In accordance with the prov. of the Bonus Act, every employee who draws a salary of Rs.10,000 or below per month and who has worked for not less than 30 days in an accounting year, is eligible for bonus (calculated as per the methodology provided under the Act) @ of 8.33% of the salary. For this purpose, If the salary of an employee is less than Rs. 7,000, then the bonus is to be calculated on the actual amount. According to the Bonus Act, a minimum of 8.33% up to 20% of his basic (earned) wages is to be paid to the employee.
- Section 2(21) in The Payment of Bonus Act, 1965
(21) “salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include—
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation. —Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee; COMMENTS
(i) Lay-off compensation is included in the term of “salary” or “wages”; Mohan Kumar v. Deputy Labour Commissioner, (1991) 62 FLR 903 (Ker).
(ii) Dearness allowance and city compensatory allowance are included in the definition of “salary” or “wages” under section 2 (21) of the Act; S. Krishnamurthy v. Presiding Officer, Labour Court, (1986) 55 FLR 535.
(iii) Dearness allowance is a part and parcel of wages; Scindia Navigation Co. Ltd. v. Scindia Employees Union, (1983) 2 LLN 63.
(iv) Retaining allowance comes within the purview of section 2 (21); Chalthan Vidyut Sehkari Udyog v. Government Labour Officer, AIR 1981 SC 905.
(v) Remuneration in case of overtime work and commission payable to employees are excluded from the definition of “salary” or “wages”; All India Voltas & Volpart Employees' Federation v. Voltas Ltd., 1973 Lab IC 645.
(vi) Overtime allowance does not form part of “wages”; Associated Cement Co. Ltd. v. Their Workmen, AIR 1959 SC 925.
Reg. no.of working days read from this link -
14th October 2018 From India, Bangalore
14th October 2018 From India, Salem
HR & Labour Relations Consultant
16th October 2018 From India, Mumbai