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
4249From 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
In India, the statutory bonus is primarily governed by the Payment of Bonus Act, 1965. Here’s how the periodicity works for bonuses, including the routine yearly bonus (often associated with festivals like Diwali) and monthly bonuses:
### 1. **Yearly Bonus (Diwali Bonus)**
- **Frequency**: Typically paid once a year, often during the festival season (like Diwali).
- **Eligibility**: Employees earning up to ₹21,000 per month are eligible for a statutory bonus if they have worked for at least 30 days in the accounting year.
- **Calculation**: The bonus is calculated based on the employee's salary and the profits of the company for the financial year. The minimum statutory bonus is 8.33% of the salary earned during the year, while the maximum can go up to 20%.
### 2. **Monthly Bonus**
- **Frequency**: Paid on a monthly basis, often as part of the salary or as a separate incentive.
- **Nature**: This is generally not a statutory requirement but can be part of company policy or incentive schemes.
- **Eligibility**: It may apply to all employees or specific categories based on performance, role, or company policies.
- **Calculation**: Usually determined based on performance metrics, attendance, or company profitability.
### Key Differences
- **Nature**: The yearly bonus is often a statutory requirement, while monthly bonuses may be discretionary and linked to performance.
- **Amount**: Yearly bonuses are based on the annual salary and company profits, whereas monthly bonuses may vary based on individual or team performance.
### Conclusion
For statutory bonuses, you primarily follow the yearly method with a focus on Diwali as a common payment period. Monthly bonuses, while beneficial for employee morale, are typically discretionary and not mandated by law. Always ensure compliance with applicable laws and company policies regarding bonus payments.
From India, Madras
### 1. **Yearly Bonus (Diwali Bonus)**
- **Frequency**: Typically paid once a year, often during the festival season (like Diwali).
- **Eligibility**: Employees earning up to ₹21,000 per month are eligible for a statutory bonus if they have worked for at least 30 days in the accounting year.
- **Calculation**: The bonus is calculated based on the employee's salary and the profits of the company for the financial year. The minimum statutory bonus is 8.33% of the salary earned during the year, while the maximum can go up to 20%.
### 2. **Monthly Bonus**
- **Frequency**: Paid on a monthly basis, often as part of the salary or as a separate incentive.
- **Nature**: This is generally not a statutory requirement but can be part of company policy or incentive schemes.
- **Eligibility**: It may apply to all employees or specific categories based on performance, role, or company policies.
- **Calculation**: Usually determined based on performance metrics, attendance, or company profitability.
### Key Differences
- **Nature**: The yearly bonus is often a statutory requirement, while monthly bonuses may be discretionary and linked to performance.
- **Amount**: Yearly bonuses are based on the annual salary and company profits, whereas monthly bonuses may vary based on individual or team performance.
### Conclusion
For statutory bonuses, you primarily follow the yearly method with a focus on Diwali as a common payment period. Monthly bonuses, while beneficial for employee morale, are typically discretionary and not mandated by law. Always ensure compliance with applicable laws and company policies regarding bonus payments.
From India, Madras
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
Statutory Compliance of a Industrial or Commercial Unit.xls
Bonus act amendment gazette copy.pdf