ajit.majhi07@gmail.com Started The Discussion:
Hi,
Could anyone please explain how to calculate the bonus according to the Payment of Bonus Act, 1965.
I would also like to know what is the min/max bonus to be paid and also will be glad if if you could give me some more information regarding this.
Please explain in a simple way so that anyone can understand.
Ajit
Posted 30th October 2006 From India, Mumbai
Hi Ajit,

I am attaching a presentation on Payment of Bonus act 1965.It would explain you all the details of Payment of Bonus act 1965 in short and sweet. The minimum bonus is 8.33% and maximum is 20%. all the details are given in the presentation.

Please feel free to revert in case of any doubts.

Regards,

Mallet.
Posted 31st October 2006 From India, Hyderabad
Attached Files
 Shared By Cite.Community Member "mallet" For Public Download the_payment_of_bonus_act_188.ppt (91.5 KB, 18897 views)
hi Mallet, thanx for that presentation but still i have query that can we deduct that 8.33% from every month. please reply me Regards Pallavi
Posted 3rd November 2006 From India, Madras
Hi Pallavi,

8.33% is one month's salary. Based on the profit a company makes bonus is negotiated between the union and the management on the scale between 8.33% and 20%. Even if the company is making loss 8.33% is min.

Regards,
Mallet.
Posted 3rd November 2006 From India, Hyderabad
Dear All,

I Need Your Help To Calculate Bonus Can Anyone Put Guidelines For The Following ?

1. If Basic+da Is 2000 Then Is It 20 % Bonus Or 8.33 %
2. If Basic+da Is 2501 Then Is It 20 % Bonus Or 8.33 %
3. If Basic+da Is 3400 Then Is It 20 % Bonus Or 8.33 %
4. If Basic+da Is 3501 Then Is It 20 % Bonus Or 8.33 %

Regards
Joseph
Posted 23rd August 2008 From India, Mumbai
Now bonus is payable to those whose salaries per month do not exceed Rs 10000(not Rs 3500). For those whose salary is in between Rs 3500 and Rs 10000, bonus will be calculated treating the salary as Rs 3500.
8.33% is the statutory bonus payable to those who are eligible for bonus and 20% is the maximum bonus. The rate of bonus will depend upon the profit available for the same. In the PPT of Millet the procedure is explained. However, in practice and where the trade unions are very strong, these steps will not work in practice. The rate will be negotiated and the rate affordable to the company will be declared.
If bonus @ 12% has been agreed then take the Basic + DA salary of individual employee for the year and then take 12% of it to arrive at the amount of bonus. Donot take one month salary and multiply it by 12 (months) to get the aggregate salary because there may be months with lesser salary due to LOP/ ESI leave. For those whose pay are more than 3500 but not more than Rs 10000, calculate the bonus as if the monthly salary is Rs 3500 (Basic + DA)

Regards,

Posted 23rd August 2008 From India, Kannur

So for example:

An employee who is drawing a salary of 7000/-

Calculate minimum and maximum bonus

8.33 % * 3500 * 12....

20 % *3500 *12.....

is this how it will be???? o we do not have to multiply it into 12?
Posted 22nd November 2008 From India, Pune
you do will have to multiply with 12 to arrive at monthly deduction from ctc of the employee payable in the next financial year .Bonus amount is paid on allocable surplus ,and based on the principle of set on & set off alltogether.To arrive at allocable surplus you can take help from people of your finance department. The bonus amount will vary in the following % es as rightly mentioned by Madhu .Min 8.33%Max 20%Regards ,Avinash Singh
Posted 22nd November 2008 From India, Rohtak
Avinash you dont make confused to others if you want to reply make it clear properly otherwise leave it.

Dear Formula is

Bonus=Basic Salary+DA*12*8.33%

For Example if my Basic salary is 5000 and DA 1000 so how much i'll get bonus

Bonus =5000+1000*12*8.33/100
= 6000*12*8.33/100
= 72000*8.33/100
= 5997.6 RS. Annual Bonus

and if company have big profits for any financial year so it can be 20% maximum.

Regards

Anish
Posted 9th January 2010 From India, Delhi
Dear Mr. Anish,

There is no correlation between having big profits & % of bonus to be disbursed.You should try to know the things more precisely before suggesting anything like this.

It is basically management policy , that what % of bonus be disbursed to the employees.Generally employers across industry specifically among Pvt sectors keeps it on Min & Max % as provisioned in the act , on the present slab of Rs. 3500/-.

Intially when Payment of Bonus act was passed in 1965 , it was linked to profit but due to manipulation of profit figures by the employers, Government brought the amendment in the act in 1966 and linked it to salary for a fixed % which is now Min - 8.33% and Max- 20% .

And it should be decided on the principle of set on & set off and allocable and available surplus with the employer.

Regards,
AS
Posted 11th January 2010 From India, Rohtak
Dear Madhu Nice Explanation. If u give an example of bonus calculation then that would be great. Kindly use every aspects in your example, which u have mentioned above.
Posted 10th March 2010 From India, Chennai
Dear ALL,

I have question.. in my company our salary structure is as following . if person salary = 8500/- then its break up, like.
BASIC = 4250/-
HRA = 1488/-
CONV = 800/-
SPL ALL=1962/-. so please tell me how can i count Bonus...? should i count bonus only on BASIC (4250) or can i add HRA (1488) also..

and also want to know that, if person salary is 12000/- pm so he will get any bonus or no?

Pls help me.

Thanks,
Yash

Dear Formula is

Bonus=Basic Salary+DA*12*8.33%

For Example if my Basic salary is 5000 and DA 1000 so how much i'll get bonus

Bonus =5000+1000*12*8.33/100
= 6000*12*8.33/100
= 72000*8.33/100
= 5997.6 RS. Annual Bonus

and if company have big profits for any financial year so it can be 20% maximum.

Regards

Anish[/QUOTE]
Posted 22nd July 2010 From India, Vadodara
Dear ALL,

I have question.. in my company our salary structure is as following . if person salary = 8500/- then its break up, like.
BASIC = 4250/-
HRA = 1488/-
CONV = 800/-
SPL ALL=1962/-. so please tell me how can i count Bonus...? should i count bonus only on BASIC (4250) or can i add HRA (148:cool: also..

and also want to know that, if person salary is 12000/- pm so he will get any bonus or no?

Pls help me.

Thanks,
Yash
Posted 23rd July 2010 From India, Vadodara
Answer to your question is available in my previous reply itself. Please read it. It follows that Bonus of all employees whose salaries exceed Rs 3500 will be the same as it takes Rs 3500 as salary even if it is Rs 4250 or even Rs 10000. Certainly if the salary exceeds Rs 10000, then he is not entitled to bonus as per Payment of Bonus Act. Salary for this purpose means basic salary and dearness allowance.

Regards,

Posted 23rd July 2010 From India, Kannur
Dear Madhu you told to one colleague that bonus will be calculated at the rate of 3500/- those who are getting salary between 3500-10000 and if some one is getting more than this criteria then what will be the figure to calculate the bonus and one more thing i wd like to ask with you wy we can't take exact figure of basic to calculating bonus is there any law for this becoz most of the companies it is calculated on actual basic.

Anish

Posted 11th August 2010 From India, Delhi
I have taken the calculation as per Payment of Bonus Act and any calculation which gives better amount of bonus to employees will be maintained. Therefore, if your company is willing to pay bonus on total salary or actual basic(+DA) salary, it is okay. It is good if all employees including those who are getting salary of more than Rs 10000 are also given bonus.

Regards,

Posted 11th August 2010 From India, Kannur
Thanx for the information pertaining to bonus calculation.

In our co. we don't have da ; Basic+HRA+Conveyance+Other Allowance.

In this case how can the bonus be calculated.

We have basic sal 1800 & 6550.
Posted 14th August 2010 From India, Hyderabad
I am a contractor working for Oil Industry, I have taken haulage and house keeping contract in Belgaum, employed seven number of employees. Please clarify whether I am liable to pay bonus for seven employees.

I heard that employers employing less than 10 person are not liable to pay bonus...?

my email id is

Thank you
Posted 7th October 2010 From India, Mumbai
Dear Member,

If you do not have DA then you are to consider Basic & if you are also providing food allowance in other allowances then pay bonus on both these heads. For more details you may go through section 2(21) of the Payment of Bonus Act, 1965.

Regards,
R.N.Khola
Skylark Associates, Gurgaon (Haryana)
Labour Law Consultants (m) +91 9810405361
www.skylarkassociates.com/

Posted 7th October 2010 From India, Delhi
Dear Member,

If the salary as defined under the Act is more than Rs. 10,000/-PM then the employee is not entitled to get bonus under the Payment of Bonus Act, 1965.

With Regards,
R.N.Khola
Skylark Associates, Gurgaon (Haryana)
(Labour Law Consultants) (M) 09810405361
www.skylarkassociates.com/

Posted 28th October 2010 From India, Delhi
Dear member, Plz go through section 4 on calculation of gratuity under the Payment of Gratuity act, 1972. Regards, R N khola
Posted 29th October 2010 From India, Delhi
if basic Salary is 4625 and he worked for 10 months, then how is Bonus calculated please reply with Solved Formula
Posted 6th November 2010 From India, Mumbai
Dear New_1961,

Even if the salary is Rs. 4625, the ceiling salary of Rs. 3,500, will be taken for bonus calculation.

Minimum bonus is 8.33%, which is the % form of 1/12. Accordingly If the salay is Rs. 3500, 3500x12/12 = 3500 will be paid as minimum. For 10 months this will be 3500 x 10/12 = Rs. 2916.67.

Abbas.P.S
Posted 6th November 2010 From India, Bangalore
Dear Anish The way of Communicating your Answer is Very Nice Thanks a Lot For your wonderful Help for Topic Regarding Bonus.....
Posted 18th October 2012 From India, Mumbai
hy this rahul whenever we calculate Bonus and as per salary structure Basic + DA = 5500 the how to calculate Basic and DA From it and what is What Is Basic? and what is What Is DA?
Posted 30th November 2012 From India, Pune
i have confusion about bonus should we calculate bonus on rate 3500 or basis of %. tell me the correct answer?
Posted 24th March 2013 From India, Chandigarh
and i think there is no basic + da. its about salary ( Grose Salary). tell me correct answer.?
Posted 24th March 2013 From India, Chandigarh
Dear sir,
Whether bonus @ 8.33% will be paid flatly for 12 months or it can be calculated on prorata basis based on attendance as follows :-
Somebody suggested :-
Bonus=Basic Salary+DA*12*8.33%

For Example if my Basic salary is 5000 and DA 1000 so how much i'll get bonus

Bonus =5000+1000*12*8.33/100
= 6000*12*8.33/100
= 72000*8.33/100
= 5997.6 RS. Annual Bonus
I want clarification :-
Bonus = Basic Salary + DA * (instead of 12 it should be number of days completed during year ) * 8.33 %
Suppose attendance is 35 days than calculation will be as follows :-
for deriving the per day rate of bonus considering ceiling of 7000 salary per month :-
7000*12*8.33/100= 6997.2
6997/312 (12months@26 days per month) = 22.43 per day
bonus for 35 days ( completed in year)=
35*22.43 = 785.00
Posted 1st May 2016 From Netherlands
Bonus is not a projected calculation based on structural wages but it is to be calculated on the actual wages earned by the employee. Therefore, if you have worked only for less than 12 months, say 9 months, your bonus will be available for wages earned during this 9 months and it cannot be same as an employee who was present for work during the entire 12 months. That means proportionate deduction for LOPs or wages not earned during the period should be made from the bonus qualifying salary.

Posted 2nd May 2016 From India, Kannur

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