Our company pays a 20% bonus every year, but now we want to pay an 8.33% bonus in 2015-16. Kindly inform us whether paying 8.33% is legal as per the Bonus Act. Please confirm and advise.
From India, Jaipur
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From India, Jaipur
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Dear Anil, You can pay 8.33% as Bonus to the employees as per Payment of Bonus Act. Regards Rajesh Pradhan
From India, Delhi
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2From India, Delhi
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Dear Anil,
Basically, the payment of a bonus does not depend upon the wish of any individual regarding how much to pay. The minimum bonus is 8.33%, and the maximum is 20%, but it depends upon allocable surplus, set ON/Set off. This means that if you have reasonable profits and you have set ON available with you, then you are bound to pay the bonus as per the set ON amount available with you.
Regards,
JS Malik
From India, Delhi
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Basically, the payment of a bonus does not depend upon the wish of any individual regarding how much to pay. The minimum bonus is 8.33%, and the maximum is 20%, but it depends upon allocable surplus, set ON/Set off. This means that if you have reasonable profits and you have set ON available with you, then you are bound to pay the bonus as per the set ON amount available with you.
Regards,
JS Malik
From India, Delhi
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Dear Anil, If you have allocable surplus then you have to pay bonus as per law minimum 8.33% to max 20%
From India, Indore
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From India, Indore
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Hi Anil,
you want to pay 8.33% bonus instead of 20% to whom..? to you staff category employees or workers...!
In case of workers category, Yes you can pay 8.33%, on upon allocable surplus set-on / set-off provision
But in case of staff category employees, bonus is part of there CTC if you are planing to revise bonus percentage the rest of the amount you have to adjust in some allowances (salary component) and it may cause to increase employees monthly gross salary also may increase esic contribution burden from both the side employer as well as employees.
Please refer note on latest amendment in The Payment of Bonus Act, 1965 it may help you to clear your concept
Amendment in The Payment of Bonus Act, 1965.
This is to inform you that both the Houses of the Parliament have passed the Payment of Bonus Act amendment Bill yesterday. As per the news broadcasted on Radio, the said bill has been passed with retrospective effect i.e. from financial year 2014-2015.
Prior to the said amendment, the employee was defined under section 2(13) which reads as under:
“employee means any person (other than an apprentice) employed on salary or wages not exceeding Rs.10,000/- per month in any industry to do any skill, manual, supervisory, managerial, administrative, technical or clerical work for higher or reward whether the terms of employment be expressed or implied”.
As per the amendment the salary/wage limit of Rs.10,000/- has been enhanced to Rs. 21,000/- per month. The nett financial impact of the same will be that those employees who are drawing salary/wages not more than Rs.21,000/- per month and those who are working in skill, manual, supervisory, managerial, administrative, technical or clerical work, will also be entitled to receive bonus henceforth.
Prior to this amendment as per section 12 where the salary/wages of an eligible employee exceeds Rs.3500/- per month (Rupees Three Thousand Five Hundred Only) the bonus payable to such employee under this act i.e. minimum @ 8.33% or maximum @20% as the case may be, was calculated as if salary or wages or such an employee was Rs.3500/- (Rupees Three Thousand Five Hundred Only).
In the aforesaid amendment the figure of Rs.3500/- (Rupees Three Thousand Five Hundred Only) has been increased to Rs.7,000/- (Rupees Seven Thousand Only) per month. Prior to the amendment the eligible employee was entitled to receive minimum bonus of Rs.3500/- per annum @ 8.33% and a maximum bonus of Rs.8400 (Rupees Eight Thousand Four Hundred Only) @ 20% as the case may be. Now the employer will have to pay minimum bonus of Rs.7,000 per annum @8.33% instead of Rs.3500 per annum and maximum bonus of Rs.16,800/- @20% instead of Rs.8,400/- per annum.
Since the amendment is with retrospective effect, for the financial year 2014-2015, the employer will have to pay difference between Rs.3500 and Rs.7000 per annum, in case the employer has paid minimum bonus @8.33% during the said financial year and in case if the employer has paid maximum bonus of Rs.8400 @20% during the said financial year, such a employer will have to pay the difference between Rs.8400 and Rs.16800/-. In all other cases the employer has to pay the proportionate difference, as may be the case.
In addition this, the employer will have to pay the bonus to those employees whose salary i.e. basic + DA was more than Rs.10,000 but less than Rs. 21,000/- per month during the said financial year 2014-2015.
Regards,
Ubaid Raheman.
Dy. Manager HR.
From India, Mumbai
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you want to pay 8.33% bonus instead of 20% to whom..? to you staff category employees or workers...!
In case of workers category, Yes you can pay 8.33%, on upon allocable surplus set-on / set-off provision
But in case of staff category employees, bonus is part of there CTC if you are planing to revise bonus percentage the rest of the amount you have to adjust in some allowances (salary component) and it may cause to increase employees monthly gross salary also may increase esic contribution burden from both the side employer as well as employees.
Please refer note on latest amendment in The Payment of Bonus Act, 1965 it may help you to clear your concept
Amendment in The Payment of Bonus Act, 1965.
This is to inform you that both the Houses of the Parliament have passed the Payment of Bonus Act amendment Bill yesterday. As per the news broadcasted on Radio, the said bill has been passed with retrospective effect i.e. from financial year 2014-2015.
Prior to the said amendment, the employee was defined under section 2(13) which reads as under:
“employee means any person (other than an apprentice) employed on salary or wages not exceeding Rs.10,000/- per month in any industry to do any skill, manual, supervisory, managerial, administrative, technical or clerical work for higher or reward whether the terms of employment be expressed or implied”.
As per the amendment the salary/wage limit of Rs.10,000/- has been enhanced to Rs. 21,000/- per month. The nett financial impact of the same will be that those employees who are drawing salary/wages not more than Rs.21,000/- per month and those who are working in skill, manual, supervisory, managerial, administrative, technical or clerical work, will also be entitled to receive bonus henceforth.
Prior to this amendment as per section 12 where the salary/wages of an eligible employee exceeds Rs.3500/- per month (Rupees Three Thousand Five Hundred Only) the bonus payable to such employee under this act i.e. minimum @ 8.33% or maximum @20% as the case may be, was calculated as if salary or wages or such an employee was Rs.3500/- (Rupees Three Thousand Five Hundred Only).
In the aforesaid amendment the figure of Rs.3500/- (Rupees Three Thousand Five Hundred Only) has been increased to Rs.7,000/- (Rupees Seven Thousand Only) per month. Prior to the amendment the eligible employee was entitled to receive minimum bonus of Rs.3500/- per annum @ 8.33% and a maximum bonus of Rs.8400 (Rupees Eight Thousand Four Hundred Only) @ 20% as the case may be. Now the employer will have to pay minimum bonus of Rs.7,000 per annum @8.33% instead of Rs.3500 per annum and maximum bonus of Rs.16,800/- @20% instead of Rs.8,400/- per annum.
Since the amendment is with retrospective effect, for the financial year 2014-2015, the employer will have to pay difference between Rs.3500 and Rs.7000 per annum, in case the employer has paid minimum bonus @8.33% during the said financial year and in case if the employer has paid maximum bonus of Rs.8400 @20% during the said financial year, such a employer will have to pay the difference between Rs.8400 and Rs.16800/-. In all other cases the employer has to pay the proportionate difference, as may be the case.
In addition this, the employer will have to pay the bonus to those employees whose salary i.e. basic + DA was more than Rs.10,000 but less than Rs. 21,000/- per month during the said financial year 2014-2015.
Regards,
Ubaid Raheman.
Dy. Manager HR.
From India, Mumbai
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slightly correction Keral High court has passed an order that the said amendment bill shall be w.e.f. FY 2015-2016 and the said bill is cancelled for FY 2014-2015. Court order copy is attached
From India, Mumbai
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From India, Mumbai
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Hi,
Bonus is payable in accordance with the provisions and methods for computation of allocable/available surplus. Please go through the provision, understand aims and procedures, and arrive at the practical amount to be paid as a bonus. No one can give a legally true and correct answer to you like this. If you are referring to the new notification and trying to present that in view of the notification that came on December 31st, 2015, there is more burden, and you wish to compare and stay closer to that figure. Less burden, more burden is not HR. Say what the law is saying with confidence. The right answer can be the amount that you find. So, you calculate as per schedule 2(a) of the Bonus Act and arrive at the amount available; the same amount and percentage are legally payable for a bonus. The issue has already been clarified by our other eminent personalities, which you can visit out of academic interest.
Regards, RDS Yadav Labour Law Adviser Director - Future Institute of Engineering and Management Technology navtaranghrs@gmail.com
From India, Delhi
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Bonus is payable in accordance with the provisions and methods for computation of allocable/available surplus. Please go through the provision, understand aims and procedures, and arrive at the practical amount to be paid as a bonus. No one can give a legally true and correct answer to you like this. If you are referring to the new notification and trying to present that in view of the notification that came on December 31st, 2015, there is more burden, and you wish to compare and stay closer to that figure. Less burden, more burden is not HR. Say what the law is saying with confidence. The right answer can be the amount that you find. So, you calculate as per schedule 2(a) of the Bonus Act and arrive at the amount available; the same amount and percentage are legally payable for a bonus. The issue has already been clarified by our other eminent personalities, which you can visit out of academic interest.
Regards, RDS Yadav Labour Law Adviser Director - Future Institute of Engineering and Management Technology navtaranghrs@gmail.com
From India, Delhi
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