Bonus Calculation..... - CiteHR
Umakanthan53
Labour Law & Hr Consultant
+1 Other

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Dear HR Fraternity,
My name is Rishi and I am working as HR executive in a firm, I have a querry regarding Bonus Act. Some companies gave 1 basic salary to their employees as Bonus whereas as per Act it should be 8.33% (min) of Rs 3500 or max 20% (Max) of Rs 3500 i.e ceiling limit as per the act. Then how should they feed the entries in Bonus register because the % that is coming is different for different employees if you give 1 basic salary as bonus and as far as my knowledge % cannot be different to different employees.
eg: Employee 1: Wage = 5626 for 1 month, Eligible Wage= Rs 3500 Bonus(8.33%)=292
But if you take 1 basic salary % coming out to be 13.40 % of Rs 3500
Employee 2: Wage= 5150 for 1 month, Eligible Wage= Rs 3500, Bonus(8.33%)= 292
But if you take 1 basic salary % coming out to be 12.25% of Rs 3500
Therefore for both the employees % is different.
Kindly help me out in this matter
Thanks and Regards
Rishi Raj Mishra
Posted 29th June 2015

Dear Rishi,
I am not able to understand the calculation you've presented. Minimum Bonus @ 8.33% is equal to 1 month wage approximately. When the salary or wage exceeds three thousand and five hundred rupees per mensem, it shall be restricted to Rs.3500-00 only for the purpose of bonus calculation as per Sec.12 of the Payment of Bonus Act,1965. Logicaly, therefore, there can not be any difference in the actual amount of Bonus payable either @ 8.33% or at any other higher rate to all such of those employees drawing wages or salary more than Rs.3500-00 p.m.

Dear Rishi Raj,
Bonus as per payment of Bonus Act has to be calculated first as per schedule under the Act - Gross Profit, available surplus, allocable surplus, set off & set on if any. If any Company pays bonus as per payment of bonus act, it is essential to follow the above path. Otherwise it is considered as customary bonus.
Now as per your query if the Company is interested to pay bonus one month gross salary - first of all it is essential to calculate bonus as per act and the booking may be as follows:-
Let the calculation shows to pay minimum bonus as per act then book as bonus - 3500/- and (5626-one month basic - 3500)= 2126 as exgratia. If the company continue to pay bonus as one month basic ignoring the act, it will be established as customary bonus and no relation with payment of bonus act irrespective of business profit or loss.
Thanks & regds.,
S K Bandyopadhyay
98310 81531

THank you All for your wonderful replies. I gt the answer of my question that if an employer wants to give 1 gross salary to their employees, it will come under customary Bonus.
Really Thanks to all of you for your guidance.
Thanks and Regards
Rishi Raj Mishra

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