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Umakanthan53
Labour Law & Hr Consultant
ShajahanHR
Hr Manager

Our company is an electronic manufacturing unit in Palakkad, kerala. Today I heard from District Labour officer that bonus to be calculated based on Minimum wages. I would like to know what is the new minimum wages for employees in our industry (unskilled labour). For minimum bonus calculation Bonus = (MinWage + VDA )8.33/100*12 is this formula is correct, kindly confirm.
3rd July 2018 From India, Palakkad
Dear Shahjahan,
The question of computation of bonus under the PB Act,1965 based on the minimum wage rates arises only when your industry wages fall less than the statutory minimum wages. Similarly, the notional limit on wages for the purpose of calculation of bonus comes into play only in respect of employees whose monthly wages are Rs.7000/- or more. In such cases, bonus should be calculated only as if the monthly wages are Rs.7000/-. If the minimum wages payable to such employees is more than Rs.7000/-, then the actual minimum wages should be the basis for the calculation. In the case of minimum wages or industry wages comprising of several components, only those components included in the definition of wages / salary under the Payment of Bonus Açt,1965 should be taken into account for the calculation of bonus under the Act.
4th July 2018 From India, Salem
Thanks a lot for the replay
Sir, We paid bonus in 2015-16 Basic 5240 + VDA avg(12months) = 3344 = 8584 and 8.33% of the same
in 2016-17 we paid Basic 5240 + VDA avg(12months)= 3658 = 8898 and 8.33% of same
we are planning in 2017-18 Basic 5240 + VDA avg and 8.33 % of same.
Is there any mistake in our calculation?
is there any change in Basic 5240 ?
5th July 2018 From India, Palakkad
Dear colleague,
While what is stated by Mr Umakanthan is correct, I would like to add that the bonus is computed not on the basis of the rate of the applicable minimum wages but wages earned during the financial year based on attendance.
Regards,
Vinayak Nagarkar
HR- Consultant
6th July 2018 From India, Mumbai

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