(pl. see attachment)
=>>>(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable,
Does this clearly mean that we can pay mandatory bonus in parts in salary every month or quarterly(ESI included if monthly paid) ?
From India, Meerut
=>>>(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable,
Does this clearly mean that we can pay mandatory bonus in parts in salary every month or quarterly(ESI included if monthly paid) ?
From India, Meerut
Yes, bonus can be paid in parts. But the Act also says that the bonus due for a particular year should be paid within 8 months of close of the financial year. That means, you can not pay it monthly or even in quarterly basis because you cannot extend it beyond 8 months. Attraction of ESI is a different issue, and if you pay advance of bonus not included in the salary, it will not attract ESI, any way. What is important is payment of bonus within 8 months. Moreover, a basic objective of paying bonus, ie, bonus is a deferred wage paid in lump sum so that the employee would be benefited, would be defeated if it is paid in five or even 8 installments.
From India, Kannur
4240From India, Kannur
Yes, we have had options given by senior lawyers for a client in Karnataka that you can pay bonus monthly, provided you do not call it bonus, but 'Advance Against Statutory Bonus' as the law allows bonus to be paid in Advance. But you are paying for the next year.
However :
1. Bonus can not be really estimated in advance. So at the end of the year, you may be required to pay the balance (if you are paying 8.33% monthly and your payable bonus is 20%, then you have to still pay the balance)
2. ESIC is to be paid on this as the ESIC rules consider any amount paid at least every 2 months is salary
3. It is still likely that the courts will take an adverse view and say that this is actually basic salary under a different name, so bonus is still payable next year.
From India, Mumbai
However :
1. Bonus can not be really estimated in advance. So at the end of the year, you may be required to pay the balance (if you are paying 8.33% monthly and your payable bonus is 20%, then you have to still pay the balance)
2. ESIC is to be paid on this as the ESIC rules consider any amount paid at least every 2 months is salary
3. It is still likely that the courts will take an adverse view and say that this is actually basic salary under a different name, so bonus is still payable next year.
From India, Mumbai
In the case of ESI, an amount paid as advance, let it be bonus advance, which will be adjusted against a final payment which is not wages, will not attract ESI. This is because the payment of advance will not be made along with wages but separately. it should be distinguished from payments like incentives which are part of wages if paid in an interval of not more than two months. Incentive is also interpreted as wages because it will be paid individually or earned by individual employee by putting some efforts as part of his work. In many cases, it can easily be interpreted as piece rate wage. But bonus is a different concept. It is fixed after considering certain other factors like profits, available surplus, allocable surplus etc. Therefore, the entire exercise will take time to give a final shape, and that is why the law has allowed 8 months' time to the employer to pay it. pending decision, obviously, employees may be given advance of bonus. Advance of bonus is not bonus though it has 'flavour' of bonus. But when you pay it every month, the objective of giving bonus will be defeated, I believe.
From India, Kannur
From India, Kannur
The question Madhu, is what the courts are likely to say.
It may defeat the purpose of the act, but if it is paid as advance and falls within the clauses of the act, it will probably escape.
wrt ESIC, it is not being paid separately, it is being paid along with wages. (note, its in the same transfer and in the pay slip too). So it is likely to get dragged into the computation. In fact, that is accepted by most companies and they pay ESIC on monthly bonus too.
From India, Mumbai
It may defeat the purpose of the act, but if it is paid as advance and falls within the clauses of the act, it will probably escape.
wrt ESIC, it is not being paid separately, it is being paid along with wages. (note, its in the same transfer and in the pay slip too). So it is likely to get dragged into the computation. In fact, that is accepted by most companies and they pay ESIC on monthly bonus too.
From India, Mumbai
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Amendment to Payment of Bonus Act 2015.jpg
Latest gujarat 6 pay modified.xls
Bonus act amendment gazette copy.pdf