The Bonus amount, depends on the working days of an Employee during the previous year subject to minimum attendance of at least 30 days.
The calculation generally based on the period of previous financial year i.e. from April to March.
Generally the amount of bonus depends on the productivity and growth of the Organisation
subject to at least 8.33% of Basic wage maximum up to 20% and the salary limit is Rs10,000/-
You have desired to know about the implication of Section 19 of the Payment of Bonus Act 1965. My colleague Sh pkmbgr has rightly mentioned that a minimum attendance of at least 30 days is required for becoming eligible for payment of bonus and the calculation is based on the period of working in the previous financial year i.e. from April to March. In normal conditions, the payment of bonus has to be made within eight months of the close of the accounting year i.e. before end of November.The second condition in Section 19 is mentioned, where there is a dispute regarding payment of bonus is pending before an authority, in that case the payment of bonus shall be made within a month from the date on which the award becomes enforceable or the settlement comes into operation.If an application is made to such authority by the employer and for sufficient reasons, the authority, by an order, may extend the said period of eight months to such further period or periods, as the appropriate Government may specify in this behalf, but the total period so extended shall not in any case exceed two years.
The Payment of Bonus Act, 1965 requires an employer to pay a minimum bonus of 8.33 percent or a maximum of twenty per cent of the salary or wage earned by the employee during the accounting year.The employer is eligible to make adjustment if he has paid any puja bonus or other customary bonus to an employee or has paid a part of the bonus payable under this Act
Member since Aug 2011
Our company has an annual short term incentive plan (STIP) for every employees which we pay in the month of March of every following year. The incentive is calculated on the basis of the company and individualís performance. We have few employees whose basic salary is less than 10,000/- per month.These employees has already received a STIP amount which comes out to be more than 8.33% of their wages. Could you please confirm or suggest if it is mandatory for the company to pay the minimum bonus over and above the STIP?
The Act is applicable to (a) every factory (b) every other establishment employing 20 or more persons.The Government can, however, apply the Act to any establishment employing less that 20 but not less than 10 persons. An establishment to which the Act applies once shall continue to be governed by the Act irrespective of any fall in the number of person employed therein.Thus you are to examine, in terms of the preceding para, as to whether the Act is applicable to you or not. If the Act is applicable to you, you are under a statutory obiligation to make payment to the eligible employees, as explained in my trailing mail.
As regards your query about payment of annual short term incentive plan (STIP) to all of your employees in the month of March, is concerned, in my opinion STIP shall not be considered as bonus payment under the Act.You need to calculate the gross profits derived from your business as per second schedule given under Section 4(b) of the Act & pay bonus to your employees accordingly.As it was held by Rajsthan High Court that ex-gratia bonus is not a bonus within the meaning of Section 10 of the Act.( RPC Officers Association Vrs RPC; 1990 LLR 222).
Member since Aug 2011
All organizations of a minimum strength of 20 during that accounting year, must pay yearly bonus to its employees. Can consider an organization to be in its infancy for the first five years from beginning of its operations, during which period the establishment may be exempted from bonus, if, and only if it fails during that time period.
Bonus amount has to be paid, compulsorily if the organization declares profit during its infancy period. Employees with basic wages of upto Rs.10000, under maternity leave, laid-off employees and those who are absent due to temporary disablement arising from course of duty are eligible for bonus.
Apprentices are not covered under the Bonus act. Employees dismissed from service due to inappropriate conduct may be disqualified from bonus.
The minimum amount to be paid as bonus is 8.33% of one's basic salary or Rs.100 whichever is higher. The maximum amount is 20% of the basic salary
Employees who have worked for 30 days during any accounting year are eligible for bonus calculated for that year. Bonus to be disbursed within 8 months on completion of any accounting year.
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