including paid leave ) proportionately the actual amount of bonus has to be paid. For LWP it will proportionately less.
S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
1.0 % of Bonus is to be paid - From P & L account of Balance sheet has to find out Available Surplus first. Certain % of Available Surplus will be Allocable surplus. Then considering Set On & Set Off to find out % of Bonus. In most of the organizations it is done by Finance Department.
2.0 Base amount to calculate Bonus - If the Basic and DA of employees are 7000/- or more , then minimum wages of the employee has to be find out based on published minimum wages average data for the financial year for which Bonus has to be paid. That amount will be base amount on which Bonus has to be paid.
3.0 Individual employee eligibility - For the financial year Bonus has to be paid , the employee's Basic & DA should be less than or equal to 21,000/- and minimum 30 working days present during the financial year.
4.0 Based on individual presence in the year with pay ( including paid leave ) proportionately the actual amount of bonus has to be paid. For LWP it will proportionately less.
S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
Calculation of bonus involves different steps. First, the establishment should cover under the Payment of Bonus Act. Second, we have to decide who all are entitled to get bonus and the salary which would qualify to bonus. Third, we have to see how much amount can be appropriated for payment of bonus. This will depend upon the profit of the organisation, surplus available for payment of bonus and the amount which can be allocated for it for the financial year. Accordingly, the rate of bonus shall vary from 8.33% to 20%.
A factory is covered by Payment of Bonus Act without reference to the number of employees working in it but other establishments will come under the purview of the Act when it employs 20 employees. Under any case, there is an infancy protection available for five years. But if the establishment makes profits in any of these years, the establishment becomes liable to pay bonus to its employees. Obviously, it will continue once covered even if the company suffers loss thereafter.
An employee whose salary does not exceed Rs 21000 per month and who has worked at least for 30 days in the preceding financial year would be entitled to get bonus. Therefore, all employees whose salary exceed Rs 21000 will be out of the purview of Bonus. However, the entire amount of salary would not qualify for bonus. In respect of employees whose salary is more than Rs 7000, the bonus will be calculated on Rs 7000 or the minimum wages fixed by the government. Therefore, if in respect of your industry a minimum wages has been fixed by the Government, then that minimum wages will be the base for calculating the bonus. Suppose that your for industry the government has notified minimum wages and for a class of employees, it is Rs 15000. Then his bonus shall be calculated as if his salary is Rs 15000.Even if his salary is less than Rs 15000, you should calculate Bonus with Rs 15000 as base. This is because you are not expected to pay a salary of less than the notified minimum wages. This applies to calculation of Gratuity (at the time of discharge) also. The leave days in the financial year without pay (LOP) shall be deducted proportionately from this 15000. Very simply, it will be Rs 15000 X 12 (months or such lesser months he was with the organisation) LESS the wages for LOP days would be the gross salary qualifying bonus. If there were no LOP, the gross salary would be Rs 180000. In the case of employee who joined during the year or in the case of left employees there will not be 12 months' payout and the amount of gross salary would be less accordingly.
Suppose that your industry is not in the scheduled employment for which minimum wages has been notified, then in respect of employees whose salary exceeds Rs 7000, the bonus qualifying salary would be Rs 7000 per month. From this 7000, you can make proportionate deduction for loss of pay leaves to arrive at the annual gross salary. If there is no LOP, the gross salary would be Rs 84000.
In case, the minimum wages is more than Rs 21000, (as in Kerala where the revised minimum wages are almost above Rs 23000) no one would be entitled to any bonus.
The statutory minimum bonus payable is 8.33% of the annual gross salary earned by each employee in the financial year. If the establishment has sufficient profits they can pay higher percentage. In a larger organisations where the employees have Unions for their collective bargaining, the rate is decided after long discussions with the Union(s). Once the rate of bonus is decided, the Personnel department shall proceed with calculation of bonus payable to each employee. It is just getting the amount by multiplying the rate of bonus with the annual gross salary arrived at as explained above. As such, if the minimum wages is Rs 15000, and the employee has worked all the days in the year, and the rate of bonus is 8.33%, then the amount of Bonus will be Rs 14996 approximately Rs 15000.
From India, Kannur
A factory is covered by Payment of Bonus Act without reference to the number of employees working in it but other establishments will come under the purview of the Act when it employs 20 employees. Under any case, there is an infancy protection available for five years. But if the establishment makes profits in any of these years, the establishment becomes liable to pay bonus to its employees. Obviously, it will continue once covered even if the company suffers loss thereafter.
An employee whose salary does not exceed Rs 21000 per month and who has worked at least for 30 days in the preceding financial year would be entitled to get bonus. Therefore, all employees whose salary exceed Rs 21000 will be out of the purview of Bonus. However, the entire amount of salary would not qualify for bonus. In respect of employees whose salary is more than Rs 7000, the bonus will be calculated on Rs 7000 or the minimum wages fixed by the government. Therefore, if in respect of your industry a minimum wages has been fixed by the Government, then that minimum wages will be the base for calculating the bonus. Suppose that your for industry the government has notified minimum wages and for a class of employees, it is Rs 15000. Then his bonus shall be calculated as if his salary is Rs 15000.Even if his salary is less than Rs 15000, you should calculate Bonus with Rs 15000 as base. This is because you are not expected to pay a salary of less than the notified minimum wages. This applies to calculation of Gratuity (at the time of discharge) also. The leave days in the financial year without pay (LOP) shall be deducted proportionately from this 15000. Very simply, it will be Rs 15000 X 12 (months or such lesser months he was with the organisation) LESS the wages for LOP days would be the gross salary qualifying bonus. If there were no LOP, the gross salary would be Rs 180000. In the case of employee who joined during the year or in the case of left employees there will not be 12 months' payout and the amount of gross salary would be less accordingly.
Suppose that your industry is not in the scheduled employment for which minimum wages has been notified, then in respect of employees whose salary exceeds Rs 7000, the bonus qualifying salary would be Rs 7000 per month. From this 7000, you can make proportionate deduction for loss of pay leaves to arrive at the annual gross salary. If there is no LOP, the gross salary would be Rs 84000.
In case, the minimum wages is more than Rs 21000, (as in Kerala where the revised minimum wages are almost above Rs 23000) no one would be entitled to any bonus.
The statutory minimum bonus payable is 8.33% of the annual gross salary earned by each employee in the financial year. If the establishment has sufficient profits they can pay higher percentage. In a larger organisations where the employees have Unions for their collective bargaining, the rate is decided after long discussions with the Union(s). Once the rate of bonus is decided, the Personnel department shall proceed with calculation of bonus payable to each employee. It is just getting the amount by multiplying the rate of bonus with the annual gross salary arrived at as explained above. As such, if the minimum wages is Rs 15000, and the employee has worked all the days in the year, and the rate of bonus is 8.33%, then the amount of Bonus will be Rs 14996 approximately Rs 15000.
From India, Kannur
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