vikaskhatter29@gmail.com
140

Dear all, I have come into a doubt that bonus amendment done in 2015. Where they stated that bonus threshold limit increase 10000 to 21000. I know bonus is calculated on basic and da. But I have a concern that if employee salary is 22000 (basic 12000, hra 60000 conveyance 2000 and sp. Allowance 2000). So employee salary is more than threshold limit 21000 as per bonus act. So is he eligible for bonus. Because in amendment there is clearly stated that if employee salary and wages coming less than 21000 then he will be eligible.

So in this regard, I wanna know that 21000 threshold limit word gross salary or basic+da.
Because somebody told me that if employee basic+da reach exceeds 21000 then the employee will not be eligible.
Kindly suggest the 21000 threshold is basic+da or gross.

From India, Chandigarh

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PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Madhu.T.K
Industrial Relations And Labour Laws
Saswatabanerjee
Partner - Risk Management
Nanu1953
Ceo-usd Hr Solutions

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Madhu.T.K
3791

If your basic and dearness allowance is not more than Rs 21000, you will be eligible for annual bonus. At the same time, if you take the entire salary for payments of contributions like PF, Gratuity, leave encashment etc, then you can take that gross salary for deciding the eligibility for bonus also. There should not be two different treatment of wages for different purposes. If you take gross salary for making an employee out of bonus coverage, that gross should be applicable for his leave encashment and also calculating gratuity.
From India, Kannur
saswatabanerjee
2356

Hi Vikas

As Madhu said, he will be eligible.
Your mistake is you read (probably in an article) the words in layman's language.
The amendment was increase of qualifying wages from 10,000 to 20,000 (not salary)
Since wages is defined as Basic+DA, it means as long as his Basic + Da is less than ₹ 20,000, he is eligible for bonus

However, please note that basic is paid on a wage ceiling of ₹ 7,000 or Minimum Wages, whichever lower. So though his bonus eligible, it will not be 8.33% of full wages

From India, Mumbai
vikaskhatter29@gmail.com
140

But as amendment done in 2015 of bonus that stated salary and wages all remuneration and guaranteed component paid to employees for their work.
So govt increased the salary threshold limit 10000 to 21000. In faridabad Haryana most of firm adopting same pattern. If employee gross salary reaching more than 21000 then no bonus giving to employees.
Off course calculation of bonus will only be on basic and da whose salary coming less than 21000.

I above attached the document in which govt stated if employee salary and wages coming less than 21000. Salary and wages is not only basic and da. It consist all guaranteed components and remuneration.

From India, Chandigarh
saswatabanerjee
2356

Hi Vikas
You have raised an interesting point, but opinion put by someone on internet is not necessarily right. So we must use our own judgement. Further, just because other employers are following a certain pattern which is wrong, does not mean you will get away with it if there is a compliant made by a worker against you. So you need to go back to the act and read the wording.

Sec 2(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 food grains 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 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.

Now look at the exclusions give above. It says "(i)any other allowance which the employee is for the time being entitled to;"
So considering the above, other than Basic and DA, what will you include in definition of salary?

@Madhu, your input on this would be appreciated

From India, Mumbai
Madhu.T.K
3791

By " any other allowance which the employee is entitled for the time being" is an allowance like deputation allowance which is paid to an employee on deputation, non family allowance which is again an allowance paid for a certain period of time while an employee s transferred from one place to another, hill station allowance, risk allowance, cash handling allowance etc which are paid to a particular situation or to a particular category of employees 'for the time being'. Per se, all allowances forming part of remuneration should be considered as part of wages.
From India, Kannur
nanu1953
288

In the definition it has been mentioned that Salary or Wages means all remuneration with exclusion of OT and inclusion of DA and subsequently exclusion of any other allowance which the employee is entitled for time being, Value of house accommodation, lighting etc which is equivalent to HRA, Production incentive, Attendance bonus (allowance ), Sales commission and any other special allowance - night shift allowance etc.

These are all exclusions from the definition of Salary and Wages except specifically mentioned as inclusion of DA.

For years together more than 90% organizations in India are following the above principle ( probably they are not fool) and so far my knowledge goes there is no court verdict in this regard.

Therefore, eligibility of Bonus should be on the basis of Basic and DA only with a limit of 21,000/- per month and calculation should be on the basis of 7000/- basic & DA or minimum wages which ever is higher not lower.

If the Basic & DA is less than 7000/- per month ( probability is less ) , then it should be on actual Basic & DA. One more thing should be remembered that Bonus is a deferred wages and sitting in 2022, the Basic & DA should be as on 2021 to qualify for bonus in 2022 for the year 2021.

There are organizations interpretating as per their way and following the same. It is their risk. Those organizations who have paid bonus considering monthly gross ( Basic, DA & allowances ) as eligibility limit (21,000/- per month ), they have deprived many employees for not paying bonus as Basic & DA is always less than total monthly gross.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
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From India, New Delhi

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