What is the process of bonus deduction - on what basis it will be calculated? - CiteHR
Adoni Suguresh
Sr.executive (per & Adm)
Client Service
Korgaonkar K A
Intergrated Management Systems And Process

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i want to know about bonus benefit.what is the process of bonus deduction .on what basis it will be calculated .
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Dear Ms. Rashmi,
As per Payment of Bonus Act, 1965.
Applicability of Act (Sec 1)
Every factory wherein 10 or more persons are employed with the aid of power (electricity) or An establishment in which 20 or more persons are employed without the aid of power on any day during an accounting year.
Limit: Any employee who draws salary/wage (Basic+DA) less than Rs. 10,000/- to be covered as an employee under the Payment of Bonus Act, 1965. revision in 2007 (Earlier this limit was Rs. 3,500/- per month [Basic+DA])
Eligibility of Bonus (section 8): An employee will be entitled only when he has worked for 30 working days in that year.
Payment of Minimum & Maximum Bonus: 8.33% & 20% of the salary
Dear Narayan,
Thanks for your support!!!!!
can you explain me through example.
when bonus amount will be provided to the employee???if one employee join the company but after 4 months they left the company and after 2 months they rejoin the company then on what basis the bonus will be calculated.and how we have to maintain the bonus register??
with regards
Dear Rashmi,

I clarify your querry. The eligibility is already explained by our friend Mr. Narayan . Any employee works in the establishment for a miniomum 30 days in the financial year he is entitled to receive the bonus. The bonus computation shall be actual earnings by the employee ie Basic and DA only. You can go on compute his earnings in the financial year and total at the end of the f.y.. On the gross amount or on total amount of his earnings he shall be entitled minimum, bonus @ 8.33 %.

As raised another query by you that, if he joins and worked for 4 months and then he left and he rejoin after two months, even then he will be eligible. If there is a gap between two service period, he will not be eligible for the intermittent period you can treat this as Zero for this period he will not entitled. If you desire you can make two entry in the Form C Bonus pay sheet or you can club doesn't matter. But he must get bonus as per provisions of Payment of Bonus Act. The Bonus payment will be made within the eight months from the date of closure of financial year. Any time before 30th November every year can be disbursed/ After disbursement of Bonus to the eligible employee you have to submit a Annual Return to the Labour Officer concerned.

Adoni Suguresh

Sr.Executive (Pers, Admin and Ind.Rels) Rtd

Labour Laws Consultant
Dear Rashmi ji,
You may abreast your self in the current subject by reading below given link:
Hi Rashmi
PFB 14 points through which Bonus act-1965 can be remember
Sr.no Particular Condition
1 No. of employees( Maharastra) 10 No
2 No. of employees (Other) 20 No
3 Salary component Basic+DA(Special Allowance)
4 Minimum Physical working days in accounting year 30 Days
5 Minimum amount to be paid as bonus Rs.100/-
6 Max.salary(Basic+DA) consider for Bonus calculation Rs.3500/-
7 Max.salary(Basic+DA) consider for Bonus eligibility Rs.10000/-
8 % 8.33% to 20%
9 Max.Amount can be paid as Bonus Rs.8400/-
10 Bonus calculation period April to March
11 Last Date of bonus paid 30th Nov
12 Last Date of bonus paid(Dispute) Within 1 month
13 Final liability of bonus payable if contractor fails to pay Principle Employer
14 Exemption for newly born organization-(Loss making year) 5 years
Dear Nandkumar ji,
Thanks for contributing.
Make it 17 points.
The 15th one is: Once make profit in any year during first 5 years, bonus is payable even there is a loss during subsequent years.
The 16th one is: Even there is a loss ( i.e. no allocable surplus), minimum bonus payable @ 8.33%.
And the 17th one is: In Maharashtra (other State not known) bonus by cheque and not by cash.
Dear All
There is a Kerla HC judgemnt where in it is ststed that Bonus and Gratuity is NOT a responsibility of Principal Employer.The gist of case law is ,while defining the term wages the ID Act and Paymnet of wages act specifically excludes bonus and gratuity from its purview.Therfore its not a liability of Principal Employer in respect of contracotr's employees.
Dear Sir, Can u explain me 14th point. if company is newel established then for 5 years they not liable to pay bonus to there employees .
Dear Rashmi ji,
If you read the thread carefully, you will get the answer.
New company, first 5 years not eligible to pay bonus till the year there is no profit. Once company makes profit, bonus is payable even during subsequent years there is a loss.
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