Dear Bhanu If you pay Bonus even of Previous Financial Year in Pesent Fnancial Year this will be calculate in your monthly wages & this will be attract PF & ESIC. Vikas P. Seth
From India, Ahmadabad
Dear Friend,

Pl.note the follg. comments I read from the ESI web site which may either assist you or confuse little more:

ANNUAL BONUS (for ESI purpose) :
Bonus paid to the employees could not be treated as wage for the purpose of charging of contribution under Sec.2(22), provided the periodicity of the payment is more than 2 months. The said issue was also considered in the meeting of the ESI Corporation held on 19.12.1968 and the Corporation agreed to the recommendations of the Standing Committee that bonus may not be treated as wage. Hence no contribution is payable on annual Bonus.
(Earlier instructions were issued vide memo No.Ins.III/2(2)-2/67 dt. 8.2.1967).


Whatever may be your purpose of this monthly idea, I am personally not convinced of the idea for monthly payment. As the term itself called "Annual Bonus" under the Bonus Act and in the event 'The allocable surplus' not permitting you to declare higher bonus you are paying the 'Minimum bonus' @ 8.33% which is to be determined at the end of the year when your books are closed and final figs. are available. Moreover it is prudent from the point of your company's IT and personal IT as well.

Pl.let us know what U did ultimately.


From India, Bangalore
You can pay bonus even monthy, instead yearly along with the salary with added bonus on gross sal*44%*8.33%.
you can implement it further discuss it with the management........, But you can do it even montly basis...

From India, Delhi
A very few organization follow the 8.33% bonus paid monthly, I had worked for it, like Central government contractual system possess this methodology. The on contract workers were paid their bonus monthly.
On Gross basic, da *44%*8.33%.
Can try this, hope its might give you some idea..... good luck...

From India, Delhi
As per Bonus Act there is no provision for monthly bonus. Bonus can be paid after completion of financial year. I am agree with TK sir that Bonus if paid on monthly basis will attract ESI provisions because in that case the amount paid under bonus head will be calculated within the definition of gross wage.
2nd thing I would like to share that Cabinate of Govt of India has decided to enhance the wage limit of Bonus. To impliment the same either they have to issue ordinance or theey have to make change in the Bonus Act in Parliament. Only after such amendment Provisions of Bonus will be applicable.
V. Acharya

From India, Patna
As per payment of Bonus Act 1965, Employee is eligible for bonus for completion of 30 days in a year with eligibility of that financial year bonus amount. Since it is a statutory bonus which not deducted from employee salary, Fund allotted by company based on their profit declaration and fix their bonus percent either 8.33% to 20 % as per dependency on every year.If any employee basic less than 10000 INR they are eligible for statutory bonus minimum 8.33 % on INR 3500 which currently following as per labor laws, there is a proposal from parliament committee along with labour ministry to do some amendment in bonus act by amendment with eligibility ceiling as INR 21000 with 8.33% minimum on INR7000. It is in processing stage with legal proceedings. It is not amended in the act.
From India, Chennai
Dear Learned Member

This is to inform you that the The Payment of Bonus Act doesn't provide any provision for paying bonus monthly. If we process monthly it will be

A- Why we should not pay monthly Bonus

Consequences Under The Payment of wages Act, 1965

The breach section 19(b) of the said Act, which express that all the amounts payable to an employee by way of bonus under this Act shall be paid within a period of eight months from the close of the accounting year.

It will also create difference when company will file it's return under Rule 5, where Every employer shall send a return in Form D, within 30 days after paying bonus under the provision it's Rules, within a period of eight months from the close of the accounting year'.

Due to point 1 & 2 will have to face the penalty under Section 28 (b) which says about imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both and other consequences under section 29.

B. If we pay monthly bonus

when we start paying bonus monthly it will become the part of wages which will hinder the objective of the Payment of Bonus Act, 1956 and will attract contribution under ESI Act.

Under section 2(22) it's expressed any remuneration paid to employee within two month of interval will be the wages for the said Act.

Due to this an Employee will never receive the actual bonus for that financial year which employer had paid.

Thus for the benefit of both employer & employee and from legislative point of view we must pay bonus within 8 month, however, under section 17 provision for Adjustment of customary or interim bonus against bonus payable, according to this section we can release any part of bonus and can adjust rest bonus.

I trust my points will completely elucidate the reason why we should not pay Bonus Monthly. However, I further welcome your query in-case if above mention points isn't lucid.

Please do write back to us for any further elucidation.


Team Compliance

Street HR & Associates Pvt. Ltd

From India, Mumbai
Dear , One our contractor paying bonus in monthly payslip . Is form A, B ,C & D is applicable for him. Regards Rajbir Sharma

One small Query From me is Bonus can be paid in advance (Monthly iam not Sure ) because In Register C you can observe 10th Coloumn "Interim Bonus or Bonus paid in advance" Need Your Suggestions..
From India, Hyderabad

Attached Images
File Type: jpg Form C.jpg (57.6 KB, 11 views)
File Type: png Form C Example.png (107.3 KB, 12 views)

Hi seniors,
In my current organization paying bonus 8.33% on Basic +DA on monthly basis for contractual staffs. Is there any legal complication for paying bonus on monthly basis. for contract employees salary has been including statutory bonus and deducting ESIC as well, is this right method.
Basic 12140
+Da +Conveyanace+bonus=19000, Statutory bonus 1200+attendance bonus+1000, Incentive +1000, total earned salary is 22200. So this case how much should deduct for ESIC contribution.
Kindly suggest.

From India, Bangalore

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