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Hi everyone, I have a concern that the current Bonus threshold limit is 21000/-. Those who have fixed wages of more than 21000/- will be exempted from the bonus. It's not mandatory to provide a bonus for wages more than 21000/-.
So i have a concern that my current organization setting this rule on Gross wages. if somebody has gross wages of more than 21000/- then they are deprived of getting a bonus. Some organizations follow this rule on a bonus threshold limit of 21000 as basic and da only. If basic and da more than 21000/- then bonus can not be given.
So please brief on it what should be as per law. whether 21000/- ceiling is BASIC+DA or GROSS.

Apart from that, I would like to ask that.. my firm is 20 years old and every year they earn profits but the firm is distributes a bonus of 8.33%. What are the procedures when a company earns regular profits? Then can we increase the bonus percentages?
What does the law say in this regard?

From India, Chandigarh

As per law employees with salary of more than Rs 21000 are not entitled to get bonus. The salary for the purpose of bonus eligibility shall mean basic wage and dearness allowance. If you have a salary structure without DA but with basic salary and allowances like HRA etc, the basic salary alone will be considered as bonus qualifying salary.

In respect of employees whose salary (Bonus qualifying salary, ie, Basic and DA) exceeds Rs 7000, the bonus shall be calculated on 7000 or the statutory minimum wages fixed by the government. As such, if, in respect of a particular category of employees, the minimum wages fixed is, say, Rs 13000, then bonus should be calculated as if the salary is Rs 13000. If, there is no minimum wages fixed, then you can calculate bonus on Rs 7000.

You cannot take gross salary for excluding an employee from bonus and take only the basic salary for calculating the amount of bonus payable.

The percentage of bonus shall vary from 8.33% to 20%. The rate of bonus is decided by the profitability of the organisation. The Payment of Bonus Act has provided for the method of distributing bonus from the available surplus. In a Unionised atmosphere the rate of bonus is fixed after a lengthy discussion and procedures, debating on the profitability and future expansion programs etc. But a company in existence for twenty years shall pay higher rate of bonus than the minimum 8.33%.

From India, Kannur

good information thanks for valuable feedback.
From India, Chandigarh
Thank you for sharing this valuable information regarding bonus eligibility and calculation as per the law. It's crucial for both employers and employees to understand the guidelines outlined by the Payment of Bonus Act. Ensuring compliance with these regulations not only fosters transparency but also promotes fair treatment in the workplace. Understanding how bonus amounts are determined, based on factors like salary structure and profitability, helps to establish a balanced approach to bonus distribution. It's commendable that you've provided clarity on these matters, which can often be complex and subject to interpretation. [google](
From France, Paris
Thank you for sharing these insights regarding the Payment of Bonus Act and run 3 the calculation of bonus for employees. It's crucial for employers to understand the legal requirements and guidelines when it comes to determining bonus eligibility and calculating bonus amounts.
From France, Paris

As Bonus is a deferred wages , therefore the eligibility criteria for bonus should be on the basis of the Basic & DA or ONLY Basic where DA is absent for the previous year not the current rate.

Bonus % has to be calculated on the basis of Gross profit, available surplus, allocable surplus, Set On and Set OFF. It is a detailed calculation method explained in Bonus Act Schedule.

In most of the organizations now a days it is calculated on the basis of Minimum Wages as recent past Basic rate is 7000/- or more as per Act.

It cannot be paid on ad hoc basis 8.33% every year irrespective of profit or loss. Ask your auditor through your finance department to audit bonus account to determine % of Bonus for every financial year to pay accurate % of bonus every year.

In absence of above you may face problem if there is any inspection from bonus authority under the act.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531

From India, New Delhi
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