Labour Law & Hr Consultant
Rajesh Kumar Dubey
Manager - Hr
Hope this link would help you to understand better post amendment. for info please.
3rd April 2018 From India, Chennai
I do not agree to your Example 1. Even the Basic salary is Rs.6,800, we have to consider his Basic salary as of Rs.7,000/- for calculation of Bonus as per amended Bonus act.
Secondly in example 3 the Basic salary is wrongly typed as Rs.7,000 instead of Rs.12,662.
Correct me if I am wrong.
3rd April 2018 From India, Thane
How you will arrive minimum Bonus amount of Rs.7,000/- when the % of Bonus is 8.33 and the employee's basic salary is Rs.6,000/-? Is there any special mechanism in maths? If not, then we have to consider basic salary of Rs.7,000/- inorder to arrive the minimum amount of bonus of Rs.7,000/-.
For example Ashok is drawing basic salary of Rs.4,000/- per month then he will be entitled to get 8.33% bonus of Rs.4,000/- if he worked whole F.Y. without LOP. Inorder to pay him bonus amount of Rs.7,000/- he should be paid 14.585% bonus on Rs.4,000/-.
Instead of doing this type of reverse calculation for employees drawing basic salary <7,000/- consider such cases as if they are drawing salary of Rs.7,000/- per month, when the % of Bonus is 8.33%.
5th April 2018 From India, Thane
At times, multiplicity of clarifications renders the confusion worse confounded. Therefore, let us see at first Section 12 of the PB Act,1965 as it stands after the 2015 Amendment:
" 12. Calculation of bonus with respect to certain employees -
(i) Where the salary or wage of an employee exceeds seven thousand rupees per mansem, the bonus payable to
such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary
or wage were seven thousand rupees per mansem or the minimum wage for the scheduled employment, as
fixed by the appropriate Government, whichever is higher.
(ii) Explanation.- For the purpose of this section, the expression " scheduled employment " shall have the same
meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act,1948. "
Therefore, it simply follows that -
(a) When the salary or wage of an employee is more than Rs.7000/-p.m, it shall be notionally limited to Rs.7000/- only and
minimum or maximum bonus payable to be calculated accordingly.
(b) In the case of any such employee who is covered under the Minimum Wages Act,1948, the above notional wages for the
purpose of calculation shall be Rs.7000/- or the minimum wages for his employment whichever is higher.
5th April 2018 From India, Salem
Your query how to calculate bonus in this scenarios.
1. Gross salary is 25000/- and Basic+DA = 14000
Answer: He is eligible for Bonus on Basic+DA i.e. on Rs.14,000/-
2. Gross Salary Rs.50000 and Basic Salary Rs.25000
Answer: He is not eligible for Bonus as Per Payment of Bonus Act as his Basic salary is >Rs.25K.
However, your Company can pay him ex-gratia. No law will stop you paying ex-gratia.
16th October 2018 From India, Thane
1. What are the implication of paying statutory bonus as part of CTC...I have read a few comments but differing viewpoints do not provide any clear answers. Is there any government agency or labor dept who could clarify this once and for all. It's understood that if Bonus is allowed to be treated as one component of salary, it will be taken into account for Prof Tax and ESI contribution.
2. Once the allocable surplus is known from CA certificate, how is bonus payout (%) determined within the Min and Max allowed.
27th October 2018 From India, Delhi
Let me try to answer your queries though the first one relating to the legal effect of C.T.C on the compensation clause of an employment contract entered either implicitly or explicitly between the parties to the contract has already been discussed in this forum several times. What is the most unfortunate is the lack of cross reference whenever a question on C.T.C is raised afresh. In my own opinion, the divergence of the view points emerges only from the interpretation of the C.T.C as a concept . "Cost to the Company per employee" or CTC is an estimation of the over all expenditure incurred by the employer per year . This over all expenditure carries within its fold the gross wages or salary periodically paid, the fringe benefits of employment both statutory and non statutory, the cost of training if any for the purpose of updation of employment skills etc. Thus, C.T.C is an accounting tool of economic reality projecting the cost of labor/services rendered by the employee and payable periodically as well as the cost of retention of labor/employees incurred actually. Therefore, just because certain economic benefits or the the value of such benefits which can be computed in terms of money mentioned under the head C.T.C in an offer letter by the employer can not be claimed,ipso facto, by the employee unless otherwise the statutory conditions associated with such benefits are ripe on the date of such a claim. Statutory Bonus paid annually does not form part of the term wages as define u/s 2(22) of the ESIAct,1948. One has to understand the fact that the inclusion or exclusion of any item of payment to the employee in the term wage or salary depends upon the purpose of the particular Legislation only.
For your second query, I would request you to go through the provisions of Sec.15 of the Act.
28th October 2018 From India, Salem
as per my knowledge the bonus eligibility is 21,000/- minimum % is from 8% to 20%
Slab will be 7,000/-
if Basic wage above 7000/- can be considered 7,000/- only. Formula is [ 7000* (% proposed by the company)*12 months]
if Basic wage is below 7000/- can be considered earned basic/- Formula is [Earned basic* (% proposed by the company)*12 months]
Correct me if i am wrong.
16th November 2018 From India, Hyderabad
The notional amount of Rs.7000/= should be taken into a/c only when the salary is more than 7000/=pm. When it falls below Rs.7000/=, the actual amount should be taken for the purpose of bonus payable under the Act. So your presumption is correct.
However, calculation would be different if the employment is covered by the Minimum Wages Act,1948 AND the minimum wages fixed is more than Rs.7000/= pm.
16th November 2018 From India, Salem
The Minimum Wages in Hyderabad (Telangana) for unskilled category is Rs.8768.80 & Rs.8438.80 for Zone I & II respectively upto 30.09.2018.
Similarly The Minimum Wages in Andhra Pradesh for unskilled category is Rs.8404 & Rs.8074 for Zone I & II respectively which is more than Rs.7,000 that means as per (Amended 2015) Payment of Bonus Act, you are required to pay Bonus as per payment of Minimum Wages (which is >7000).
In Delhi the MW is Rs.10,374 for unskilled category w.e.f 1st October, 2018.
Now for the calculation purpose the salary/wage limit is enhanced from Rs.3,500 to Rs.7,000 and the eligibility for Bonus coverage from Rs.10K to Rs.21K.
As per amended Bonus Act it is mentioned to pay Minimum Bonus Amount of Rs.7,000 or as per the MW, whichever is higher.
According to me there is no clarity whether the employees drawing salary wages <Rs.7,000 would get bonus on lesser amount or Rs.7000. Moreover, now the MW for unskilled category is >Rs.7,000/- per month almost in all States in India so they will get Bonus >Rs.7000 @8.3333%.
16th November 2018 From India, Thane
Thanks for the valuable information.
the bonus calculation can be consider the minimum wage if it is more than 7,000/- as [MW*(% proposed by the company)*12 months] is it right ?....
Thanking you for the clarification.
17th November 2018 From India, Hyderabad
You are eligible for Bonus amount of Rs. 7,000/- or as per the applicable Minimum Wages, whichever is higher.
You have not mentioned in what capacity you are working (Your Designation) accordingly the working can be provided.
1st December 2018 From India, Thane
i just want to confirm that in payment of wages act workmen can be considered on ceiling limit of rupees 24000, and as per bonus act every workmen is eligible for bonus, so will 21000 ceiling limit for bonus is not applicable here and if yes then what is the actual amount which comes in purview of bonus act, is special allowance also applicable in considering ceiling limit?
24th September 2019 From India, Gurgaon
2. Rs,7000 or Minimum Wages which ever is higher to considered If for example if MW is Rs.8000 you have consider Rs.8000/- and not Rs.7000
3. Less than Rs.8000 actual and over and above Rs.8000, Rs.8000 has to be taken for Calculation
4. Bonus Eligibility Ceiling limit is Rs.21000 as per payment of Bonus Act as like PF and ESI Ceiling Limit.
5. Applicability of Payment of Wages Act is Rs.24000/- and dont think it has to be linked to Payment of Bonus Act.
6. My Suggestion is If management is willing you can also pay the Bonus as EXGRATIA to members above 21000. or normally goes out as VPP For staff members
7. Wages speaks about Basic + DA only.
Please correct me if my views are wrong.
24th September 2019 From India, Chennai