Salary Limit Increase: How Do We Calculate Bonuses Now? Urgent Help Needed!

Dear all,

Please suggest to me that after raising the salary limit from 3500 to 10000 under sec2(12), how can we calculate the bonus. Previously, it was 2500 as per sec-12 of the Payment of Bonus Act, 1965. Someone mentioned to me that it is now 8500. Is he right or wrong?

This matter requires urgent attention.

Awaiting your reply.

Gaurav Agrawal

Dear Gurav
Please be guide by the below for payment of Bonus
Two issues are to be considered;
Saalary Eligibility for bonus: is less than 10000 i.e u r eligible for bonus if u r salary is les that r 10,000 as per the Act
Bonus calculation: Bonus shall be calculated on Rs 3500 if u r salary is more than rs 3500. Pls see the example for more calarity.
Case A: Monthly wages greater than Rs 3500/-


Gross Monthly Wages of Workmen “A”

=
Rs 5190
Bonus Payable Wages of Workmen “A”
=
Rs 3500
Bonus Payable @ existing rate assuming that the workman comes regularly
=
Rs3500*Bonus rate*12 months




Case B: Gross Monthly wages less than Rs 3500/-

Gross Monthly Wages of Workmen “B”

=
Rs 3120
Bonus Payable Wages of Workmen “B”
=
Rs 3120
Bonus Payable @ existing rate assuming that the workman comes regularly every month
=
Rs3120* Bonus rate *12 months


Regards
ravi

Hi,

Thank you for providing the exact calculation of the bonus.

I have a query: If an employee has been working with the company for the past 2 years, i.e., joined in September 2006, and the company typically gives bonuses to all employees in October or November. If this employee plans to leave the organization in September, can he/she still ask for the bonus? Is it mandatory for the organization to include the bonus in his/her Full and Final settlement?

Regards,
Rajashree D

Dear Gaurav,

An amendment in the Bonus Act was made as follows:

1. Meaning of Salary: Eligible to get the bonus for those whose salary is beyond 10,000/- per month (before amendment, it was 3500/-).
2. Salary for calculation: It was amended to 3500/- per month (before amendment, it was 2500/-).

How to calculate the bonus:
Minimum rate: 8.33%
Maximum rate: 20% (as per the Payment of Bonus Act)
Calculation: 3500 x 12 x 20% = 8400/- (maximum)
Before amendment:
2500 x 12 x 20% = 6000/-

I think you may need to clarify your query.

Thank you,
Jagan
9903599794

Hello,

The method to calculate the bonus under the act has not changed.

What has changed is as follows:

1. Coverage: Any employee who draws a salary/wage (Basic+DA) less than Rs. 10,000 per month will now, due to this amendment, be covered as an employee under the Payment of Bonus Act 1965. In the past, this limit was Rs. 3,500 per month (Basic+DA).

2. The percentage of the bonus is a derived percentage from the method prescribed under the act (of calculating Gross Profit, Available Surplus, and the Allocable Surplus, and then the percentage of the Bonus that can be paid).

3. The law stipulates that even when the company makes a loss, it is obliged to pay a bonus of 8.33%, and whatever the profits, the company cannot pay a bonus exceeding 20%. The first is called the Statutory Minimum Bonus, and the other is called the Statutory Maximum Bonus. Subject to other provisions of the act, the percentage of the bonus varies between these two levels.

4. The rule is that the calculated bonus is to be paid on the actual salary/wage (Basic+DA) up to (now) Rs. 3,500 (In the past, this limit was Rs. 2,500), and the maximum salary/wage (Basic+DA) on which the bonus can be paid is Rs. 3,500 (In the past, this limit was Rs. 2,500).

5. Therefore, if the calculated bonus was 20%, then in the past, an employee drawing a salary/wage between Rs. 2,500 and Rs. 3,500 per month would get Rs. 6,000 as a bonus (i.e., 2,500*12*20%), and now he would get Rs. 8,400 under the same conditions (i.e., 3,500*12*20%).

Hope the issue is clear. If you need more clarification, please raise your query.

Regards,
Samvedan
September 23, 2008

Dear Friends,

Can anyone clarify whether a bonus (according to the rules) can be incorporated into the CTC? (Please note I am not referring to performance bonuses or incentives). If yes, then can it be paid on a monthly basis? If it can be included in the monthly components of the gross salary, do we have to deduct ESI on that? Please help me.

Regards,
Sangeeta

Dear All,

I want to clarify one thing... If an employee's Basic+DA is Rs 5000, can we calculate bonus on this amount as well, or not? Is Rs 3500 a fixed amount, and can we only change the bonus percentage (i.e., 8.33% to 20%) and not the salary amount?

Best Regards

Dear Samvedan,

Please clarify the following:

1) For an employee to be eligible for a bonus, what is the minimum duration of service he is required to complete in an organization? For example, if an employee joins in the month of Feb '08 or May '08, is he eligible for a bonus this year or only in the next financial year?

2) If a person earns more than Rs. 10,000/-, say Rs. 10,500 per month (Basic + DA), is he eligible for a bonus? If so, how is it calculated?

As per your mail, you have stated that:

4. "The rule is that the calculated bonus is to be paid on the actual salary/wage (Basic+DA) up to Rs. 3500/- (In the past, this limit was Rs. 2500/-) and the maximum salary/wage (Basic+DA) on which the bonus can be paid is Rs. 3500/- (In the past, this limit was Rs. 2500/-)"

5. "Therefore, if the calculated bonus was 20%, then in the past an employee drawing a salary/wage between Rs. 2500/- and Rs. 3500/- per month would get Rs. 6000/- as a bonus (i.e., 2500*12*20%) and now he would get Rs. 8400/- under the same conditions (i.e., 3500*12*20%)"

I could not understand this because you have stated in the beginning that the bonus eligibility is Rs. 10,000 per month (Basic + DA). So please explain "and the maximum salary/wage (Basic+DA) on which the bonus can be paid is Rs. 3500?" along with the actual calculation.

Regards

Hello Gaurav,

On 27th October 2007, the President promulgated the Payment of Bonus (Amendment) Ordinance, 2007 containing the following amendments:

i) Amendment to clause (13) of Section 2 of the Payment of Bonus Act, 1965 to raise the eligibility limit for payment of bonus from the salary or wage of Rs. 3500/- per month to Rs. 10000/- per month.

ii) Amendment to Section 12 of the Payment of Bonus Act, 1965 to raise the ceiling for calculation purposes from the salary or wage of Rs. 2500/- per month to Rs. 3500/- per month;

iii) Deletion of clause (vi) of Section 32 of the Payment of Bonus Act, 1965 so as to cover the employees employed through contractors on building operations.

Thus, the employees, including those employed through contractors on building operations, will be entitled to receive a bonus as per the revised ceilings for the year 2006-07 and onwards.

The Ordinance shall be deemed to have come into force on 1st April 2006.

Ministry of Labour & Employment New Delhi, Kartika 07, 1929/October 29, 2007

I am also attaching the GO.

There is one more addition to this: if any company is paying CCA (city compensatory allowance), then its calculation becomes Basic + DA + CCA.
REF THE PAYMENT OF BONUS ACT 1965 (BARE ACT) PAGE 7 COMMENT ii footnote definition of wages and salary

Hello,

I am afraid that my response has caused some confusion. Let me clarify:

1. Any employee on the rolls of the company who has worked with the company for at least 30 days in the financial year for which the bonus is being paid will be eligible to receive the declared bonus (not ex-gratia) on a pro-rata basis.

2. Bonus is to be paid for a given financial year. In your query, the person concerned has worked for two months in one financial year and eight months in the next financial year. In both financial years, he will be eligible to receive a bonus subject to other conditions.

3. If a person earns a salary/wage (i.e. Basic+DA only) of Rs. 10,000/- per month or less, he is covered by the act but will be paid a bonus as if his salary wage was only Rs. 3,500/- only. If his salary/wage exceeds the coverage limit (Rs. 10,000/- Basic+DA) per month, he is strictly speaking outside the purview of the act (meaning that he is NOT eligible to receive a bonus under the act at all).

4. For some employees whose salary/wage is less than Rs. 3,500/- (say it is Rs. 3,000/-), then he will receive a bonus on his actual salary/wage i.e. Rs. 3,000/- in this case. But for salary/wage exceeding Rs. 3,500/- per month but less than Rs. 10,000/- per month, the person will be eligible to receive a bonus under the act as if his salary/wage is Rs. 3,500/- only.

5. Finally, the examples:

- Salary/wage (Basic+DA) above Rs. 10,000/- per month exclude the person from coverage or benefits of the payment of Bonus Act altogether.
- Salary/wage (Basic+DA) less than Rs. 10,000/- per month is covered by the act and is entitled to receive a bonus under the act, as may be determined.
- Now salary/wage (Basic+DA) is say Rs. 3,000/- In this case, the person will be eligible to receive the declared bonus under the act on his salary of Rs. 3,000/- only.
- And now consider salary/wage (Basic+DA) to be anywhere between Rs. 3,501/- per month and Rs. 10,000/- per month. In this case, the person will be eligible to receive the declared bonus under the act on his actual salary/wage (Basic+DA) in this range.

Employees who are not covered by the act are NOT eligible to receive any bonus under the act. Many employers, regardless of pay, an amount equal to the declared bonus as "ex-gratia." But such payment cannot disturb the calculations of the bonus under the act and as the name suggests, it is not a compulsory payment.

I sincerely hope your queries will stand resolved. If they are not resolved, I am still available to answer more doubts.

I appreciate your deep interest in the details of the legislation. Keep it up.

Regards, Samvedan
September 24, 2008

Dear Samvedan,

Please clarify the following:

1) For an employee to be eligible for a bonus, what is the minimum duration of service he is required to complete in an organization? If an employee joins in the month of Feb '08 or May '08, is he eligible for a bonus this year or only in the next financial year?

2) If a person earns more than Rs. 10,000/- say Rs. 10,500 p.m (Basic + DA), is he eligible for a bonus? If so, how is it calculated?

As per your mail, you have stated that:

4. "The rule is that the calculated bonus is to be paid on the actual salary/wage (Basic+DA) up to (now) Rs. 3,500/- (In the past, this limit was Rs. 2,500/-) and the maximum salary/wage (Basic+DA) on which the bonus can be paid is Rs. 3,500/- (In the past, this limit was Rs. 2,500/-)"

5. "Therefore, if the calculated bonus was 20%, then in the past an employee drawing salary/wage between Rs. 2,500/- and Rs. 3,500/- per month would get Rs. 6,000/- as a Bonus (i.e. 2,500*12*20%) and now he would get Rs. 8,400/- under the same conditions (i.e., 3,500*12*20%)"

I could not understand this because you have stated at the beginning that the bonus eligibility is Rs. 10,000/- p.m (Basic + DA). So please explain "and the maximum salary/wage (Basic+DA) on which the bonus can be paid is Rs. 3,500" along with the actual calculation.

Regards

Thank you, Samvedan, for the very nice clarification.

Can you clarify whether a bonus (according to the rules) can be incorporated into the CTC? (Please note that I am not referring to performance bonus/incentive).

If yes, then can it be paid in a monthly system?

If it can be incorporated into the monthly components of the gross salary, do we have to deduct ESI on that?

Please help me.

Regards,
Sangeeta

Dear Tittli,

Please find below a reply to your queries:

1) For an employee to be eligible for a bonus, what is the minimum duration of service required to complete in an organization? If an employee joins in the month of Feb '08 or May '08, is he eligible for a bonus this year or only in the next financial year? Minimum of 30 days of work to be performed in the previous year.

2) If a person earns more than Rs. 10,000/-, say Rs. 10,500 per month (Basic + DA), is he eligible for a bonus? If so, how is it calculated? The Central government has raised the limit by amendment. Now, any employee drawing a salary or wages below Rs. 10,000/- per month is eligible for the bonus payment. Technically, any employee drawing a salary/wages more than the prescribed limit of Rs. 10,000 per month is not qualified for the bonus, but yes, you can pay him/her an ex gratia.

Regarding your mail, you have stated:

4. "The rule is that the calculated bonus is to be paid on the actual salary/wage (Basic + DA) up to Rs. 3500/- (previously Rs. 2500/-) and the maximum salary/wage (Basic + DA) on which a bonus can be paid is Rs. 3500/- (previously Rs. 2500/-).

5. "Therefore, if the calculated bonus was 20%, then in the past, an employee drawing a salary/wage between Rs. 2500/- and Rs. 3500/- per month would get Rs. 6000 as a bonus (i.e., 2500*12*20%) and now he would get Rs. 8400 under the same conditions (i.e., 3500*12*20%).

I could not understand this because you have stated in the beginning that the bonus eligibility is Rs. 10,000/- per month (Basic + DA). So please explain "and the maximum salary/wage (Basic + DA) on which a bonus can be paid is Rs. 3500"? along with the actual calculation.

Please understand the Central Government has increased the salary/wages limit to bring more and more employees under the purview of the Act. Rs. 10,000/- is the maximum coverage limit given by the law. While calculating the bonus, one has to calculate it on Rs. 3500/-.

So, as per the new amendment, the maximum bonus, i.e., 20%, will be Rs. 8400/- only.

Hope this will help you.

Regards,

Manoj

A small correction to Samvedan - In respect of employees who have exceeded the threshold limit of Rs. 10,000/- per month during the year, Basic+DA up to the month in which the limit has been exceeded should be considered.

For example, if an employee had Basic+DA less than 10,000 for April, May, and June, and he received an appraisal in July whereby his Basic+DA went above 10,000, the bonus will have to be calculated up to June for his bonus. In other words, he will be eligible for 3 months of bonus.

Hello, here is the bonus calculation. Earned basic + DA x 8.33% minimum, maximum till 20%. The person who is getting more than 3500 as a bonus - till 3500, it's a bonus and the rest will be called ex gratia. For more than 3500, it is called ex gratia.

Regards,
Prasanna

i didn't understand the calculation. as both the calculation are same. so whats the difference between employee who get monthly salary more than 3500 & those who get less than 3500. could u please explain me in detail.
thkx\
bandita

Hello,

I am answering four queries in this post. I will have to, therefore, answer each query by name. Kindly bear with me.

First for "sangsangeet"

CTC must be regarded only as a management budgeting tool. If you use it for salary negotiations, you have to ensure that each element included is, in fact, paid out OR it is clearly informed that though included, some inclusions will not be paid. Even if you think that only the finite ingredients may be included in CTC. Bonus is NOT a finite ingredient except at the Minimum (8.33%) and the Maximum (20%). Bonus, as Bonus under the act, is paid only to those covered by the act (and others, if the management so decides, will get only ex-gratia, which is an amount always equal to the bonus paid to covered employees. No, Bonus should NOT be included in CTC.

Next, there is no provision in the Payment of Bonus Act to pay Bonus in installments. (Even if you do, it will be termed as "advance against bonus" and will have to be reconciled and appropriated at the end of the financial year when the Bonus under the act is calculated and declared. Also, how and on what basis will you even estimate the amount of advance to be paid. My advice is to banish the thought. Stick to paying Bonus to eligible employees at the end of the year.

Lastly, even if an "advance against bonus" is paid in monthly installments, it will attract ESI, as it is NOT bonus (when paid) and any payment made to the employee at a frequency of less than two months attracts ESI!!!

Now for "aru 729"

Your observation is correct. I had covered it in my earlier reply but it was not explicitly done!

For "banditapadhi"

In brief:

1. Bonus is paid to eligible (covered employees)
2. As at present, any employee who draws salary/wage (Basic+DA) less than Rs. 10000/- per month is eligible to receive a bonus under the act.
3. For those employees who draw salary/wage (Basic+DA) less than Rs. 3500/- will receive the bonus declared under the act on his actual salary/wage (Basic+DA)
4. For those who draw salary/wage greater than Rs. 3500/- per month but less than Rs. 10000/- per month will receive a bonus as though their salary/wage (Basic+DA) is only Rs. 3500/- per month.
5. The recent amendment to the Payment of Bonus Act has enhanced the eligibility to receive a bonus considerably (i.e. from Rs. 3500/- to Rs. 10000/-) and the eligibility to receive a bonus under the act marginally (i.e. from Rs. 2500/- per month to Rs. 3500/- per month.)

I suppose this should set at rest your doubt.

Lastly for "s. Ramchandran"

No, your understanding is NOT right. This mail and particularly this reply will make the point clear.

That is about all, ladies & gentlemen (for the time being at least)

Regards,
samvedan
September 25, 2008

To All,

A person who leaves the service if their P.L. (Privilege Leave) is due in the company, whether they are entitled to draw cash for their P.L. on their basic or gross salary.

Thanks,
V.B. Pandey

Hi,

I have a doubt. If an employee joins somewhere in the month of September, is that employee eligible for the full bonus?

Dear Samavedan ji,

Happy to give clarification. Everyone may note it.

One more point: The statutory ceiling limit of Bonus is Rs. 10,000/-. On management discretion, those who cross the limit may also be eligible @ Rs. 10,000/-, called it as ex-gratia amount. But it will not be applicable for the employees' salary covered in CTC.

Regards,

PBS KUMAR

Please inform us regarding the Bonus Act Form - A Computation of the Allocable Surplus under Section 2(4) calculation method.

V.B. Pandey

Dear Pandey ji,

Please see the attachment for the BONUS REGISTER under this act.

Regards,

PBS KUMAR

Dear Friends,

Can anyone clarify whether a bonus (as per company rules) can be included in the CTC? (Please note I am not referring to performance bonuses or incentives).

If yes, can it be paid on a monthly basis?

If it can be included in the monthly components of the gross salary, do we have to deduct ESI on that?

Please help me....

Regards,

Sangeeta

Dear Sangeeta,

You have asked a pertinent question. According to the Bonus Act, bonuses cannot be considered a part of CTC. Bonus calculations are based on the balance sheet, working allocable surplus, and other factors as prescribed under the Bonus Act. Only after this process can the company determine the percentage of bonus to be declared or paid. Therefore, presuming and adding it to the CTC is not appropriate.

If a company adds it to the CTC at 8.33%, but the actual percentage payable is 16%, the employer is obligated to pay the difference to its employees. However, in normal circumstances, this is uncommon.

Regarding your second question on whether it affects ESI, the CTC typically consists of two or three parts. The salary part includes basic salary, HRA, and other allowances. The statutory part includes PF and ESI. The third part comprises other items like LTA, medical benefits, and bonuses. Bonuses shown in the third column are usually paid at the year-end and do not attract ESI.

In the event an employee leaves the organization before bonus payment, the bonus amount shown in the CTC must be settled during Full and Final settlement. If any disputes arise, it is the company's responsibility to prepare the necessary workings as per the Bonus Act.

Patrudu
098668-67772

Hi all,

As a new HR person, kindly help me out. Are you all not talking about a Diwali bonus? What kind of bonus is this, and is it obligatory to be paid to all people? Please inform me.

Kindest regards,
Petra

Dear Gaurav,

A lot of communication we have seen on this issue. Everyone has put up their point. Let me give my point in a very simple manner. As per the Bonus Act 1965 and as per the amendment of last year, please thoroughly go through the following points:

1. Eligibility

If you gently calculate what they earned the previous year, his total earned basic is 8.33%, and Ex-gratia is 11.67%. Therefore, the total payable bonus is 20% of his earned basic amount.

Dear Gaurav,

A lot of communication has been seen on this issue. Everyone has put up their point. Let me give my point in a very simple manner.

As per the Bonus Act of 1965 and the last year's amendment, please thoroughly go through the following points:

1. ELIGIBILITY FOR BONUS AS PER ACT: BASIC+DA SHOULD BE WITHIN THE RANGE OF RS. 3500/- PM TO 10000/-.

2. FOR DISBURSEMENT OF BONUS, CEILING IS RS. 3500/-. AS PER THE ACT, STATUTORILY, WE HAVE TO PAY 8.33% MINIMUM BONUS, WHICH COMES TO 3500*8.33% = RS. 291.55 PER MONTH AND SUBSEQUENTLY RS. 3500/- PER YEAR. THE MAXIMUM WE CAN PAY UNDER THIS ACT IS 20%, THAT IS 20% OF 3500/-, WHICH IS RS 700/- PM AND RS 8400/- PER YEAR.

3. EVEN IF A WORKER WORKS FOR A MINIMUM OF ONE MONTH, HE IS ELIGIBLE FOR BONUS AS PER THE ACT.

4. FOR THE CALCULATION OF BONUS, ATTENDANCE TO BE CONSIDERED FOR THE LAST FINANCIAL YEAR (THAT IS 1 APR 2007 TO 31 MAR 2008 FOR BONUS TO BE PAID IN OCT 2008).

5. BONUS TO BE PAID WITHIN SIX MONTHS AFTER THE CLOSE OF THE FINANCIAL YEAR, WHICH MEANS FINANCIAL YEAR CLOSING IS MARCH AND BONUS TO BE PAID IN THE MONTH OF OCTOBER EVERY YEAR. 'A', 'B', AND 'C' BOOKS HAVE TO BE MAINTAINED FOR BONUS AND THE SAME TO BE PRODUCED TO GOVERNMENT AUTHORITIES ON DEMAND.

Thanks and regards,

RAVINDRA SHENVI
MANAGER HR

Sir,

As stated above, I agree with it, but I want to know if a person receiving a salary more than $10,000 is eligible for a bonus or not. I have read the Payment of Bonus Act, but I could not clarify my above doubt. Please clarify for me.

Suraj Biswal.

The latest bonus ordinance was passed in the year 2007. Bonuses are calculated for those whose pay + DA does not exceed Rs. 10,000 per month. All regular, casual, and contract employees are eligible to receive the bonus as per the above wage limit. Employees who worked 30 days in a year are also eligible to receive the bonus.

Dear Gaurav,

Employees receiving a salary up to 10,000 per month are eligible for a bonus under the Bonus Act. The ceiling amount for the bonus is Rs. 3,500. If your company is willing to pay a bonus to persons receiving a salary more than 10,000, it will be treated as an ex-gratia amount. Please go through the amendment sheet in the act, as attached.

Dear all,

Our company has declared a bonus of 16%. So, how do I calculate the bonus for a person drawing a monthly salary of Rs. 5000?

Will it be 5000*12*16% = Rs. 9600 (so a maximum of Rs. 8400 to be paid) or 3500*12*16% = Rs. 6720 (Rs. 3500 max salary limit)?

Please advise at the earliest.

Regards,

Athif

Our company has declared a bonus of 16%. So how do I calculate the bonus for a person drawing a monthly salary of Rs. 5000? Will it be 5000*12*16% = Rs. 9600 (so a maximum of Rs. 8400 to be paid) or 3500*12*16% = Rs. 6720 (Rs. 3500 max salary limit)? Please advise at the earliest.

Anand B

Dear Gaurav,

Please read the email from Jagan and Ravi. All details related to the bonus have been clearly explained by him. If any employee is absent (LWP), you can deduct the LWP amount from their bonus. The calculation will depend on the minimum/maximum bonus.

Regards,
Arun
09935098288

Bonus calculations are based on the salary for the month, i.e., from April to March (calendar year), we should calculate 8.33% of wages for each month specifically, not on the annual salary. For example, if an employee's salary for a month is Rs. 10,000 in August, and they receive an annual increment of Rs. 500 in September, then they are not eligible to receive a bonus for the month of September.

Like wise.

Hi Samvedan,

I need your help. I am working with an Indian company and currently under notice period. I am getting relieved on February 27, 2009. My bonus component was due in March's appraisal. I want to know if, having worked for the past 11 months, I am eligible to receive a bonus on a pro-rata basis. I am willing to wait until the end of March or April for the company to disperse the same. Kindly help ASAP!

Regards,
Anshu

This is for Anshoog and other interested members!

To be eligible to receive Bonus under the Act:

1. You have to be a covered employee. (In case of doubt, read this thread from the beginning.)
2. You have to have worked for at least 30 days in the aggregate during the financial year.
3. The Bonus under the act has nothing to do with your appraisals. Only non-statutory bonus may be linked to performance and therefore to the reviews!
4. The process that leads to the declaration of bonus under the act goes as follows:

After the close of the financial year, the company accounts are finalized. Simultaneously, Bonus is determined by following a method prescribed under the Payment of Bonus Act - mostly done by the company CA or the Finance Department.

Bonus is always a derived figure and depends upon the calculation of Allocable Surplus, Available Surplus, and after taking into account the Set On and the Set Off position prescribed under the act.

Because the process of finalization of accounts, the statutory audit, calculation of bonus under the act, etc. take time, the law has stipulated EIGHT months from the close of the financial year (i.e. up to the end of November) for the payment of statutory bonus.

Since Anshoog will be working right up to the end of February 09, assuming that she is a covered employee as far as the Payment of Bonus Act 1965 is considered, she HAS to get declared bonus pro-rated to the number of days she was in employment with this particular company.

Having provided the basic information, permit me to add a few observations. Very few employers meticulously adhere to the law. Often the employees who are not covered under the act are also paid derived bonus under the act but it is called by various names like, "ex-gratia", "performance bonus", etc. These are NOT to be confused with or as Bonus under the act.

Many times one finds that Bonus is paid even at 20%, but being the maximum payable bonus, no one complains, yet the law may have been ignored!

I suppose you have got your answers. If there are more questions, you are welcome.

Regards,
samvedan
February 10, 2009

Hi Samvedan,

Thank you for your prompt response! Much appreciated!

I have a few clarifications/questions. Mine is a non-statutory bonus component. I know this is performance-based and is linked with the appraisal. My performance had been "Exceed" in the last year, and I have contributed to the business as well. However, since I will not be available in March for the appraisal, I will lose this entire money which I actually deserved.

Is there any law by which I can claim this amount or at least a percentage of it from my existing company (on a pro-rata basis or otherwise)?

Kindly help as soon as possible.

Regards,
Anshu

Thanks, Samvedan, for your prompt response! Much appreciated!

I have a few clarifications/questions. Mine is a non-statutory bonus component. I know this is performance-based and is linked with appraisal. My performance had been "Exceed" in the last year and has contributed to the business as well. But since I will not be available in March for the appraisal, I will lose this entire money which actually I deserved.

Is there any law by which I can claim this amount or at least a percentage of it from my existing company (on a pro-rata basis or otherwise)? Kindly help as soon as possible.

Regards, Anshu

Hello,

Thank you for the appreciation.

Since we are not discussing the statutory bonus, the issue solely revolves around the terms and conditions of your employment. The outcome depends on the ethics, morality of the employer, and the organizational culture. Any dispute between you and the employer will not be covered by Labour Law but by Civil Law. Resorting to civil law could result in significant delays, potentially taking years to reach a resolution. Even if you eventually win in court, you would have lost time and incurred legal expenses possibly exceeding the bonus amount. Therefore, you need to make a calculated decision.

Was the Bonus a part of the CTC when you were employed?

Regardless, the logic suggests that you are entitled to at least the pro-rata Bonus unless there is a clause in your terms & conditions that you overlooked during your employment acceptance.

In dealing with this issue, it is important to approach the employer with a polite yet firm demeanor. Being confrontational could cause the employer to disengage from the matter, leading to a loss of the deserved bonus.

Good Luck. I hope you receive the hard-earned money.

Regards, Samvedan February 11, 2009

Simply calculate the number of days present from April to March and the total basic and DA earned during the year, and 8.33% of that, i.e., total year basic * total year DA * 8.33%, or whatever % decided by management. Don't include gross salary, SA, ASA, etc.

Thank you, Samvedan, for your prompt and accurate replies. Your responses were greatly appreciated. You are doing a wonderful job. :-)

I will now speak to my employer politely and try to convince them about this. The bonus component was part of my annual package that was offered to me at the time of employment. I also hope that I will receive the right and hard-earned money that I deserve. I will surely inform you of the outcome. Thank you so much for your help!

Please let me know if I can assist you in any way.

Regards, Anshu

Hi Samvedan!

You are right! However, I am not from an HR background. I am currently involved in IT Project Management and Leadership.

I truly appreciate your prompt responses on this forum. If I encounter any issues in the future, I may reach out to you for help.

Regarding the bonus matter, I have discussed it with my boss, and he agrees that bonuses should be given to employees as it is their right. Nevertheless, he is uncertain about whether I will receive the full amount.

Regardless, I will stand up for what I deserve. The rest is in God's hands! :-)

Thank you very much for your advice, which enabled me to speak up.

Anshu