Understanding Statutory vs. Performance Bonuses: Can You Clarify the Differences?

Hi All,

Please let me know the difference between statutory bonus and performance bonus.

As per my knowledge, statutory bonus is paid to all the employees whose basic salary is less than 10K per month, and the minimum compulsory limit is 8.33% of the basic salary.

Would be great if you can provide further insight.

Regards,

Urvashi

Dear Urvashi,

You know about statutory bonus, as explained by you, is correct. It is paid as per the Payment of Bonus Act 1965. Performance bonus is paid based on company policy and performance; no law applies to it.

Regards,
J. S. Malik

Dear Mr. Malik,

Please confirm if the company can pay statutory bonuses to employees whose salary basis is more than 10K.

Thank you.