Dear BP In the 1sr scenario, Bonus will be calculated on 7000/- & in the 2nd scenario, it will remain on 8903/-.
From India, Mumbai
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7From India, Mumbai
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It is my understanding that according to the amendment, the maximum earned wages on which a bonus is payable is Rs. 7,000/- or the minimum wages, whichever is higher. Since the bonus is paid on the earned wages, if the earned wages are less than Rs. 7,000, the bonus is payable only on the earned wages.
Below are a few examples:
Scenario 1:
Minimum wages: Rs. 5348
Earned wages: Rs. 5348
Then the bonus will be calculated on Rs. 5348.
Scenario 2:
Minimum wages: Rs. 5348
Earned wages: Rs. 6800
Then the bonus will be calculated on Rs. 6800.
Scenario 3:
Minimum wages: Rs. 5348
Earned wages: Rs. 7200
Then the bonus will be calculated on Rs. 7000.
Scenario 4:
Minimum wages: Rs. 7500
Earned wages: Rs. 7500
Then the bonus will be calculated on Rs. 7500.
Scenario 5:
Minimum wages: Rs. 7500
Earned wages: Rs. 12000
Then the bonus will be calculated on Rs. 7500.
If you believe this is incorrect, please let me know why. Thanks.
From India, Delhi
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Below are a few examples:
Scenario 1:
Minimum wages: Rs. 5348
Earned wages: Rs. 5348
Then the bonus will be calculated on Rs. 5348.
Scenario 2:
Minimum wages: Rs. 5348
Earned wages: Rs. 6800
Then the bonus will be calculated on Rs. 6800.
Scenario 3:
Minimum wages: Rs. 5348
Earned wages: Rs. 7200
Then the bonus will be calculated on Rs. 7000.
Scenario 4:
Minimum wages: Rs. 7500
Earned wages: Rs. 7500
Then the bonus will be calculated on Rs. 7500.
Scenario 5:
Minimum wages: Rs. 7500
Earned wages: Rs. 12000
Then the bonus will be calculated on Rs. 7500.
If you believe this is incorrect, please let me know why. Thanks.
From India, Delhi
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In the scenario 1 and 2 according to the act we have to calculate the earned wages or the ceiling amount of Rs.7,000/- ‘‘seven thousand rupees or the minimum wage for the
scheduled employment, as fixed by the appropriate Government, whichever is higher"
Reply pls
Regards
Shiva - 9241729276
From India, Bangalore
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scheduled employment, as fixed by the appropriate Government, whichever is higher"
Reply pls
Regards
Shiva - 9241729276
From India, Bangalore
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I'm sorry, but the input you provided seems to be in a different language or script that I am not able to recognize or correct. If you provide the text in English, I would be happy to help correct any spelling, grammar, or punctuation errors and ensure proper paragraph formatting. Thank you!
From India, Rudarpur
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From India, Rudarpur
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Dear Mr. Shiva,
It is my understanding that a bonus is payable on earned wages. The higher of Rs. 7,000 or the minimum wages is just the maximum earned wages on which the bonus is payable; that is NOT the minimum amount on which the bonus is payable. Hence, if earned wages are less than Rs. 7,000, the bonus is payable only on the earned wages.
To put it in the form of a formula in Excel, here is how I would represent this:
=MIN(EarnedWagesForTheMonth, MAX(MinimumWages, 7000))
From India, Delhi
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It is my understanding that a bonus is payable on earned wages. The higher of Rs. 7,000 or the minimum wages is just the maximum earned wages on which the bonus is payable; that is NOT the minimum amount on which the bonus is payable. Hence, if earned wages are less than Rs. 7,000, the bonus is payable only on the earned wages.
To put it in the form of a formula in Excel, here is how I would represent this:
=MIN(EarnedWagesForTheMonth, MAX(MinimumWages, 7000))
From India, Delhi
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I do not find any sense in the amendment. First, the concept of Rs 7000 or minimum wages whichever is HIGHER, is wrong. To take an example, if the earned wage is Rs 7500 and the minimum wages fixed is Rs 8000, then we have to calculate the bonus on Rs 8000 as we are bound to take minimum wages for calculation of bonus. If, on the other hand, the earned wage is Rs 6800 and the minimum wages is Rs 6500, then we will have to calculate the bonus on Rs 7000, whereas the actual earned wages is only 6800. This is because the bonus is to be calculated on 7000 or minimum wages whichever is higher and in this case 7000 is higher than the minimum wages and hence we take it as base for calculation of bonus. But how can we pay bonus at the rate of 7000 when we are paying only less than that (ie, Rs 6800) or when we are bound to pay only less than that, ie, Rs 6500, the minimum wages?
Now the amendment suggests a retrospective effect to the new system. Needless to say that a Bonus decision is taken after a lengthy processes involving trade unions and spending a lot of time in negotiations. It is horrible to reopen everything and re do it. Now let us analyse the apprehension of Advocatemukundh, that if he has been paying at the rate of 20% on 3500, whether he would have to retain the percentage of 20% and based on it pay bonus at 20% of 7000 or can have a percentage lesser than 20%. This should be addresses now because rate percentage of bonus is decided after considering allocable surplus and it will be different at different amounts allocated for payment of bonus. When a smaller amount is allocated for payment of bonus, the remaining amount of profit will be readily available for distribution as bonus and the same will be repeated over years. But when it is calculated on 7000, more amounts would be required for payment of bonus and this would certainly reduce the profits available and the rate of bonus for the coming years.
That means, the entire process will have to be reopened and the rate of bonus based on 7000 or minimum wages whichever is higher will have to be decided considering the allocable and available surpluses. In such cases, where the trade unions were involved, I do not think that this would be an easy task. Therefore, I feel that the amendment lacks sanctity. It is good that more people are brought under the bonus cover and it is also good that the amount of bonus would also be good. But the inclusion of “whichever is high” and its retrospective effect should be reconsidered.
Madhu.T.K
From India, Kannur
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Now the amendment suggests a retrospective effect to the new system. Needless to say that a Bonus decision is taken after a lengthy processes involving trade unions and spending a lot of time in negotiations. It is horrible to reopen everything and re do it. Now let us analyse the apprehension of Advocatemukundh, that if he has been paying at the rate of 20% on 3500, whether he would have to retain the percentage of 20% and based on it pay bonus at 20% of 7000 or can have a percentage lesser than 20%. This should be addresses now because rate percentage of bonus is decided after considering allocable surplus and it will be different at different amounts allocated for payment of bonus. When a smaller amount is allocated for payment of bonus, the remaining amount of profit will be readily available for distribution as bonus and the same will be repeated over years. But when it is calculated on 7000, more amounts would be required for payment of bonus and this would certainly reduce the profits available and the rate of bonus for the coming years.
That means, the entire process will have to be reopened and the rate of bonus based on 7000 or minimum wages whichever is higher will have to be decided considering the allocable and available surpluses. In such cases, where the trade unions were involved, I do not think that this would be an easy task. Therefore, I feel that the amendment lacks sanctity. It is good that more people are brought under the bonus cover and it is also good that the amount of bonus would also be good. But the inclusion of “whichever is high” and its retrospective effect should be reconsidered.
Madhu.T.K
From India, Kannur
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Dear Mr. Madhu,
In your post above, you mention "If, on the other hand, the earned wage is Rs 6800 and the minimum wages is Rs 6500, then we will have to calculate the bonus on Rs 7000, whereas the actual earned wages is only 6800." My understanding is different from this. According to the (amended) Act, section 12 will be something like this: Where the salary or wage of an employee exceeds seven thousand rupees or the minimum wage, whichever is higher per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were seven thousand rupees or the minimum wage, whichever is higher per mensem. Please observe that it says "WHERE the salary or wage of an employee EXCEEDS". So if the salary/wages are less than the maximum limit (higher of 7000 or minimum wage), only actual wages should be taken. So in this case on 6800. In case there is anything wrong in this interpretation, please let me know.
From India, Delhi
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In your post above, you mention "If, on the other hand, the earned wage is Rs 6800 and the minimum wages is Rs 6500, then we will have to calculate the bonus on Rs 7000, whereas the actual earned wages is only 6800." My understanding is different from this. According to the (amended) Act, section 12 will be something like this: Where the salary or wage of an employee exceeds seven thousand rupees or the minimum wage, whichever is higher per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were seven thousand rupees or the minimum wage, whichever is higher per mensem. Please observe that it says "WHERE the salary or wage of an employee EXCEEDS". So if the salary/wages are less than the maximum limit (higher of 7000 or minimum wage), only actual wages should be taken. So in this case on 6800. In case there is anything wrong in this interpretation, please let me know.
From India, Delhi
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Yes, you are right. In the case of employees whose wages are less than Rs 7000, the actual wage will be the base for calculation. Let us write the new section 12 as follows for the sake of understanding how it works.
Section 12: Calculation of bonus with respect to certain employees. - Where the salary or wage of an employee exceeds seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher per mensem.
Madhu.T.K
From India, Kannur
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Section 12: Calculation of bonus with respect to certain employees. - Where the salary or wage of an employee exceeds seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher per mensem.
Madhu.T.K
From India, Kannur
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OK, since that is clear now, I would like to go back to my earlier question on this thread, which is still unresolved.
Since the wages limit for the bonus is now Rs. 21,000, and wages include only Basic + VDA, many Software Engineers will also be eligible for the bonus. The bonus is now payable on the minimum wages for the scheduled employment or Rs. 7,000, whichever is higher. Therefore, I would like to know the minimum wages for Software Engineers in Karnataka.
Mr. Saswata Banerjee said, "I do not think software development is in a scheduled employment. So the residual category will be shop and establishment (offices), and software engineers will be skilled or highly skilled."
However, in Karnataka, minimum wages for Shops and Commercial Establishments (see attached) show no category for Skilled and Highly Skilled. The Class of employment is categorized from Group I to Group V and then Office Staff. Therefore, for the purpose of minimum wages for Software Engineers, I am wondering if Group IV - General Workers (item 9) will apply or if Office Staff - Computer Operator (item 5) will be relevant.
Any guidance on this would be appreciated.
From India, Delhi
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Since the wages limit for the bonus is now Rs. 21,000, and wages include only Basic + VDA, many Software Engineers will also be eligible for the bonus. The bonus is now payable on the minimum wages for the scheduled employment or Rs. 7,000, whichever is higher. Therefore, I would like to know the minimum wages for Software Engineers in Karnataka.
Mr. Saswata Banerjee said, "I do not think software development is in a scheduled employment. So the residual category will be shop and establishment (offices), and software engineers will be skilled or highly skilled."
However, in Karnataka, minimum wages for Shops and Commercial Establishments (see attached) show no category for Skilled and Highly Skilled. The Class of employment is categorized from Group I to Group V and then Office Staff. Therefore, for the purpose of minimum wages for Software Engineers, I am wondering if Group IV - General Workers (item 9) will apply or if Office Staff - Computer Operator (item 5) will be relevant.
Any guidance on this would be appreciated.
From India, Delhi
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The attachment pertains to shops, commercial establishments, and spinning mills. However, in most states like Kerala, separate minimum wage notifications have been issued for IT and ITES industries. This means that IT is considered a scheduled employment. If no separate minimum wage is fixed for IT companies, then the applicability of 21000 and 7000 still applies to them. If software engineers are receiving a Basic (+DA) pay of less than 21000, they would fall under the bonus bracket. Historically, small IT companies have calculated bonuses based on the 10000 ceiling.
Madhu.T.K
From India, Kannur
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Madhu.T.K
From India, Kannur
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