Bonus Calculation - Social Compliance

Dear Sir,
We have a practice of calculating and giving bonus as follows:
All employees below one year of service will get 8.33% and above one year of service will have 14% of bonus.
As we are in garment field and undergoes rigorous social compliance audits frequently let me make it sure is my practice is leaglly correct or will face any charge of violations under any act or code of conducts.
Awaiting seniors comment on this

can anyone pl. advice me who are the appropriate authorities to whom clousure intimation to be given though it is a Memorandum of Settlment under 12(3) signed among workmen, Trade Union and ALC.
Regards
Ashok K. Gupta
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Clousure Intimation to the authorities under Labour Laws

Hi Rameshan,

As per payment of bonus act, any worker who works in the factory for 30 days are eligible for bonus minimum at the rate of 8.33% on the earned wages (Basic & DA) for the bonus period (Oct to Sep or April to March whatever may be the case) subject to minimum of Rs.100/-. Provided that the earned wages (Basic & DA) should not below the minimum wages fixed by the State Government.

If the company giving 14% of bonus for above one year service and 8.33% for below one year service there will be a issue by the compliance auditors as discriminating the workers in giving the benefits to the workers based on service which is not as per the Act. But the aim of the bonus act is to pay the bonus to all the workers based on the profit/loss of the company during the financial period.

If the company fixing as 8.33% as bonus percentage and it should be paid for all the workes as 8.33% irrespective of their service and if it is 14%, it should be 14% for all the employees based on their earned wages (Basic & DA) during the bonus period.

Note: As per payment of bonus Act, all the workers who are earning wages (Basic & DA) up to Rs.10,000 are covered under the act. The maximum ceiling for the payment of bonus is Rs.3,500. i.e if any worker who draws Rs.5,000 are limited to Rs.3,500/- if his bonus amount exceeds Rs.3,500. (if the company wishes to pay more than Rs.3,500/- as bonus can pay it without limitation)

Hope the information provided is useful.

Regards
Ganesh

Thank you Sir,and this information is highly sufficient to clear my query.
But again it is my job to persuade the management to standardise the bonus% otherwise as you rightly pointed out, I may invite charges of discrimination

Hi,
Bonus will be declared based upon the set off,set on & allocable surplus.The payment of bonus to the employees should be uniform i.e.of the same ratio.
Declaring the bonus 8.33% for the employees below one year & 14% above one year is not advisable.
Reena

Hi,
Bonus will be declared based upon the set off,set on & allocable surplus.The payment of bonus to the employees should be uniform i.e.of the same ratio.
Declaring the bonus 8.33% for the employees below one year & 14% above one year is not advisable.
Reena