Dear Member,
Welcome to CiteHR.
If the salary or wages of an employee exceed Rs. 10,000 per mensem as defined in section 2(21) of this Act, then this employee will not be covered under the definition of an employee as provided in sec. 2(13) for receiving any benefits under this Act. Hence, he is not eligible to receive a bonus from his employer under the Payment of Bonus Act of 1965.
R.N. KHLOA | Sr. ASSOCIATE | LL&IR |
From India, Delhi
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422Welcome to CiteHR.
If the salary or wages of an employee exceed Rs. 10,000 per mensem as defined in section 2(21) of this Act, then this employee will not be covered under the definition of an employee as provided in sec. 2(13) for receiving any benefits under this Act. Hence, he is not eligible to receive a bonus from his employer under the Payment of Bonus Act of 1965.
R.N. KHLOA | Sr. ASSOCIATE | LL&IR |
From India, Delhi
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Dear Vibs,
Welcome to CiteHR. If the salary or wage of an employee is up to Rs. 3500/- per month as defined by sec. 2(21) of this Act, then he will be eligible to receive a bonus from his employer based on his actual salary or wages as per this definition.
Regards,
R N KHOLA
From India, Delhi
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Welcome to CiteHR. If the salary or wage of an employee is up to Rs. 3500/- per month as defined by sec. 2(21) of this Act, then he will be eligible to receive a bonus from his employer based on his actual salary or wages as per this definition.
Regards,
R N KHOLA
From India, Delhi
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Hi,
The same bonus act is applicable for all over India. There is no separate act for individual states. We need to keep the maximum amount at Rs. 3500/- as the ceiling while calculating the bonus.
As such, there has been no new amendment passed by the government.
Regards,
Harsha Shetty
From India, Bangalore
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The same bonus act is applicable for all over India. There is no separate act for individual states. We need to keep the maximum amount at Rs. 3500/- as the ceiling while calculating the bonus.
As such, there has been no new amendment passed by the government.
Regards,
Harsha Shetty
From India, Bangalore
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Dear All,
When I was being interviewed by the HR Manager of Intas Pharmaceutical Ltd, I was told that the bonus is to be paid by keeping allocable surplus in mind, and some companies follow different methods altogether. The bonus is paid on the basic salary, where 8.33% * 12 equals one month's salary, although it is only paid to those earning below 10,000/- P.M.
So, how do people earning 25,000/- get the bonus? Please explain this to me. You can send the details to the mentioned email id: pragnesh228@gmail.com.
Thank you.
From India, Ahmadabad
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When I was being interviewed by the HR Manager of Intas Pharmaceutical Ltd, I was told that the bonus is to be paid by keeping allocable surplus in mind, and some companies follow different methods altogether. The bonus is paid on the basic salary, where 8.33% * 12 equals one month's salary, although it is only paid to those earning below 10,000/- P.M.
So, how do people earning 25,000/- get the bonus? Please explain this to me. You can send the details to the mentioned email id: pragnesh228@gmail.com.
Thank you.
From India, Ahmadabad
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The Payment of Bonus Act, 1965
Objective of the Act: Until the Payment of Bonus Act was promulgated, bonus was linked to profits, meaning that if an establishment did not make profits in a certain year, the employer was not liable to pay bonus. However, the present Act makes the employer liable to pay bonus to an employee as an annual statutory payment irrespective of the existence of profits.
Applicability of the Act
The Act includes all employees, factory workers, clerical staff, or executives drawing wages or salary up to Ten Thousand rupees per month who perform any skilled, unskilled, manual, supervisory, managerial, administrative, technical, or clerical work.
Eligibility
To become eligible for bonus, every employee must have worked in the establishment for not less than 30 working days in the relevant accounting year.
Bonus is not payable on subsistence allowance paid to an employee during the period of his suspension since such employee did not actually perform any work. Bonus can be forfeited if dismissal is for riotous behavior.
How much Bonus is Payable
A minimum of 8.33% of wages actually earned during the accounting year, subject to a minimum of 100 Rs, is payable to each eligible employee irrespective of profit or loss. The minimum amount payable is limited to 20% of the wages.
What components of wages shall be considered for calculation of Bonus:
Wages/Salary are understood to be basic pay and VDA and exclude any other allowance.
When the salary or wage of an employee exceeds Rs.3500 per month, the Bonus payable for such employees shall be calculated as if his salary or wage were only Rs.3500 pm (but eligibility for paying bonus is Rs.10,000).
When is Bonus Payable
The Bonus is payable within a period of 8 months from the close of the accounting year. Where there is a dispute regarding the payment of bonus, it becomes payable within a month from the date that the award becomes enforceable or the settlement comes into operation.
METHODS OF COMPUTATION--FIRST STEP--NET PROFIT
Presumption of Accuracy: (Section 23) -- The accuracy of the balance sheet and profit and loss statement of the establishment is presumed under the Act if they are duly audited by qualified auditors. If, however, the Arbitrator or Tribunal hearing a dispute is not satisfied with the accuracy or if any trade union or employees being parties to the dispute demand clarification of accuracy, the employer shall comply with the demand.
If the authority requires auditing of accounts of an employer, not being a company, such as that of a proprietary concern or a partnership firm, such employer shall comply with the requirement within such time as directed, at his own expense.
METHODS OF COMPUTATION--STEP TWO--GROSS PROFIT
The gross profits derived by an employer from an establishment in respect of any accounting year shall:
(a) in the case of a banking company be calculated in the manner specified in the first schedule;
(b) in any other case, be calculated in the manner specified in the Second Schedule.
From India, Mysore
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Objective of the Act: Until the Payment of Bonus Act was promulgated, bonus was linked to profits, meaning that if an establishment did not make profits in a certain year, the employer was not liable to pay bonus. However, the present Act makes the employer liable to pay bonus to an employee as an annual statutory payment irrespective of the existence of profits.
Applicability of the Act
The Act includes all employees, factory workers, clerical staff, or executives drawing wages or salary up to Ten Thousand rupees per month who perform any skilled, unskilled, manual, supervisory, managerial, administrative, technical, or clerical work.
Eligibility
To become eligible for bonus, every employee must have worked in the establishment for not less than 30 working days in the relevant accounting year.
Bonus is not payable on subsistence allowance paid to an employee during the period of his suspension since such employee did not actually perform any work. Bonus can be forfeited if dismissal is for riotous behavior.
How much Bonus is Payable
A minimum of 8.33% of wages actually earned during the accounting year, subject to a minimum of 100 Rs, is payable to each eligible employee irrespective of profit or loss. The minimum amount payable is limited to 20% of the wages.
What components of wages shall be considered for calculation of Bonus:
Wages/Salary are understood to be basic pay and VDA and exclude any other allowance.
When the salary or wage of an employee exceeds Rs.3500 per month, the Bonus payable for such employees shall be calculated as if his salary or wage were only Rs.3500 pm (but eligibility for paying bonus is Rs.10,000).
When is Bonus Payable
The Bonus is payable within a period of 8 months from the close of the accounting year. Where there is a dispute regarding the payment of bonus, it becomes payable within a month from the date that the award becomes enforceable or the settlement comes into operation.
METHODS OF COMPUTATION--FIRST STEP--NET PROFIT
Presumption of Accuracy: (Section 23) -- The accuracy of the balance sheet and profit and loss statement of the establishment is presumed under the Act if they are duly audited by qualified auditors. If, however, the Arbitrator or Tribunal hearing a dispute is not satisfied with the accuracy or if any trade union or employees being parties to the dispute demand clarification of accuracy, the employer shall comply with the demand.
If the authority requires auditing of accounts of an employer, not being a company, such as that of a proprietary concern or a partnership firm, such employer shall comply with the requirement within such time as directed, at his own expense.
METHODS OF COMPUTATION--STEP TWO--GROSS PROFIT
The gross profits derived by an employer from an establishment in respect of any accounting year shall:
(a) in the case of a banking company be calculated in the manner specified in the first schedule;
(b) in any other case, be calculated in the manner specified in the Second Schedule.
From India, Mysore
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Dear Seniors,
As per the Act, Section 2(21), salary or wage means all remuneration (other than overtime work) capable of being expressed in terms of money which would be payable to an employee if the terms of employment, express or implied, were fulfilled, in respect of his employment or work done in such employment, including DA, but does not include any other allowance to which the employee is entitled at the time.
Please let me know which allowances are not included in wage or salary, as it is unclear which allowances to exclude. For example, if an employee is drawing a salary of Rs. 18,000/- with the following breakup:
Basic + DA: Rs. 10,000/-
HRA: Rs. 5,000/-
Conveyance: Rs. 800/-
LTA: Rs. 833/-
Medical: Rs. 833/-
Special Allowance: Rs. 534/-
For bonus eligibility, do we consider only basic + DA or the total gross salary? Please clarify this for me.
Thank you,
Siva Sankar
From India, Calcutta
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As per the Act, Section 2(21), salary or wage means all remuneration (other than overtime work) capable of being expressed in terms of money which would be payable to an employee if the terms of employment, express or implied, were fulfilled, in respect of his employment or work done in such employment, including DA, but does not include any other allowance to which the employee is entitled at the time.
Please let me know which allowances are not included in wage or salary, as it is unclear which allowances to exclude. For example, if an employee is drawing a salary of Rs. 18,000/- with the following breakup:
Basic + DA: Rs. 10,000/-
HRA: Rs. 5,000/-
Conveyance: Rs. 800/-
LTA: Rs. 833/-
Medical: Rs. 833/-
Special Allowance: Rs. 534/-
For bonus eligibility, do we consider only basic + DA or the total gross salary? Please clarify this for me.
Thank you,
Siva Sankar
From India, Calcutta
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Lok Sabha passes Bonus Bill; benefits to accrue from April 2014
The Lok Sabha on Tuesday passed a bill allowing the doubling of the wage ceiling for calculating bonus to Rs 7,000 per month for factory workers with establishments with 20 or more workers, with the benefits being applicable retrospectively from April 2014.
The Payment of Bonus (Amendment) Bill, 2015, was passed by a voice vote, with some members objecting to the raising of the eligibility limit for payment of bonus from a salary of Rs 10,000 per month to Rs 21,000.
Replying to a debate on the legislation, Labour Minister Bandaru Dattatreya said the Government has ensured that the interests of workers are protected, and there is no infringement on their rights.
"Because of Bihar Elections, this bill got delayed... The Prime Minister spoke to me and asked why should the benefits of this Act accrue to workers from 2015. It should be made available from April 2014," he said while moving an official amendment to the Bill.
The official amendment provides that the benefits of the Act would be deemed to have come into force on April 1, 2014, instead of April 1, 2015. Dattatreya said the Ministry has held 21 tripartite meetings with all central trade unions while arriving at a decision.
The Bill provides for enhancing the monthly bonus calculation ceiling to Rs 7,000 per month from the existing Rs 3,500. It also seeks to enhance the eligibility limit for payment of bonus from Rs 10,000 per month to Rs 21,000 per month.
"The Government's paramount intention is to safeguard the interest of workers... There is no infringement of workers' rights, and whatever the government does will be in the interest of workers," Dattatreya said.
After the bill was passed, Deputy Speaker M Thambidurai, who was in the Chair, said the government should be congratulated for bringing the measure as also for effecting the benefits retrospectively.
Terming the legislation as historic, Dattatreya said the outgo from government coffers would be about Rs 6,203 crore.
The Minister said the Bill would benefit crores of organised sector workers. He said the unorganised sector constitutes 93 per cent of the workforce or about 40 crore people.
Participating in the discussion, Mumtaz Sanghamita (TMC) said "it will benefit the vast majority of poor workers. Bonus is the thing that is extra and over regular pay." She, however, wanted to know whether the increase in ceiling was commensurate with the inflation rate.
M Srinivas Rao (TDP) observed that labour laws in India were very weak, and the government should ensure safety and security for workers.
K Visheweshwar Reddy (TRS) said the sharp cut off of Rs 21,000 per month was flawed and added that contractual workers in factories are overworked and underpaid.
Sankar Prasad Datta (CPI-M) too echoed similar views, saying that the Rs 21,000 per month ceiling should not be there. Jaiprakash Narayan Yadav (SP) said there should be a special provision for women workers while providing bonus.
Prahlad Singh Patel (BJP) asked the government to fix a minimum ceiling and not the maximum one. "We can also think of linking it with the Pay Commission so that we do not have to come again and again to Parliament to make changes." He said the bonus should not be linked to profit or losses.
The Payment of Bonus Act, 1965, is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year. The last amendment to the eligibility limit and the calculation ceiling was carried out in 2007 and made effective from April 1, 2006.
This amendment in the Act to increase the wage ceiling and bonus calculation ceiling was one of the assurances given by the Centre after 10-day central trade unions went on a one-day strike on September 2.
From India, Kolkata
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The Lok Sabha on Tuesday passed a bill allowing the doubling of the wage ceiling for calculating bonus to Rs 7,000 per month for factory workers with establishments with 20 or more workers, with the benefits being applicable retrospectively from April 2014.
The Payment of Bonus (Amendment) Bill, 2015, was passed by a voice vote, with some members objecting to the raising of the eligibility limit for payment of bonus from a salary of Rs 10,000 per month to Rs 21,000.
Replying to a debate on the legislation, Labour Minister Bandaru Dattatreya said the Government has ensured that the interests of workers are protected, and there is no infringement on their rights.
"Because of Bihar Elections, this bill got delayed... The Prime Minister spoke to me and asked why should the benefits of this Act accrue to workers from 2015. It should be made available from April 2014," he said while moving an official amendment to the Bill.
The official amendment provides that the benefits of the Act would be deemed to have come into force on April 1, 2014, instead of April 1, 2015. Dattatreya said the Ministry has held 21 tripartite meetings with all central trade unions while arriving at a decision.
The Bill provides for enhancing the monthly bonus calculation ceiling to Rs 7,000 per month from the existing Rs 3,500. It also seeks to enhance the eligibility limit for payment of bonus from Rs 10,000 per month to Rs 21,000 per month.
"The Government's paramount intention is to safeguard the interest of workers... There is no infringement of workers' rights, and whatever the government does will be in the interest of workers," Dattatreya said.
After the bill was passed, Deputy Speaker M Thambidurai, who was in the Chair, said the government should be congratulated for bringing the measure as also for effecting the benefits retrospectively.
Terming the legislation as historic, Dattatreya said the outgo from government coffers would be about Rs 6,203 crore.
The Minister said the Bill would benefit crores of organised sector workers. He said the unorganised sector constitutes 93 per cent of the workforce or about 40 crore people.
Participating in the discussion, Mumtaz Sanghamita (TMC) said "it will benefit the vast majority of poor workers. Bonus is the thing that is extra and over regular pay." She, however, wanted to know whether the increase in ceiling was commensurate with the inflation rate.
M Srinivas Rao (TDP) observed that labour laws in India were very weak, and the government should ensure safety and security for workers.
K Visheweshwar Reddy (TRS) said the sharp cut off of Rs 21,000 per month was flawed and added that contractual workers in factories are overworked and underpaid.
Sankar Prasad Datta (CPI-M) too echoed similar views, saying that the Rs 21,000 per month ceiling should not be there. Jaiprakash Narayan Yadav (SP) said there should be a special provision for women workers while providing bonus.
Prahlad Singh Patel (BJP) asked the government to fix a minimum ceiling and not the maximum one. "We can also think of linking it with the Pay Commission so that we do not have to come again and again to Parliament to make changes." He said the bonus should not be linked to profit or losses.
The Payment of Bonus Act, 1965, is applicable to every factory and other establishment in which 20 or more persons are employed on any day during an accounting year. The last amendment to the eligibility limit and the calculation ceiling was carried out in 2007 and made effective from April 1, 2006.
This amendment in the Act to increase the wage ceiling and bonus calculation ceiling was one of the assurances given by the Centre after 10-day central trade unions went on a one-day strike on September 2.
From India, Kolkata
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