Bonus Calculation Based On Minimum Wages Of Which City? - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Pratheekshaa
Senior Manager - Human Resources
PL Kanthan
Proprietor
Mandeepgahlawat
Hr Executive
Rajesh Kumar Dubey
Manager - Hr
Debnath Mitra
Working As An Officer Hr
+1 Other

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Respected Sir(s),
I have few queries in respect of Bonus calculation :-
1) The minimum wages rate will be application for calculating Bonus will be
(a) The city in which the employee is working or (b) The City where the Head Office of the company
2) As per new amendment the Maximum limit of Bonus is Rs 20000/- and minimum is Rs. 7500/- What does it means This limit considered to Wages consideration.
Regards
Yogesh
Community Prime Sponsor
Talentedge.com "Interactive Anywhere Learning". Executive courses from top reputed institutes like IIM, XLRI, MICA.
1) Place of employment is the most important determinant factor for the fixation of basic salary/wages and other allowances payable to the employee basing on which other derivative compensations of employment like bonus are computed. Even in the case of employment disputes, only the place of employment determines jurisdiction. Therefore, the place of the head office has no relevance in such matters unless the employee is employed in the head office itself. If the questioner focuses his attention on the basics of fixation of minimum wages under the Minimum Wages Act,1948, he would understand that the same is done in respect of the scheduled employments by the Appropriate Govts only on regional basis across the States or the entire country as the case may be.

2) I am not able to find the particulars relating to maximum bonus and minimum bonus mentioned in the query in the Gazette of India notification no.6 dated 01-01-2016 bringing the new amendment in force. So, let the questioner elucidate his point.
Place of business must be Determination for the rate of minimum wage , maximum bonus is 20% and wages not exceeding 7000 or minimum wage should be taken into account.
Dear sir,
As per new amendment in bonus 7000 and minimum wages whichever is higher, we calculate the bonus on that amount, if you are provide the bonus that person whose salary more than 20000 so see which category he is belong obviously he is belong in high skilled category so check your state minimum wage, if it's greater than 7000 so calculate bonus on minimum wage if its less than so calculate on 7000
Recent Notification of Bonus Act only focus on few points as under-
Eligibility Criteria & Coverage : That is Employees who are earning Salary up to 21000/- PM are covered under this revision.
Bonus Calculation Criteria : The Calculation will be on the basis either 7000/- Or Mini mum wages on particular category of employment which ever high value.
Calculation will Per Month Basis and Based on his earning in that month.
Let me elaborate the impact on the liability of the employers to pay the statutory bonus consequent on the recent amendment as follows:

1) Revision of wage-threshold for eligibility [Sec.2(13)]: Earlier Rs.10,000/= raised to Rs.21000/=

2) Revision of wage/salary ceiling for calculation purpose (Sec.12): Earlier Rs.3500/= raised to Rs.7000/= OR minimum wages whichever higher

3) Retrospective effect from 01-04-2014

Now, coming to the query:

a) Since the raise in the threshold wages to claim bonus, more no. of employees earning upto 21000/= become eligible for bonus.

b) Revision of salary/wage ceiling for calculation purpose increases the liability of the employers because of the caveat of " whichever is higher" clause introduced in the amended provision. It implies that in case though the industry wages are more than the minimum wages but less than the notional wages of Rs.7ooo/=, hereinafter bonus has to be calculated on the basis of the 8.33% to 20% of the notional higher wages only and NOT on the actually earned wages. The logic is that when the actual wages received at the rate of MW is less than the notional wages, the employee should get higher bonus on the basis of higher notional wages.

Similarly, in case, the employee crosses both the statutory ceiling of Rs7000/= as well as the MW fixed for his employment, for calculation purpose his notional wages should be Rs.7000/= only for the reason it is higher than the relevant MW. The logic here is that but for the amendment of Sec.12, he would have received lesser bonus at Rs.3500/= only depending on the actual percentage of bonus decided in between 8.33% and 20%.
Thanks Umakanthan Sir, Nice and detailed description of each part of notification and logic.
I’m working in a public Ltd. If my gross is 30,000 p.m. And I’m in the system for 4 years. So, what would be my Bonus for 2015 - 2016(As per new policy)?
No, Not at all, under the provisions of Bonus Act and recent Notification
According to current notification an employee is entitled for Bonus who is receiving wages up to Rs.21,000 up to a limit of Rs. 7,000. Within the salary framed, an employee is entitled only if he have rendered 30 days working.

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