Is an Employee Earning Over ₹10,000 Eligible for a Bonus? Seeking Clarification and Case Laws

Dear sir,

If an employee is drawing more than ₹10,000 Basic+DA per month, will he be eligible for a bonus (min 8.33%)? In the Bonus Act, it is not mentioned about the non-eligibility of a bonus. As it says a minimum of 30 days of working in the financial year will make a person eligible for payment. I request clarification in this regard and also if somebody helps with some case laws, it will be highly appreciated.

Regards,
Venkat

Dear Venkat,

An employee will be entitled to receive a bonus for an accounting year if the employee actually works in the establishment for a minimum of 30 days in that accounting year for which the employer is liable to pay a bonus. When the Act itself is clear, there is no need to refer to any ruling. For the definition of an employee, you may refer to section 2(13) of the Payment of Bonus Act, 1965.

Regards,
R.N. Khola

As per the Payment of Bonus Act, the maximum eligible salary for the computation of bonus is Rs. 3,500. This implies that if a company wants to give a bonus to all employees, the calculation will be based on Rs. 3,500 only, even if the employee's salary is higher than Rs. 3,500. The maximum percentage is 20%.

Please let me know if you need any further clarification.

HAPPY DIWALI TO CIYTEHR FAMILY.

VINOD KAUL

Dear Sir,

According to the Bonus Act, an employee should be able to work for more than 1 month. At the same time, there should be a round figure of 3500/- for 8.33% of the bonus. This provision should be applicable to all employees, whether they are left employees or present employees. Sometimes, the company may give more than 8.33% depending on the firm.

Thanks,

Ms. Prasanna Reddy

Executive-HR

Dear Sir,

If an employee is drawing more than 10,000/- Basic+DA per month, will he be eligible for a bonus (minimum 8.33%)? The Bonus Act does not mention the non-eligibility of a bonus. It states that a minimum of 30 days of working in the financial year will make a person eligible for payment. I request clarification in this regard, and any assistance with relevant case laws would be highly appreciated.

Regards,

Venkat

Thank you all for the reply. As per this, I understood that the 10,000 limit is there only for calculation, and the same does not determine the eligibility. So every person who works for more than 30 days in a Financial year is eligible for a bonus (8.33%) irrespective of his Basic+DA (which may be more than 10,000 also).

Still, it is not crystal clear whether an employee is entitled to a bonus if their basic salary is more than $10,000. Please clarify.

Dear,

It is clarified that if an employee is getting more than Rs10,000/- per month as wages or salary as defined under Section 2(21) of the Payment of Bonus Act, 1965, then he will not be entitled to receive any bonus from the employer. You may also go through the definition of the employee under Section 2(13) of this Act. Go through the Payment of Bonus Act; then it will become crystal clear to you also.

Regards,
R.N. Khola

Dear All,

The condition of putting 30 days of service is essential; however, the maximum salary on which a bonus, as per the act, can be given is Rs. 3,500.00 per month. Section 12 of the Payment of Bonus Act is clear about the cases where the salary drawn is higher than Rs. 3,500.00. The bonus is paid on Rs. 3,500.00 only, minimum 8.33% and maximum 20%. Any amount paid over and above the bonus shall be treated as Ex-Gratia.

Hope the matter is clear.

Regards,
Vinod Kaul

Dear Khola,

Please clarify:

1. An employee receiving a salary exceeding Rs. 10,000/- is not eligible.
2. Even if an employee's salary is Rs. 9000/- or Rs. 8000/-, the bonus calculation will be capped at Rs. 3500/-.
Is this correct? If incorrect, please explain.

Regards,
Thiru

Dear Thiru,

Your statement is correct if the salary is in accordance with the definition of the Payment of Bonus Act, 1965.

Regards,
R.N. Khola

Dear Sir, I want to know what the eligibility salary for a bonus is. Everybody says here that ₹10,000/- basic + DA is eligible for a bonus. An employee whose basic + DA exceeds ₹10,000/- is not eligible for a bonus. Please clarify if ₹10,000/- refers to basic + DA or Gross salary.

However, some say that a ₹3,500/- salary is eligible for a bonus. Which is correct - ₹10,000/- or ₹3,500/-?

Thank you,
Hariharan

Yes, you are right, sir. If an employee has a basic salary of more than ₹10,000, he can't claim a bonus.

As your basic salary is less than 10,000, the bonus will be calculated by treating the salary as 3,500. So, the bonus will be:

3,500 * 8.33% or 20% * 12

The percentage of the bonus will be decided by your company.

Dear Sir,

I need your help, please clarify. My company is giving a bonus of one month's gross salary, and the calculation is done based on the calendar year from January to December for all employees from Junior to Senior levels earning above 21K.

Do we need to make any changes, or is it acceptable as we are already providing a bonus exceeding 7,000/-?