We are working in the engineering sector. Our organization wants to follow periodicity of two for payment of the Statutory bonus. One is the routine yearly method of diwali bonus, and another is the monthly bonus. Can we follow both systems in one organization? Please explain.
From India, Ashta
From India, Ashta
Statutory bonus cannot be paid in monthly installments because the bonus for a financial year should be paid within eight months of closing of financial year. If you pay it monthly, it will extend to 12 months, and that is a non compliance. But you can pay it in such installments that the last installment is paid before 8 months of closing the books of accounts. Again, the employees would be benefited if they get a lumpsum amount in hand. Therefore, it is not advisable to pay it even in 8 installments.
From India, Kannur
4227From India, Kannur
The monthly paid bonus is production linked but not govern under any statute act or rules.The annual bonus profit based bonus and govern under the payment of bonus act. The annual bonus for current year is payable on 1st April or by 30th November subsequent year @minimum of 8.33% & maximum of 20% to the employee getting ₹21k or less wages per month.
You can follow the monthly bonus systems as it is linked to production and motivate employee and organization gets more production. This types of bonus schemes introduced to optimize the production, when production goes above the target. The management sanction agreed % of bonus on excess quantity with a set calculated norms.
From India, Mumbai
You can follow the monthly bonus systems as it is linked to production and motivate employee and organization gets more production. This types of bonus schemes introduced to optimize the production, when production goes above the target. The management sanction agreed % of bonus on excess quantity with a set calculated norms.
From India, Mumbai
There is a major dispute on this
We got clarification from senior lawyers who explained that amount paid monthly is salary (even if called bonus) and bonus will still be payable at the end of the year under the payment of bonus act.
Further, if paid monthly, PF and esic is due on it
From India, Mumbai
We got clarification from senior lawyers who explained that amount paid monthly is salary (even if called bonus) and bonus will still be payable at the end of the year under the payment of bonus act.
Further, if paid monthly, PF and esic is due on it
From India, Mumbai
HiVJ,
The statutory(annual) bonus, be it Ganesh Chaturti or Diwali or Christmas is different and what is disbursed, in some establishments, monthly or bi monthly or whatever paid is different. As you know 'the statutory bonus' is some sort of 'a share' of the profits earned by the establishment, which shall be a minimum of 8.33% of salary or a maximum of 20% as laid down under the Payment of Bonus Act as described.determined under sec.11 read with sec.4,5,6,10&12 of PoB Act. This statutory bonus is payable - i) whether earn profits or not ii) payable before 6 months after closure of annual accounts (which in India 31st March > 6 months > 30th Sept.) For this purpose your accounts dept. shall prepare Form A,B,C&D listed in PoB Rules,1975 (Central Rules) and submit Returns to Labour Dept.periodically. On the other hand some establishments disburses monthly or in intervals which is more or less linked to the production & productivity wherever in vogue. This is not statutory bonus as per PoB act. Generally this kind of bonus is linked when production for the defined period exceeds the targeted minimum threshold limits, computed under certain mutually agreed formula. There are also other bonuses (incentives) such as attendance bonus.
While statutory bonus is compulsory, at a minimum of 8.33% other production linked bonus is operated under a bipartite agreement on achieving certain targets only. Both when applicable are operable in any establishment, concurrently & as and when "accrued and due". It is customary in many establishments in India ahead of a festival season. It's legally permissible in more than one installment of the entitled bonus. For e.g. 50% during June or July (at times employees require financial assistance during schools/colleges reopening to meet fees, books etc. and in which case balance 50% can be paid before major festival such as Diwali usually during Oct or Nov. The other bonus can be paid monthly or bi-monthly or qly as in vogue.
From India, Bangalore
The statutory(annual) bonus, be it Ganesh Chaturti or Diwali or Christmas is different and what is disbursed, in some establishments, monthly or bi monthly or whatever paid is different. As you know 'the statutory bonus' is some sort of 'a share' of the profits earned by the establishment, which shall be a minimum of 8.33% of salary or a maximum of 20% as laid down under the Payment of Bonus Act as described.determined under sec.11 read with sec.4,5,6,10&12 of PoB Act. This statutory bonus is payable - i) whether earn profits or not ii) payable before 6 months after closure of annual accounts (which in India 31st March > 6 months > 30th Sept.) For this purpose your accounts dept. shall prepare Form A,B,C&D listed in PoB Rules,1975 (Central Rules) and submit Returns to Labour Dept.periodically. On the other hand some establishments disburses monthly or in intervals which is more or less linked to the production & productivity wherever in vogue. This is not statutory bonus as per PoB act. Generally this kind of bonus is linked when production for the defined period exceeds the targeted minimum threshold limits, computed under certain mutually agreed formula. There are also other bonuses (incentives) such as attendance bonus.
While statutory bonus is compulsory, at a minimum of 8.33% other production linked bonus is operated under a bipartite agreement on achieving certain targets only. Both when applicable are operable in any establishment, concurrently & as and when "accrued and due". It is customary in many establishments in India ahead of a festival season. It's legally permissible in more than one installment of the entitled bonus. For e.g. 50% during June or July (at times employees require financial assistance during schools/colleges reopening to meet fees, books etc. and in which case balance 50% can be paid before major festival such as Diwali usually during Oct or Nov. The other bonus can be paid monthly or bi-monthly or qly as in vogue.
From India, Bangalore
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Statutory Compliance of a Industrial or Commercial Unit.xls
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