QUERIES
dear all..
plz suggest me that after raising the salary limit from 3500 to 10000..sec2(12).
hw we can calcalate for bonus previosly it was 2500 as sec-12 of [payment of bonus act,1965.
some one told me it is now 8500..
whether he is ri8 or wrong?
take this matter urgent.

awaiting your reply.
gauravagrawal

23rd September 2008 From India, Pune

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Dear Gurav
Please be guide by the below for payment of Bonus
Two issues are to be considered;
Saalary Eligibility for bonus: is less than 10000 i.e u r eligible for bonus if u r salary is les that r 10,000 as per the Act
Bonus calculation: Bonus shall be calculated on Rs 3500 if u r salary is more than rs 3500. Pls see the example for more calarity.
Bonus Calculation
Case A: Monthly wages greater than Rs 3500/-


Gross Monthly Wages of Workmen “A”

=
Rs 5190
Bonus Payable Wages of Workmen “A”
=
Rs 3500
Bonus Payable @ existing rate assuming that the workman comes regularly
=
Rs3500*Bonus rate*12 months




Case B: Gross Monthly wages less than Rs 3500/-

Gross Monthly Wages of Workmen “B”

=
Rs 3120
Bonus Payable Wages of Workmen “B”
=
Rs 3120
Bonus Payable @ existing rate assuming that the workman comes regularly every month
=
Rs3120* Bonus rate *12 months


Regards
ravi
23rd September 2008 From United States
Hi,
Thanks for letting us know the exact calculation of Bonus.
I have one query, If an employee is working with the company from last 2 years. i.e has joined in Sept 2006.
Company gives the Bonus to all the employees in October or November.
Now that employee is planning to leave the organization in September itself. Then can he/she ask for the Bonus?
And is it mandatory for the Org gives him the Bonus with his F&F?
Regards,
Rajashree D
23rd September 2008 From India, Mumbai
Dear Gaurav,
Ammendment in Bonus act was:
1. Meaning of Salary : eligible to get the bonus whose salary beyond 10,000/- per month (before ammendment it was 3500/-)
2. Salary for calculation : it was ammended 3500/- per month (before ammendment it was 2500/-)
How to calculate the bonus:
Minimum rate :8.33%
Maximum rate : 20%
(as per Pyament of Bonus Act)
Calculation : 3500 x 12 X 20% = 8400/- (maximum)
Before ammendment:
2500 X 12 X 20% = 6000/-
I think you may clarify your problem
thanks.
Jagan
9903599794
23rd September 2008 From India, Visakhapatnam
Hello,

The method to calculate bonus under the act has NOT changed.

What has changed is as follows:

1. Coverage: Any employee who draws salary/wage (Basic+DA) less than Rs. 10000/- per month will now due to this amendment be covered as an employee under the Payment of Bonus Act 1965. (In past this limit was Rs. 3500/- per month (Basic+DA)
2. The percentage of bonus is a derived percentage from the method prescribed under the act (of calculating Gross Profit, Available Surplus and the Allocable Surplus and then the percentage of Bonus that can be paid.
3. The law stipulates that even when the company makes a loss, it is obliged to pay a bouns of 8.33% and whatever the profits the company cannot pay bonus exceeding 20% The first is called the Statutory Minimum Bonus and the other is called the statutory Maximum Bonus. Subject to other provisions of the act the percentage of bonus varies between these two levels.
4. The rule is that the calculated bonus is to be paid on the actual salary/wage (Basic+DA) upto (now) Rs. 3500/- (In past this limit was Rs. 2500/-) and the maximum salary/wage (Baisc+DA) on which bonus can be paid is Rs. 3500/- (In past this limit was Rs. 2500/-
5. Therefore if the calculated bonus was 20% then in past an employee drawing salary/wage between Rs. 2500/- and Rs. 3500/- per month would get Rs. 6000/- as Bonus (i.e. 2500*12*20%) and now he would get Rs. 8400/- under same conditions.
(i,e, 3500*12*20%)

Hope the issue is clear. if you have a need for more clarification, please raise your querry.

Regards
samvedan
September 23, 2008
--------------------------------------------6
23rd September 2008 From India, Pune
Dear Friends,
Can n e one clear the fact , whether bonus (acc to rule) can be incorporated in the CTC? (Pls note i am not talking abt performance bonus/incentive)
If yes then whether it can be paid in a monthly system?
If it can be incorporated in the monthly components of the gross salary then do we have to deduct ESI on that ?
Pls help me....
Regards
Sangeeta
23rd September 2008 From India, New Delhi
Dear All,
I want to clarify one thing....if an employee's Basic+DA is Rs 5000, in that case can we calculate bonus on this amount also or not. Is Rs 3500 a fixed amount and we can change only the bonus percentage (i.e 8.33% to 20%) and not the Salary amount
Best Regards
24th September 2008 From India, New Delhi
Dear Samvedan,

Please clarify the following:-

1) For an employee to be eligible for bonus, what is the minimum duration of service
he is required to complete in an organization? Say if an employee joins in the
month of Feb'08 or May '08 is he eligible for bonus this year or only in the next
financial year?

2) If a person earns more than Rs. 10,000/- say Rs. 10,500 p.m (Basic + DA), is he
eligible for bonus? If so how is it calculated?

As per your mail, you have stated that :-

4. "The rule is that the calculated bonus is to be paid on the actual salary/wage
(Basic+DA) upto (now) Rs. 3500/- (In past this limit was Rs. 2500/-) and the
maximum salary/wage (Basic+DA) on which bonus can be paid is Rs. 3500/- (In
past this limit was Rs. 2500/-"

5. "Therefore if the calculated bonus was 20% then in past an employee drawing
salary/wage between Rs. 2500/- and Rs. 3500/- per month would get Rs. 6000/-
as Bonus (i.e. 2500*12*20%) and now he would get Rs. 8400/- under same
conditions. (i,e, 3500*12*20%)"

I could not understand this, because you have stated in the beginning that the bonus eligiblity is Rs. 10,000/- p.m (Basic + DA) so please explain "and the maximum salary/wage (Basic+DA) on which bonus can be paid is Rs. 3500" ? along with actual calculation

Regards
24th September 2008 From India, Bharuch
Hello Gaurav

on 27th October, 2007 the President has promulgated the Payment of Bonus (Amendment) ordinance, 2007 containing the following amendments:-

i) Amendment to clause (13) of Section 2 of the Payment of Bonus Act, 1965 to raise the eligibility limit for payment of bonus from the salary or wage of Rs. 3500/- per month to Rs. 10000/- per month.

ii) Amendment to section 12 of the Payment of Bonus Act, 1965 to raise the ceiling for calculation purpose from the salary or wage of Rs. 2500/- per month to Rs. 3500/- per month;

iii) Deletion of clause (vi) of section 32 of the Payment of Bonus Act, 1965 so as to cover the employees employed through contractors on building operations.

Thus the employees, including those employed through contractors on building operations will be entitled to receive bonus as per the revised ceilings, for the year 2006-07 and onwards.

The Ordinance shall be deemed to have come into force on 1st April, 2006.

Ministry of Labour & Employment New Delhi, Kartika 07, 1929/October 29, 2007

I am also attching the GO.

There is one more addition to this if any company is paying CCA(city compensatory allowance) then it calculation becomes Basic+DA+CCA
REF THE PAYMENT OF BONUS ACT 1965(BARE ACT) PAGE 7 COMMENT ii foot note definition of wages and salary


24th September 2008 From India, Kota

Attached Files
File Type: pdf PaymentofBonusAct2007.pdf (313.7 KB, 1563 views)
Hello,

I am afraid that my response has caused some confusion. Let me clarify:
  1. Any employee on the rolls of the company who has worked with the company for atleast 30 days in the financial year for which bonus is being paid will be eligible to receive declared bonus (not ex-graia) on pro-rata basis.
  2. Bonus is to be paid for a given financial year. In your query the person concerned has worked for two months in one financial year and eight months in the next financial year. In both the financial years he will be eligible to receive bonus subject to other conditions.
  3. If a person earns salary/wage (i.c. Basic+DA only) of Rs. 10000/- per month or less, he is covered by the act but will be paid bonus as if his salary wage was only Rs. 3500/- only. If his salary/wage exceeds above limit of coverage (Rs. 10000/- Basic+DA) per month, he is strictly speaking outside the perview of the act (meaning that he is NOT eligible to receive bonus under the act at all)
  4. For some employee whose salary/wage is less than Rs. 3500/- (say it is Rs. 3000/-) then he will receive bonus on his actual salary/wage i.e. Rs. 3000/- in this case. But for salary/wage exceeding Rs. 3500/- per month but less than Rs. 10000/- per month, the person will be eligible to receive bonus under the act as if his salary/wage is rs. 3500/- only.
  5. Finally the examples:
  • Salary/wage (Basic+DA) above Rs. 10000/- per month excludes the person from coverage or benefits of the payment of Bonus Act altogether.
  • Salary/wage (Basic+DA) less than Rs. 10000/- per month is covered by the act and is entitled to receive bonus under the act, as may be determined.
  • Now salary/wage (Basic+DA) is say Rs. 3000/- In this case the person will be eligible to receive the declared bonus under the act on his salary of Rs. 3000/- only.
  • And now consider salary/wage (Basic+DA) to be anywhere between Rs. 3501/- per month and Rs. 10000/- per month. In this case the person will be eligible to receive declared bonus under the act on his actual salary/wage (Basic+DA) in this range.
Employees who are not covered by the act are NOT eligible to receive any bonus under the act. Many employers, regardless pay an amount equal to declared bonus as "ex-gratia". But such payment cannot disturb calculations of bonus under the act and as the name suggests it is not a compulsory payment.

I sincerely hope your queries will stand resolved. If they are not resolved, I am still available to answer more doubts.

I like your taking deep interest in the details of the legislation. keep it up.

Regards
samvedan
September 24, 2008
---------------------------------


24th September 2008 From India, Pune

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