Clerification Of The Definition Of Wage Under Payment Of Bonus Act - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Saswatabanerjee
Partner - Risk Management
J.P.Srivastava
Chief Manager (hr)
Sbiswal80
Asst Manager Hr

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Dear All,
We are not clear definition of wage under the bonus act. we are paying monthly various allowances, apart from basic pay, as stated Below.
Sl. No. Name of allowance
1 Medical Reimbursement
2 Children Education Allowance
3 Transport Allowance
4 Child Hostel Allowance
5 Washing Allowance
6 LTC/LTA
7 Miscellaneous Allowance
8 Technical Allowance
9 HRA
10 Gun Allowance
11 Karate Allowance
12 NPA
Pls let us know whether the allowances paid by us will come under the definition of wage under payment of bonus act. In case there is any case history. pls do provide us for clarification of our management.
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Dea Srivastava,

The term " salary or wage " defined u/s 2(21) of the Payment of Bonus Act,1965 is in tune with the view of the recommendation made by the Bonus Commission in its report that bonus should be related to wages and dearness allowance taken together and all other allowances should be excluded. If one analyses the definition under the Act, one will find that salary and wages have been defined together. Legaly speaking, there is no difference between salary and wages. Salary is periodical payment while wage is generally paid for day, although the period of payment varies. The Madras High Court has held in a case [ AIR 1953 Mad 269 ] that if the remuneration is to be paid daily or weekly it can be called wages but where it is monthly remuneration payable on the last day of the month and where the remuneration, considering the general standard of payment is fairly high, then it has to be understood as salary. At present, wages consists of many factors, the most imprtant being the basic wages, the dearness allowance and the amenities like housing, fuel, etc. But at the same time that it should be noted that an allowance can be paid in addition to but not in lieu of wages. The test to decide whether any remuneration is wages or salary is whether the remuneration is due for the fulfilment of the terms of employment express or implied. Where the definition is exhaustive, no other meaning can be assigned to the term than is put under the Act. So in my opinion the allowances mentioned in your post would not come under the definition of salary or wages for the purpose of calculation of bonus under the PB Act,1965.
I think the definition of wages in the act is very clear. It says basic and DA So none of the allowances will be included in computation of bonus
Dear All, I am agree with Mr. Umakanthan. As per PB act bonus calculation is based only on Basic + DA/VDA. for better clarification please refer the attachment.

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File Type: jpg Wages Salary PB Act.jpg (529.8 KB, 312 views)

There are numerous books on challenges faced in HR functions in an organization but not on the problems faced by HR practitioners in a firm. What all are the problems they face with respect to career growth training they get salaries etc
I would like to add and additional thing :
if Basic + DA + All Allowance altogether makes a Minimum wage, then what would be considered for Bonus, It is it still Same Basic + Da to be taken, as recent amendment says 7000 or Rate of MW of scheduled employment.
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