what does Seton & Set off means in Bonus Act. This information will be used to know how company decide the percentage of amount to b paid as bonus. Also help us to calculate bonus for the employees.
From India, Mumbai
From India, Mumbai
As per the Bonus Act, minimum is 8.33% and maximum is 20%. If the allocable surplus is below 8.33%, it can be adjusted from the forthcoming 4 years, called Set Off. Similarly if allocable surplus is more than to pay 20%, balance amount upto another 20% can be carried forward to the forthcoming 4 years which is called Set On.
Abbas.P.S
From India, Bangalore
517Abbas.P.S
From India, Bangalore
Dear Patel,
Section 15 of the Payment of Bonus Act,1965 dealing with set-on and set-off of allocable surplus will apparently baffle anyone at the first reading and his further effort to understand by reading it together with the Schedule IV will dull his thirst because of the arithmatics shown therein by way of example and finally compel the reader move away setting on his choice to the chance of necessity. Therefore,let me elaborate what Abbas has briefly stated. The determination of the bonus payable as per the Bonus Act in an accounting year is made from the amount of available surplus that can be allocated. But, Sec.10 of the Act compels the employer to pay the statutory minimum bonus even in years where there is no allocable surplus or loss sustained by the management.Similarly, Sec.11 of the Act, with a liberal notion coupled with some restriction enjoins upon the employer to pay higher bonus in any accounting year where the allocable surplus is in excess of the minimum bonus of 8.33% in lieu of the minimum bonus subject to a maximum of 20% of the salary or wage earned. What to do with the remaining allocable surplus over and above 20%? Can the employer take it for himself? No for bonus is conceptually treated as "deferred wages"and the practice has to be continued till the attainment of "living wages" to the working classes. To ensure this, it is imperative that some alternative arrangement is in place to utilize the allocable surplus in excess of the maximum bonus. Hence, the Sec.15 dealing with set-on and set-off of surplus allocable surplus. Whenever the allocable surplus in an accounting year exceeds the amount of maximum bonus payable, the excess should be carried forward for being set on in the succeeding accounting year and so on up to the fourth year. It should be noted that the total amount thus set on to the succeeding year should be subject to the limit of only 20% of wages payable in the accounting year. Whenever in any accounting year the allocable surplus is nil or less than the minimum bonus, the amount already set on in the previous accounting years should be set off for making good the short fall in the accounting year for which bonus is payable. If, we closely follow the calculations illustrated by way of example in Sch IV, the principles of set-on and set-off can be easily understood.
From India, Salem
Section 15 of the Payment of Bonus Act,1965 dealing with set-on and set-off of allocable surplus will apparently baffle anyone at the first reading and his further effort to understand by reading it together with the Schedule IV will dull his thirst because of the arithmatics shown therein by way of example and finally compel the reader move away setting on his choice to the chance of necessity. Therefore,let me elaborate what Abbas has briefly stated. The determination of the bonus payable as per the Bonus Act in an accounting year is made from the amount of available surplus that can be allocated. But, Sec.10 of the Act compels the employer to pay the statutory minimum bonus even in years where there is no allocable surplus or loss sustained by the management.Similarly, Sec.11 of the Act, with a liberal notion coupled with some restriction enjoins upon the employer to pay higher bonus in any accounting year where the allocable surplus is in excess of the minimum bonus of 8.33% in lieu of the minimum bonus subject to a maximum of 20% of the salary or wage earned. What to do with the remaining allocable surplus over and above 20%? Can the employer take it for himself? No for bonus is conceptually treated as "deferred wages"and the practice has to be continued till the attainment of "living wages" to the working classes. To ensure this, it is imperative that some alternative arrangement is in place to utilize the allocable surplus in excess of the maximum bonus. Hence, the Sec.15 dealing with set-on and set-off of surplus allocable surplus. Whenever the allocable surplus in an accounting year exceeds the amount of maximum bonus payable, the excess should be carried forward for being set on in the succeeding accounting year and so on up to the fourth year. It should be noted that the total amount thus set on to the succeeding year should be subject to the limit of only 20% of wages payable in the accounting year. Whenever in any accounting year the allocable surplus is nil or less than the minimum bonus, the amount already set on in the previous accounting years should be set off for making good the short fall in the accounting year for which bonus is payable. If, we closely follow the calculations illustrated by way of example in Sch IV, the principles of set-on and set-off can be easily understood.
From India, Salem
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