Dear Sir,
When the employee earns an annual income of more than 42000/-, the bonus will be 3500/-. However, if the employee earns an annual income of 40000/-, then the bonus will be calculated as follows:
40000 * 8.33% = 3332/-
Is this calculation correct or incorrect? Please advise us as we have been calculating the bonus in this manner for the past 3 years.
Thank you,
Akhilesh
From India, Mumbai
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5When the employee earns an annual income of more than 42000/-, the bonus will be 3500/-. However, if the employee earns an annual income of 40000/-, then the bonus will be calculated as follows:
40000 * 8.33% = 3332/-
Is this calculation correct or incorrect? Please advise us as we have been calculating the bonus in this manner for the past 3 years.
Thank you,
Akhilesh
From India, Mumbai
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The Employee get the monthly salary =4500+4500+4500+4500+4000+4500+5000+4000+4500=40000/- after this he leave the job. So the bonus calculate on total salary or monthly salary? please advice us
From India, Mumbai
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From India, Mumbai
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To keep it simple, it is better to understand the problem in the context of the provisions of the Act. If an employee's Basic + DA exceeds Rs. 3500/- per month, you should take only Rs. 3500/- per month for calculating the bonus. If his Basic + DA is less than Rs. 3500/- per month, you should take the actual wages drawn by the employee in that case. However, please note that the salary of an employee should not exceed Rs. 10000/- per month to be eligible for a bonus.
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
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B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
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Dear Akhilesh,
As per Section 12 of the Payment of Bonus Act, 1965, all the employees drawing a salary or wages up to Rs. 10,000 per month or less are eligible for the payment of bonus. However, where the salary or wages of an employee exceed Rs. 3,500 per month, the bonus payable to such an employee shall be calculated as if their salary or wages were Rs. 3,500 per month.
In my opinion, your calculation seems to be in order.
BS Kalsi
Member since Aug 2011
From India, Mumbai
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As per Section 12 of the Payment of Bonus Act, 1965, all the employees drawing a salary or wages up to Rs. 10,000 per month or less are eligible for the payment of bonus. However, where the salary or wages of an employee exceed Rs. 3,500 per month, the bonus payable to such an employee shall be calculated as if their salary or wages were Rs. 3,500 per month.
In my opinion, your calculation seems to be in order.
BS Kalsi
Member since Aug 2011
From India, Mumbai
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Hi Akhilesh,
I would like to tell you the method of Bonus Calculations. The bonus is calculated on Basic+DA. We have Payable Basic and Paid Basic every month. Paid Basic can be changed subject to the attendance of an employee every month. As per the act, the Minimum Bonus-able Salary or Wage is Rs. 3500/- per month.
Example: A has a payable basic for Rs. 4000/-, B has a payable basic for Rs. 3500/-, and C has a payable basic for Rs. 3000/- per month during the financial year (April to March).
If A, B, & C are fully present and receive full paid Basic in the organization during the financial year, the Bonus-able wage for A is Rs. 42000/-, for B is Rs. 42000/-, and for C is Rs. 36000/-. Accordingly, you can calculate 8.33% or whatever bonus percentage is decided by the management on the Bonus-able Wage.
If A, B, & C are absent for 15 days, you have to consider the month-wise absent details for calculating their Bonus-able wage. The formula for calculating Monthly Bonus-able wage is if the payable bonus is exceeding Rs. 3500/-: Rs. 3500/- (i.e. Min Bonus-able wage set by Act) / (Divided by) Number of days for the particular month (i.e. 30, 31, 28) * (Multiply by) Number of days present during the month = (Equal to) you will get the Bonus-able wage for that month.
By using this formula, you can calculate the month-wise Bonus-able wage for the year of an employee. You can calculate the Bonus on the Bonus-able wage.
I hope this will suffice your query.
One more thing: As per section 12 of the Payment of Bonus Act, 1965, The bonus is eligible for employees whose Basic+DA is not exceeding Rs. 10,000/- (Sorry but Not on Salary or Wage is exceeding Rs. 10000/-). In most organizations, the management is also paying a bonus to such employees till he is in employment and not paying to resigned employees.
Sorry, I am just sharing my view and knowledge. Mr. Kalsi, please correct me if anything is wrong in the above.
Regards,
Madhav Kalele
09890700529
From India, Mumbai
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I would like to tell you the method of Bonus Calculations. The bonus is calculated on Basic+DA. We have Payable Basic and Paid Basic every month. Paid Basic can be changed subject to the attendance of an employee every month. As per the act, the Minimum Bonus-able Salary or Wage is Rs. 3500/- per month.
Example: A has a payable basic for Rs. 4000/-, B has a payable basic for Rs. 3500/-, and C has a payable basic for Rs. 3000/- per month during the financial year (April to March).
If A, B, & C are fully present and receive full paid Basic in the organization during the financial year, the Bonus-able wage for A is Rs. 42000/-, for B is Rs. 42000/-, and for C is Rs. 36000/-. Accordingly, you can calculate 8.33% or whatever bonus percentage is decided by the management on the Bonus-able Wage.
If A, B, & C are absent for 15 days, you have to consider the month-wise absent details for calculating their Bonus-able wage. The formula for calculating Monthly Bonus-able wage is if the payable bonus is exceeding Rs. 3500/-: Rs. 3500/- (i.e. Min Bonus-able wage set by Act) / (Divided by) Number of days for the particular month (i.e. 30, 31, 28) * (Multiply by) Number of days present during the month = (Equal to) you will get the Bonus-able wage for that month.
By using this formula, you can calculate the month-wise Bonus-able wage for the year of an employee. You can calculate the Bonus on the Bonus-able wage.
I hope this will suffice your query.
One more thing: As per section 12 of the Payment of Bonus Act, 1965, The bonus is eligible for employees whose Basic+DA is not exceeding Rs. 10,000/- (Sorry but Not on Salary or Wage is exceeding Rs. 10000/-). In most organizations, the management is also paying a bonus to such employees till he is in employment and not paying to resigned employees.
Sorry, I am just sharing my view and knowledge. Mr. Kalsi, please correct me if anything is wrong in the above.
Regards,
Madhav Kalele
09890700529
From India, Mumbai
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Dear Akhilesh,
I support the inputs of Mr. B. Sai Kumar, and the corrected Excel statement is attached herewith for your ready reference and necessary action. Please disregard the previous payment details and process the correct payments for this year.
For all calculations related to Workmen, it should be based on 26 days, whereas for the salaries of management staff, it should be calculated based on the total days of a month. If there is no loss of pay throughout the 12 months, the total amount should be Rs. 3500/- per annum, regardless of their category (workmen/management staff). These details should be accurately recorded in the Bonus register and must be made available for inspection whenever a labor officer or any official visits the firm.
Please review the attached statement to understand the variance between absent workmen/staff and those who attend work regularly. The eligibility for bonus and the limit of basic pay would be a maximum of Rs. 10,000 per month, with the maximum bonus payable being Rs. 3500/- per annum at 8.33% as per the Act. Employees earning more than Rs. 10,001 are not entitled to bonus payment as per the Act.
Dear Seniors, please correct me if I am mistaken.
If you require further clarification, please feel free to contact me on my mobile.
Regards,
SRao
9849562900
From India, Hyderabad
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I support the inputs of Mr. B. Sai Kumar, and the corrected Excel statement is attached herewith for your ready reference and necessary action. Please disregard the previous payment details and process the correct payments for this year.
For all calculations related to Workmen, it should be based on 26 days, whereas for the salaries of management staff, it should be calculated based on the total days of a month. If there is no loss of pay throughout the 12 months, the total amount should be Rs. 3500/- per annum, regardless of their category (workmen/management staff). These details should be accurately recorded in the Bonus register and must be made available for inspection whenever a labor officer or any official visits the firm.
Please review the attached statement to understand the variance between absent workmen/staff and those who attend work regularly. The eligibility for bonus and the limit of basic pay would be a maximum of Rs. 10,000 per month, with the maximum bonus payable being Rs. 3500/- per annum at 8.33% as per the Act. Employees earning more than Rs. 10,001 are not entitled to bonus payment as per the Act.
Dear Seniors, please correct me if I am mistaken.
If you require further clarification, please feel free to contact me on my mobile.
Regards,
SRao
9849562900
From India, Hyderabad
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Dear Mr. S. Rao,
I am sorry, but I do not agree with your comment regarding the division by 26 for the calculation of the bonus. The bonus calculation should not be based on Gratuity or Leave Encashment as they are entirely different aspects.
Regards,
Madhav Kalele
09890700529
From India, Mumbai
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I am sorry, but I do not agree with your comment regarding the division by 26 for the calculation of the bonus. The bonus calculation should not be based on Gratuity or Leave Encashment as they are entirely different aspects.
Regards,
Madhav Kalele
09890700529
From India, Mumbai
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Dear Friends,
Don't make it so complicated. Let me share my views:
1. Every organization is practicing some percentage of a bonus but not more than 8.33% of the Basic+DA.
2. Employers are paying bonuses to every employee irrespective of the salary range and also mentioning this part/percentage in CTC calculations.
3. Calculate bonus accrual on a monthly basis for payment at year-end (or Deepawali) if you don't want to confuse yourself at the time of payment.
4. The calculation will be as follows: If "A" works for 30 days in January and his Basic + DA is Rs. 3500, then the formula will be Rs. 3500 divided by 8.33% divided by 31 days, and multiplied by 30 days of actual working.
5. Add the bonus amount and pay.
Simple and Clear!! Chill HR!!
https://www.facebook.com/HRGang
From India, Gurgaon
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Don't make it so complicated. Let me share my views:
1. Every organization is practicing some percentage of a bonus but not more than 8.33% of the Basic+DA.
2. Employers are paying bonuses to every employee irrespective of the salary range and also mentioning this part/percentage in CTC calculations.
3. Calculate bonus accrual on a monthly basis for payment at year-end (or Deepawali) if you don't want to confuse yourself at the time of payment.
4. The calculation will be as follows: If "A" works for 30 days in January and his Basic + DA is Rs. 3500, then the formula will be Rs. 3500 divided by 8.33% divided by 31 days, and multiplied by 30 days of actual working.
5. Add the bonus amount and pay.
Simple and Clear!! Chill HR!!
https://www.facebook.com/HRGang
From India, Gurgaon
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Akhilesh,
I hope you realize that 8.33% is the minimum bonus that is required to be paid. You have to pay a bonus as per the act up to a maximum of 20% of annual wages (subject to the ceiling of 3500 per month).
Thank you.
From India, Mumbai
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I hope you realize that 8.33% is the minimum bonus that is required to be paid. You have to pay a bonus as per the act up to a maximum of 20% of annual wages (subject to the ceiling of 3500 per month).
Thank you.
From India, Mumbai
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Hi Pawan,
Assuming that you are talking about statutory bonus under the Payment of Bonus Act (and not ex gratia bonus that is at the discretion of the company), you are eligible for a bonus between Rs. 3500 * 12 * 8.33% (minimum bonus) and Rs. 3500 * 12 * 20% (maximum bonus), depending on how much profit your company has made and a few other criteria specified in the act.
From India, Mumbai
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Assuming that you are talking about statutory bonus under the Payment of Bonus Act (and not ex gratia bonus that is at the discretion of the company), you are eligible for a bonus between Rs. 3500 * 12 * 8.33% (minimum bonus) and Rs. 3500 * 12 * 20% (maximum bonus), depending on how much profit your company has made and a few other criteria specified in the act.
From India, Mumbai
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