Hey guys,
Can anyone guide me as to how Bonus is calculated for employees :-
1. Does the calculation has to be based on financial year (April - Mar)?
2. How do u calculate bonus for the employees who have recently joined the Company?
3. For the employees who have completed one month should one month of the Basic salary be paid?
4. What is the formula for calculation of Bonus?
Please help me guys, coz I want to change the current system that exists in my company.
From India, Pune
Can anyone guide me as to how Bonus is calculated for employees :-
1. Does the calculation has to be based on financial year (April - Mar)?
2. How do u calculate bonus for the employees who have recently joined the Company?
3. For the employees who have completed one month should one month of the Basic salary be paid?
4. What is the formula for calculation of Bonus?
Please help me guys, coz I want to change the current system that exists in my company.
From India, Pune
Dear Nalini,
1. Yes, the calculation is based on financial year. But the maximum time limit is 8 months after completion of financial year, which will be 30th November.
2.Those who have 30 days attendance in a financial year are eligible for bonus for that year. But this is to be paid pro-rata basis.
3. For one month attendance, bonus amount will be 1/12th of the entitled amount for one year.
4. First arrive available surplus by deducting Tax, Depreciation, Developmental Rebate etc. (Better cosult an expert in this regard). Calculate allocable surplus. For companies this is 67% of available surplus, but for banking institutions 60%.
Distribute the allocable surplus among the eligible employees, subject to a minimum of 8.33% and maximum 20%. If the maximum is above 20%; balance subject to another maximum of 20%, can be carried forward for next 4 years which is called Set On. Similarly if allocable surplus is below 8.33%, it will be adjusted from the next 4 years which is called Set Off. Please note that 8.33% is the percentage form of 1/12 and is equal to one month salary. Accordingly 20% is 2.4 times of one month salary, but subject to ceiling of Rs. 3,500.
Abbas.P.S
From India, Bangalore
5171. Yes, the calculation is based on financial year. But the maximum time limit is 8 months after completion of financial year, which will be 30th November.
2.Those who have 30 days attendance in a financial year are eligible for bonus for that year. But this is to be paid pro-rata basis.
3. For one month attendance, bonus amount will be 1/12th of the entitled amount for one year.
4. First arrive available surplus by deducting Tax, Depreciation, Developmental Rebate etc. (Better cosult an expert in this regard). Calculate allocable surplus. For companies this is 67% of available surplus, but for banking institutions 60%.
Distribute the allocable surplus among the eligible employees, subject to a minimum of 8.33% and maximum 20%. If the maximum is above 20%; balance subject to another maximum of 20%, can be carried forward for next 4 years which is called Set On. Similarly if allocable surplus is below 8.33%, it will be adjusted from the next 4 years which is called Set Off. Please note that 8.33% is the percentage form of 1/12 and is equal to one month salary. Accordingly 20% is 2.4 times of one month salary, but subject to ceiling of Rs. 3,500.
Abbas.P.S
From India, Bangalore
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Bonus Calculation.xls
BONUS CALCULATION RULE (1).pdf