Component to be considered to calculate wages for bonus (2015 amendment)? - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Suresh2511
Labour Consultant
+2 Others

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As per bonus act 2015 amendment employee with wages upto 21000 is eligible to get statutory bonus Would your please confirm which all are the component to be considered to calculate wages.
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Dear Vishwanath,
I would like to request you to go through the definition of the term " Salary or Wage " as defined u/s 2(21) of the Payment of Bonus Act,1965. Legally speaking, there is no difference between salary and wage. Salary is a periodical payment while wage is generally paid for day although the periodicity of payment varies.
In order to bring clarity of understanding, let me quote the observation of the Bonus Commission in its report at para 12.4 as follows: " Having considered the various views, we are of the opinion that the distinction between basic wages and dearness allowance for the purpose of expressing the bonus quantum should be done away with and that bonus should be related to wages and dearness allowance taken together."
Therefore, up on a careful analysis, salary and wages under the PB Act,1965 primarily mean:
1) all remuneration ( except O.T allowance )
2) capable of being expressed in terms of money
3) payable for work done
4) if terms of employment express or implied were fulfilled and
(a) includes (i) dearness allowance (ii) free food allowance or (iii) food given in lieu of whole or part of salary or wages but
(b) does not include any other allowance and other six items mentioned in the definition.
Thanks for detailed information.
Would you please advise, what is the provision of legal action if any employer dont pay bonus to eligible staff.
Best Regards,
Vishwanath W
Dear Mr. Vishwanath,
The query is as an employer or employee?
Shri Umakanthan has already described your query in detail. To add something more pls note the followings:
Employees drawing salary wages upto Rs.21,000/- p.m. are eligible for maximum Bonus amount of Rs.7,000 or the amount equivalent to Minimum Wages, whichever is higher, if the employee/workman earned full salary/wage for the whole financial year. This is as per amended Payment of Bonus Act.
However, the organisations are giving / may give full Bonus on his/her actual earned salary/wage upto the amount of Rs.21,000/-.
Suresh
Dear Mr. Vishwanath, Further to the comments by seniors here, you need to look at the components of Monthly Gross in your CTC structure. From the monthly gross deduct the HRA & Conveyance amount . The remainder amount upto Rs.21000/- p.m. is to be considered for payment of statutory bonus@ 8.33% of the said amount.
For example : Conveyance is 1600 p.m., HRA is 4000 p.m.
To calculate statutory bonus -
If Monthly Gross is 27000 - then 27000-1600-4000 = 21400 , - is out of statutory bonus.
If Monthly Gross is 26600 - then 2660 - 1600-4000 = 21000, - then 8.33% of 21000 = 1749.30 p.m *12 = 20331.60 statutory Bonus for the year .
If Monthly Gross is 23000 - then 23000-1600-4000 = 17400, then 8.33% of 17400 -1449.42 *12 =17393.04 is statutory bonus for the year based on attendance.
Regards
My understanding of the provisions of Payment of Bonus Act is as under:
1. While employees getting wages/salary up to Rs 21,000/month are covered under the Bonus Act, the calculation of statutory bonus will be on Rs. 7,000/month.
2. Therefore statutory bonus may vary from Rs. 7,000 (8.33%) to Rs. 16,800 (20%), depending on company's financial performance.
3. Employers may pay higher rates of bonus over and above the statutory requirement at their own discretion.
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