Dear Seniors,
One of our employees' basic salary is 6000 PM, and the state minimum wage is 7345. However, in the month of July, the employee had taken two days off; therefore, his earned basic was 5600 in July. Please let me know for the month of July whether to calculate the bonus on 6000, 7345, or 5600.
Regards,
Amit
From India, Jaipur
Acknowledge(0)
Amend(0)
6One of our employees' basic salary is 6000 PM, and the state minimum wage is 7345. However, in the month of July, the employee had taken two days off; therefore, his earned basic was 5600 in July. Please let me know for the month of July whether to calculate the bonus on 6000, 7345, or 5600.
Regards,
Amit
From India, Jaipur
Acknowledge(0)Amend(0)
The bonus is computed on the total annual salary actually received by an employee during the financial year. If the salary (basic + da) is more than ₹7000 or more than the minimum wages, then you need to compute the bonus on ₹7000 or the minimum wages, whichever is higher. I hope you are not computing and paying the bonus every month.
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Amit,
As per the new amendment of the Payment of Bonus Act, wage consideration is seven thousand rupees or the minimum wage, whichever is higher. In your case, the minimum wage is higher, so you can calculate it as Rs 7,345 as the ceiling, divided by the number of days in a month, multiplied by the days worked.
Regards,
Vishnu
From India, Bangalore
Acknowledge(0)Amend(0)
As per the new amendment of the Payment of Bonus Act, wage consideration is seven thousand rupees or the minimum wage, whichever is higher. In your case, the minimum wage is higher, so you can calculate it as Rs 7,345 as the ceiling, divided by the number of days in a month, multiplied by the days worked.
Regards,
Vishnu
From India, Bangalore
Acknowledge(0)Amend(0)
Assuming you are mentioning basic salary of Rs. 6000, with no DA/VDA applicable in your payment terms above. Bonusable wages/PFable wages rates should not be lower than the notified rates, i.e., Rs. 7345. A two-day deduction means 7345/26 x 2 = Rs. 565. Therefore, the bonus should be calculated on Rs. 7345 - 565 = Rs. 6780. Also, please correct the minimum wages rates, clarified here with examples for you.
Regds,
RDS Yadav
From India, Delhi
Acknowledge(0)Amend(0)
Regds,
RDS Yadav
From India, Delhi
Acknowledge(0)Amend(0)
Please read section 12 along with 10 and 11 of the Bonus Act. The consideration for minimum wages is only applicable when the wages of an employee are above Rs. 7000 per month. If the wage is Rs. 6000, calculate the bonus based on Rs. 6000 only. If the wage is Rs. 10000 and the minimum wage is Rs. 8000, calculate the bonus based on Rs. 8000. If the minimum wage is not fixed and the wage is Rs. 20000, calculate the bonus based on Rs. 7000.
From India, Thiruvananthapuram
Acknowledge(0)Amend(0)
From India, Thiruvananthapuram
Acknowledge(0)Amend(0)
I agreed with Varghese Mathew. If the basic wage is below the minimum wage (MW), then the calculation is based on the actual amount of "6000". If the basic wage is above the minimum wage, then the ceiling is the minimum wage or 7000, whichever is higher and applicable. If someone has a different view, it will be a learning experience for all.
From India, Surat
Acknowledge(0)Amend(0)
From India, Surat
Acknowledge(0)Amend(0)
Dear Amit,
Section 12, after amendment in 2016, states that the salary/wage limit for the calculation of bonus is Rs. 7000/- or the minimum wages per month for the appropriate scheduled employment, whichever is higher. Thus, the basic salary of the employee (assuming no Dearness Allowance is payable) is Rs. 6000/- per month, but after deducting two days' leave in July, it became Rs. 5600/- per month. In any case, since the employee's salary or wage does not exceed Rs. 7000/- or the minimum wages, i.e., Rs. 7345 per month, the bonus has to be calculated on the annual salary from April to March at the basic rate of Rs. 6000/-, including the reduced basic for July. I concur with Verghese Mathew.
Best regards,
B. Saikumar
From India, Mumbai
Acknowledge(0)Amend(0)
Section 12, after amendment in 2016, states that the salary/wage limit for the calculation of bonus is Rs. 7000/- or the minimum wages per month for the appropriate scheduled employment, whichever is higher. Thus, the basic salary of the employee (assuming no Dearness Allowance is payable) is Rs. 6000/- per month, but after deducting two days' leave in July, it became Rs. 5600/- per month. In any case, since the employee's salary or wage does not exceed Rs. 7000/- or the minimum wages, i.e., Rs. 7345 per month, the bonus has to be calculated on the annual salary from April to March at the basic rate of Rs. 6000/-, including the reduced basic for July. I concur with Verghese Mathew.
Best regards,
B. Saikumar
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Amit,
Bonus contemplated under the Payment of Bonus Act, 1965 is a one-time annual payment determined based on the performance of the establishment, calculated and paid on the basis of the total earnings of every eligible employee in an accounting year. Here, total earnings would mean the annual sum total of the components comprising the term "salary or wage" as defined under section 2(21) of the Act. Therefore, as rightly pointed out by Mr. Saswata Banerjee, the question of monthly-based calculation does not arise in the case of statutory bonus. Even assuming that such an exercise is done for the sake of administrative or accounting convenience, such a sum would be the interim bonus only mentioned under section 17(b) of the Act and can be deducted from the annual bonus payable at the close of the accounting year.
As regards the point about the interpretation of section 12 after the amendment put forth by Mr. Varghese Mathew and concurred with by Mr. Saikumar, I beg to differ based on the following reasoning:
1. The object of the rise in the threshold wages from the existing Rs. 10,000/= to Rs. 21,000/= in the Amending Act is to bring more employees within the purview of the Act and make them eligible for a bonus considering the prevailing economic situation of the country.
2. The simultaneous amendment to section 12 of the Act raising the entitlement of employees to a bonus from the existing Rs. 3,500/= to Rs. 7,000/= with a "WHICHEVER IS HIGHER" conditional clause is to ensure a higher amount of bonus for the lowly paid employees as well as to enhance the bonus for employees with higher income.
Let me explain my point with illustrations:-
(a) IN THE CASE OF EMPLOYEES UNDER SCHEDULED EMPLOYMENTS FOR WHICH MINIMUM WAGES ARE FIXED:
The actual monthly wage of an employee for the purpose of a bonus is Rs. 8,000-00 against the minimum wages of Rs. 7,000-00.
Here, a bonus of 8.33% or 20% has to be calculated based on the higher earnings of Rs. 96,000-00 (8,000 x 12) only.
In case the monthly wage is only Rs. 6,000-00 against the minimum wages of Rs. 7,000-00.
Here too, the bonus has to be calculated based on the higher earnings of Rs. 84,000-00 (7,000 x 12) only.
The rationale is that the lowly-paid employee should get a higher bonus based on higher wages.
(b) IN THE CASE OF EMPLOYEES BEYOND THE PURVIEW OF THE MINIMUM WAGES ACT, 1948:
The actual monthly salary for the purpose of a bonus is Rs. 10,000-00.
Here, the bonus has to be calculated based on the monthly notional wages of Rs. 7,000-00 only.
The rationale is that, but for the amendments of sections 2(13) and 12, he would be entitled only to a lesser bonus on the lesser notional limit.
3. The conditional clause of whichever higher with reference to minimum wages need not be applied to employees who are beyond the purview of the Minimum Wages Act.
From India, Salem
Acknowledge(0)Amend(0)
Bonus contemplated under the Payment of Bonus Act, 1965 is a one-time annual payment determined based on the performance of the establishment, calculated and paid on the basis of the total earnings of every eligible employee in an accounting year. Here, total earnings would mean the annual sum total of the components comprising the term "salary or wage" as defined under section 2(21) of the Act. Therefore, as rightly pointed out by Mr. Saswata Banerjee, the question of monthly-based calculation does not arise in the case of statutory bonus. Even assuming that such an exercise is done for the sake of administrative or accounting convenience, such a sum would be the interim bonus only mentioned under section 17(b) of the Act and can be deducted from the annual bonus payable at the close of the accounting year.
As regards the point about the interpretation of section 12 after the amendment put forth by Mr. Varghese Mathew and concurred with by Mr. Saikumar, I beg to differ based on the following reasoning:
1. The object of the rise in the threshold wages from the existing Rs. 10,000/= to Rs. 21,000/= in the Amending Act is to bring more employees within the purview of the Act and make them eligible for a bonus considering the prevailing economic situation of the country.
2. The simultaneous amendment to section 12 of the Act raising the entitlement of employees to a bonus from the existing Rs. 3,500/= to Rs. 7,000/= with a "WHICHEVER IS HIGHER" conditional clause is to ensure a higher amount of bonus for the lowly paid employees as well as to enhance the bonus for employees with higher income.
Let me explain my point with illustrations:-
(a) IN THE CASE OF EMPLOYEES UNDER SCHEDULED EMPLOYMENTS FOR WHICH MINIMUM WAGES ARE FIXED:
The actual monthly wage of an employee for the purpose of a bonus is Rs. 8,000-00 against the minimum wages of Rs. 7,000-00.
Here, a bonus of 8.33% or 20% has to be calculated based on the higher earnings of Rs. 96,000-00 (8,000 x 12) only.
In case the monthly wage is only Rs. 6,000-00 against the minimum wages of Rs. 7,000-00.
Here too, the bonus has to be calculated based on the higher earnings of Rs. 84,000-00 (7,000 x 12) only.
The rationale is that the lowly-paid employee should get a higher bonus based on higher wages.
(b) IN THE CASE OF EMPLOYEES BEYOND THE PURVIEW OF THE MINIMUM WAGES ACT, 1948:
The actual monthly salary for the purpose of a bonus is Rs. 10,000-00.
Here, the bonus has to be calculated based on the monthly notional wages of Rs. 7,000-00 only.
The rationale is that, but for the amendments of sections 2(13) and 12, he would be entitled only to a lesser bonus on the lesser notional limit.
3. The conditional clause of whichever higher with reference to minimum wages need not be applied to employees who are beyond the purview of the Minimum Wages Act.
From India, Salem
Acknowledge(0)Amend(0)
if any worker worked 50 days only in the factory. what is the amt for bonus will be payable for the financial year 2014-15 and 2015 - 16
From India, undefined
Acknowledge(0)Amend(0)
From India, undefined
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Statistics on violations Minimum Wages-Bonus Act.doc
Amendment to Payment of Bonus Act 2015.jpg
Bigger bonuses for more as Lok Sabha amends Payment of Bonus Act - The Economic Times.pdf