Dear Faraz,
Bonus is an extra pay due to good performance and as per Payment of Bonus 1965 as a part of social security legislation has made is mandatory and the provision of the act are as below.
The payment of Bonus Act is applicable to every factory and every other establishment in which twenty or more persons are employed on any day during an accounting year excluding some categories of employees as contained in section 32 of the Act (i.e. employees in Life Insurance – Corporation, seamen, port and dock workers, universities, etc.).
Definition of an employee – An ‘employee’ means any person (other than an apprentice) employed on a salary or wage not exceeding three thousand and five hundred rupees per mensem.
Calculation of bonus w.r. to certain employees – where the salary or wage of an employee exceeds two thousand and five hundred rupees per mensem, the bonus payable to such employee shall be calculated as if his salary or wage were two thousand and five hundred rupees per mensem.
Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this act, provided he has worked in establishment for not less than 30 days.
MINIMUM BONUS - Every employer shall be bound to pay to every employee in respect of the accounting year a minimum Bonus which shall be 8.33 % of the salary or wages 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.
MAXIMUM BONUS - Where in respect of any accounting year, the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wages earned by the employee during the accounting year subject to a maximum of 20% of such salary or wage.
The employer whom this Act, applies, need not pay any Bonus for first five accounting year in which the Employer sells the goods produced or manufactured by him or render services, as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of the Act in relation to that year.
Regards,
Brijesh
From India, Mumbai
3Bonus is an extra pay due to good performance and as per Payment of Bonus 1965 as a part of social security legislation has made is mandatory and the provision of the act are as below.
The payment of Bonus Act is applicable to every factory and every other establishment in which twenty or more persons are employed on any day during an accounting year excluding some categories of employees as contained in section 32 of the Act (i.e. employees in Life Insurance – Corporation, seamen, port and dock workers, universities, etc.).
Definition of an employee – An ‘employee’ means any person (other than an apprentice) employed on a salary or wage not exceeding three thousand and five hundred rupees per mensem.
Calculation of bonus w.r. to certain employees – where the salary or wage of an employee exceeds two thousand and five hundred rupees per mensem, the bonus payable to such employee shall be calculated as if his salary or wage were two thousand and five hundred rupees per mensem.
Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this act, provided he has worked in establishment for not less than 30 days.
MINIMUM BONUS - Every employer shall be bound to pay to every employee in respect of the accounting year a minimum Bonus which shall be 8.33 % of the salary or wages 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.
MAXIMUM BONUS - Where in respect of any accounting year, the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wages earned by the employee during the accounting year subject to a maximum of 20% of such salary or wage.
The employer whom this Act, applies, need not pay any Bonus for first five accounting year in which the Employer sells the goods produced or manufactured by him or render services, as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of the Act in relation to that year.
Regards,
Brijesh
From India, Mumbai
Very happy to note that many senior friends suggests better reading, which I always advocated.
Quries of HR professionals should be more of practical nature, like: situational management, crisis resolvement, etc.
From India, Jaipur
Quries of HR professionals should be more of practical nature, like: situational management, crisis resolvement, etc.
From India, Jaipur
Dear Faraz,
Good Morning!
However, to give bonus to employee is liablity of an employer but there is one exception or you can say that he can take examption for a particular year in which his organization has not generated profit. In that case he can refuse to give bonus for that particular year.
You can check this clause in Bonus Act 1965.
I do hope that now ur confusion is resolved.
Thanks & Rgds
Abhay Raj
National Head-HR & Legal
From India, Mumbai
Good Morning!
However, to give bonus to employee is liablity of an employer but there is one exception or you can say that he can take examption for a particular year in which his organization has not generated profit. In that case he can refuse to give bonus for that particular year.
You can check this clause in Bonus Act 1965.
I do hope that now ur confusion is resolved.
Thanks & Rgds
Abhay Raj
National Head-HR & Legal
From India, Mumbai
According to payment of bonus act
it is the liabillity of the company to pay the annual statutory bonus to the employees. It is not compulsory for new companies to pay bonus for five years but if with in five years company generate any kind of profit then it becomes the statutory liabillity of the company to pay bonus. Grace period of payment of bonus is 8months. Eligibilty for bonus is 30 days of joining. Minimum statutory bonus is 8.33 and maximum is 20%. Maximum eligibility for 10.000 and it will be calculated for 3500 rs.
hope everything is cleared.
From India, Chandigarh
it is the liabillity of the company to pay the annual statutory bonus to the employees. It is not compulsory for new companies to pay bonus for five years but if with in five years company generate any kind of profit then it becomes the statutory liabillity of the company to pay bonus. Grace period of payment of bonus is 8months. Eligibilty for bonus is 30 days of joining. Minimum statutory bonus is 8.33 and maximum is 20%. Maximum eligibility for 10.000 and it will be calculated for 3500 rs.
hope everything is cleared.
From India, Chandigarh
Please note that statutory liability of bonus is only for those whose salary is less than 6500 per month. Further that bonus is computed on a max salary of Rs. 3500 per month.
Any thing extra paid is called as Ex-Gratia (which can not be enforced in a court of law, as it is at the option of the employer) to distinguish it from bonus that is payable under law.
From India, Mumbai
Any thing extra paid is called as Ex-Gratia (which can not be enforced in a court of law, as it is at the option of the employer) to distinguish it from bonus that is payable under law.
From India, Mumbai
Dear Faraz,
It is the statutory obligation and also liability to pay the bonus to your employees, should be in 8.33% which means one month salary in which their earnings. You have in sick industry than intimate to labour department for the poor performance of records and take decision from labour officer.
thanks
Suresh tondepu
From India, Hyderabad
It is the statutory obligation and also liability to pay the bonus to your employees, should be in 8.33% which means one month salary in which their earnings. You have in sick industry than intimate to labour department for the poor performance of records and take decision from labour officer.
thanks
Suresh tondepu
From India, Hyderabad
Dear,
This depends purely on the companies. As the private companies do not seriously follow all the company acts and payment acts which are for the company to be bind with under Government rules & regulations. But private companies(excluding manufacturing companies) make few loopholes in those rules and work with the profitability.
In my opinion, a person working hard in the company is given appreciation and even provided with monetary benefits this is company management interest level. Yes companies if declared bonus for all the employees then they do need to provide, But companies have an option of explaining that this year they are in loss or were not at par with profits.
Our System is to be blamed but as HR you could say that the company is not in profits or make some other wordings to make employees cool & clam.
Sandeep Korde
From India, Warangal
This depends purely on the companies. As the private companies do not seriously follow all the company acts and payment acts which are for the company to be bind with under Government rules & regulations. But private companies(excluding manufacturing companies) make few loopholes in those rules and work with the profitability.
In my opinion, a person working hard in the company is given appreciation and even provided with monetary benefits this is company management interest level. Yes companies if declared bonus for all the employees then they do need to provide, But companies have an option of explaining that this year they are in loss or were not at par with profits.
Our System is to be blamed but as HR you could say that the company is not in profits or make some other wordings to make employees cool & clam.
Sandeep Korde
From India, Warangal
Dear Faraz Also note the point tht bonus shud b paid compulsory to employees whose sal is wit in 10k. & also 8.33%of sal or 100/- which ever is higher to b paid.
From India, Bangalore
From India, Bangalore
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