Hi! Everyone. Greetings. I work as a statutory compliance officer (fresher). I have a doubt regarding Payment of bonus (statutory Bonus) can be added as a pay head in salary. Is it legal? or its an addition to the salary of any employee? And can we do two different practices in one financial year, like for a few months we were considering statutory bonus additional to gross salary, later we consider it as a part of gross salary by changing the salary structure. is it feasible? Urgent, please reply asap along with supportive documents or link if any
From India, Ludhiana
Statutory Bonus is based on the amount of salary or remuneration which includes the components of basic and dearness allowance only as defined u/s 2(21) of the Payment of Bonus Act,1965. The bonus contemplated under the Act is relatable to the performance of the establishment in any given accounting year. The performance of the establishment is assessed only at the close of the accounting year. Moreover sec.2(vi) of the PW Act,1936 excludes statutory bonus from the definition of wages. Therefore, it cannot be merged with the gross monthly salary as a component by tentatively fixing it at a rate according to one's convenience. The employer is precluded from effecting any unilateral change in wages as and when according to his whims and fancies under section 9-A r.w Schedule IV of the ID Act,1947.
From India, Salem
When you pay bonus along with monthly salary, the problem is that you will be deferring bonus payment beyond 8 months of closing the financial year. That is legally not correct.
From India, Kannur
There is nothing wrong in paying minimum bonus of 8.33% alongwith monthly salary as long as you are not violating provisions of Payment of wages Act & the Minimum Wages Act.
You need to ensure that the bonus amount is not debited to Salary or Wages account, but to the Bonus account.
At end of the Financial Year, based on Profit & Loss account, Company need to calculate allocable surplus as per the provisions of Payment of Bonus Act and arrive at % of Bonus payable for the respective F.Y.
Difference if any, over and above the 8.33% bonus need to pay to the respective employees within 8 months from the date of close of Financial Year.
If your company is treating Bonus amount as a part of salary, then it is wrong assumption or practice.
Suresh

From India, Thane
Dear Mr.Suresh Bonus on Monthly basis attract PF & ESI deduction
From India, Delhi
Dear Shishram,
If 8.33% Bonus amount is debited to Bonus account in your Books of Account every month, which is a part and parcel of Bonus due to employees, then PF & ESI will not attract on a particular monthly Bonus amount.
Suresh

From India, Thane

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