Hi All, Please someone tell me, what is meant by statutory bonus? Thanks & Regards, Arushi
From India
From India
Statutory Bonus means bonus payable as per statute, ie, the Payment of Bonus Act. As per the Act, an amount equal to 8.33% of the Basic + Dearness allowance paid to an employee who is eligible for bonus is to be paid irrespective of availability of surplus or profit. Therefore, 8.33% is the statutory minimum bonus payable. However, depending upon availability of profit, the employer shall pay bonus subject to a maximum of 20%.
Regards,
Madhu.T.K
From India, Kannur
4250Regards,
Madhu.T.K
From India, Kannur
Hello,
By way of amplification of what Mr. Madhu has said, I wish to add as under:
1) When one talks of "Statutory Bonus" one must first ensure that the "Statute" (The Payment of Bonus Act 1956) is applicable to the establishment.
2) The law on Bonus provides the "formula" to calculate "available surplus" and "allocable surplus" for the given year.
3) The law also provides that the statutory bonus could range from 8.33% (Minimum) to 20% (Maximum) of Bonusable salary (Basic+DA)
4) The law along side applicability to establishments also stipulates as to who all the act will be applicable and on what conditions!
5) The law also states that even when the organization makes LOSS, it is obliged to pay the Minimum Bonus to eligible employees.
6) The law has also provided a mechanism called "Set On" and "Set Off" statement. Simply it requires the employer when he makes profits in excess of 20% Bonus,, surplus up to another 20% has to be carried in the books (for three years) as a "set on" and when the employer makes a loss in a particular year then he is entitled to (for the next three years) "set off" for related amount. This mechanism makes it possible for employees to receive maximum possible bonus depending upon the health of the "set on"-"set off" situation.
To get a deeper understanding of the subject one must STUDY the law and the case law on the subject. I am merely providing an insight!
As the punishment tot he employer, yes, the act does provide a procedure to be followed to recover due bonus from the employer and for non adherence the employer is liable to be punished like Mr. Madhu said!
Trust the basics are now clear!
Regards
samvedan
September 23, 2013
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From India, Pune
By way of amplification of what Mr. Madhu has said, I wish to add as under:
1) When one talks of "Statutory Bonus" one must first ensure that the "Statute" (The Payment of Bonus Act 1956) is applicable to the establishment.
2) The law on Bonus provides the "formula" to calculate "available surplus" and "allocable surplus" for the given year.
3) The law also provides that the statutory bonus could range from 8.33% (Minimum) to 20% (Maximum) of Bonusable salary (Basic+DA)
4) The law along side applicability to establishments also stipulates as to who all the act will be applicable and on what conditions!
5) The law also states that even when the organization makes LOSS, it is obliged to pay the Minimum Bonus to eligible employees.
6) The law has also provided a mechanism called "Set On" and "Set Off" statement. Simply it requires the employer when he makes profits in excess of 20% Bonus,, surplus up to another 20% has to be carried in the books (for three years) as a "set on" and when the employer makes a loss in a particular year then he is entitled to (for the next three years) "set off" for related amount. This mechanism makes it possible for employees to receive maximum possible bonus depending upon the health of the "set on"-"set off" situation.
To get a deeper understanding of the subject one must STUDY the law and the case law on the subject. I am merely providing an insight!
As the punishment tot he employer, yes, the act does provide a procedure to be followed to recover due bonus from the employer and for non adherence the employer is liable to be punished like Mr. Madhu said!
Trust the basics are now clear!
Regards
samvedan
September 23, 2013
-------------------------------
From India, Pune
Madhu Sir,
On comments of Samdeven I would like to add one more obligation under the act i.e
If a Company is newly established and not earning profit then,the act will not be applicable for fist Five years to the newly established company.
But during the initial Five years in any one if company earned any profit then the act shall applicable to that.
Thanks
Mangesh Wakodkar
From India, Pune
On comments of Samdeven I would like to add one more obligation under the act i.e
If a Company is newly established and not earning profit then,the act will not be applicable for fist Five years to the newly established company.
But during the initial Five years in any one if company earned any profit then the act shall applicable to that.
Thanks
Mangesh Wakodkar
From India, Pune
As per the existing Payment of Bonus Act, it is payable to employees whose salary (if you take Basic+DA only as salary for the purpose of payment of gratuity, calculation of leave enacshment or overtime wages or contributing PF, take the basic +DA or if you do not have DA in your salary take Basic salary alone or if you have a consolidated salary pattern, take the entire salary) does not exceed Rs 10000 per month. Now, while calculating the amount of bonus, take the salary of all employees whose salary exceed Rs 3500 as Rs 3500. That means, an employee whose bonus qualifying salary is Rs 9000 is eligible to get bonus. Now, if the rate of bonus is 8.33%, then the bonus is not 8.33% of 9900 but it is calculated at 8.33% of 3500 only.
The above illustration is on the basis of law and in practice bonus is always decided after a settlement arrived at between workers and management and in a settlement there is no scope for calculation of bonus as described above.
Madhu.T.K
From India, Kannur
The above illustration is on the basis of law and in practice bonus is always decided after a settlement arrived at between workers and management and in a settlement there is no scope for calculation of bonus as described above.
Madhu.T.K
From India, Kannur
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