Calculating Manager Bonuses: Should We Use 313 or 365 Days for Annual Workdays?

Dear Friends,

I was calculating the bonus as asked by my senior in Form C of the Bonus Act. Can anyone please help me out with the information regarding the bonus calculated for managers and supervisors? Should the number of days worked in a year be written as 313, i.e., if all days are taken, or as 365 for managers considering their number of days worked in a year? The number 313 was used for workers who are paid on a daily basis. However, what about the managers who are paid for Sundays as well?

Please assist me in determining the correct figure to be written for the number of days worked in a year.

Regards,
Priyanka Sahu

Dear Priyanka,

Bonus can be calculated in the following two ways:

(1) 8.333% of Basic Salary.
(2) Basic Salary divided by the number of months, i.e., 12 - to get a monthly amount of Bonus as a deduction from Salary.

Abhinav Chandra

Dear Priyanka,

Greetings for the day!

Days are always considered for measuring the eligibility, not for its calculation. The calculation is done based on the frozen limit decided under The Payment of Bonus Act, 1965.

I was calculating the bonus as requested by my senior in Form C of the Bonus Act. Can anyone please help me with information regarding the calculation of bonus for managers and supervisors? Should the number of days worked in a year be written as 313 (if all days are taken) or as 365 for managers since they work on Sundays as well?

The figure 313 was used for workers who are paid on a daily basis. However, I am unsure about the appropriate number of days to be written for managers who work on Sundays as well. Your assistance in clarifying this matter would be greatly appreciated.

Regards,
Priyanka Sahu

Dear Kapil Sir,

Greetings to you too.

I have an idea that we do not calculate the bonus based on the days present. This is required for eligibility. However, the Form C of the bonus act contains a column which states the number of working days in the year and also the number of days worked in the year.

My confusion lies in the fact that I have prepared the bonus sheet for workers where I have considered 313 as the number of working days. For my staff, should I consider the number of working days as 313 only, or should it be 365 because they are paid for weekly offs while workers are not?

Please guide me on the same.

Regards,
Priyanka Sahu

Dear Kapil Ji,

As per the rules and my knowledge, if an employee has completed 30 days of continuous work, they will be eligible for the bonus. However, what is the percentage? Please guide me.

I joined my company in March 2007, but I haven't received the bonus. My boss told me that employees who have not completed one year of service are not eligible for the bonus.

I am waiting for your warm regards.

Thanks & Regards,
Amrish Singh Raghuwanshi
Mob. 9827071872
Email: amrish_vishnu@yahoo.co.in
Email: amrish.hrnatrajfoods@rediffmail.com

Hi, how did you arrive at 313 days? You need not take N&F holidays. You should mention company working days only. If worked days, you take the worked days of an employee. Should not take the number of days paid.

Regards,
Rajesh Kumar K

Dear Priya,

Yearly Bonus = Actual (Basic + DA) for that year of an individual employee * 8.33%. If the employee worked in that year for more than 30 days and less than 1 year; then it is = (Basic + DA) * 8.33% * No. of working days / Days worked by the employee. For those who did not complete a year of service, it is the management's prerogative to pay Ex-gratia on a pro-rata basis.

For calculation, LOP days matter a lot, i.e., the bonus is only for the actual working days in that year. For example, if he has not suffered LOP in a year then 365 - 12 (Fest/holidays) = 353. The number of holidays may vary among companies.

From where did you arrive at 313 days? All CL, SL, PL are paid days and shall not be figured under LOP. Anyways, have a second opinion.

Regards, Chandru Consultant

Dear Priyanka,

It would be 313 days (as per your calculation), but the figure shows that you have deducted 52 weeks only. You should deduct national holidays as well. (The figure shows that you have deducted off days only, but you have to deduct the National Holidays & Festival as per the list of holidays of your company).

Apart from this, for exempted employees, you shouldn't make the entry in Form-C (Bonus Register). You should show it as "Ex-Gratia" from an HR and compliance point of view.

For your reference, an example is as follows:

No. of days in a year: 365
No. of off-days (Sunday): 52
List of Holidays & Festival: 10
Total worked days: 303

For entry point of view:

"A" Salary (Basic+D.A.) is Rs. 10,000 = Eligible (Entry should be in Form-C)
"B" Salary (Basic+D.A.) is Rs. >10,001 = Exempted (Separate List as Ex-Gratia)

If you still need any clarification, you can contact as below:

From - VIJAY VASHISTH
Manager HR
vijayvashisth@yahoo.com
+91 9717989830

"NOTHING IS IMPOSSIBLE IN LIFE EVEN WORD SAYS I'M POSSIBLE."

QUOTE by Priyankasahu;926633:
Dear Friends,

I was calculating the bonus as asked by my senior in Form C of the bonus act.

Can anyone please help me out with the information that the bonus calculated for managers and supervisors, the number of days worked in a year shall be written as 313 if all days are taken or as 365 for managers as their number of days worked in a year.

313 was taken for workers who are paid on a daily basis. But what about the managers who are paid Sundays also?

Please help me out as to what figure has to be written in the number of days worked in a year.

Regards,
Priyanka Sahu

I have arrived on 313 after deducting the 52 weekly offs in the year. My senior still says to write 313 on the form C even if they pay for 365 days, which means weekly offs too. He is of the opinion that the number of working days in the year is 365 for the company as it is a dairy company, but the physical presence of the employee is only 313, i.e., excluding weekly offs. I am very confused about the same.

Dear Vijay sir,

Workers get the nationally declared holidays, i.e., 6 per year, as paid holidays. Therefore, we do not include them. Bonuses were given to workers, and it was successful.

However, the question pertains to employees. They are paid for the entire 365 days, including their weekly offs, i.e., their Sundays. Then why should we only write 313 on the sheet?

Additionally, the 6 days declared as paid holidays should also be deducted. Am I making a mistake in this?

Thank you.

Dear Priyankasahu,

Please check last year's data. Speak to your supervisor about the same. If you are still confused, follow the instructions given earlier.

Sarfaraz

Dear Priyanka Sahu,

In Form C, "Days" means present days, not paid days. In your case, working days should be considered as 313, not 365 days.

Regards,
Thanks & Regards,
Ranjeet

Weekly offs are paid holidays that need to be considered as working days for the calculation of bonuses, as per the act. However, there are companies following a methodology that you have been asked to adopt, which is not a fair labor practice.

Sahayaraj
Sr. HR Executive (IR)

Dear Priyanka,

I hope you have arrived 313 working days from - monthly No. of working days = 26 * 12 months = 312 days & not 313 days. If they have completed 1 year of service from the start of the financial year, i.e., Apr 1 till 30 May... Take their Basic salary paid for the period multiplied by the bonus percentage agreed to pay, i.e., varying from 8.33% to 20%. Eligibility for Bonus is basic pay less than 10,000 INR monthly & max ceiling would be Rs. 3500.

Regards,
Sripathy.P

Dear Amrish,

As per the rules and my understanding, if an employee has completed 30 days of continuous work, they will be eligible for a bonus. However, what is the percentage of the bonus? Please provide guidance on this matter.

I joined my company in March 2007 but have not received the bonus. My boss informed me that employees who have not completed one year of service are not eligible for the bonus.

I am eagerly awaiting your warm regards.

Thanks & Regards,
Amrish Singh Raghuwanshi
Mob. 9827071872
Email- amrish_vishnu@yahoo.co.in
amrish.hrnatrajfoods@rediffmail.com

Dear Amrish,

According to the eligibility criteria, an employee must have worked for 30 days in an organization to qualify for the bonus. Could you please provide me with your salary breakdown so that I can assist you accordingly? Bonuses are typically calculated based on limits set by the Act.

Also, could you clarify what type of bonus you are referring to:
1. Normal Bonus
2. Performance Bonus
3. Ex Gratia

If it is a Performance Bonus, it is usually calculated on an annual basis.

Please be specific in your response.

Thank you.

1. For bonus eligibility: 30 man working days in a financial year are a must. If below 30 working days, he is not entitled to a bonus.

2. Calculation of Bonus: Total earnings (Basic + DA) in a year x 8.33% (but a maximum of 20%).

3. The wage ceiling is Rs. 3500/- per month.

4. Coverage of Bonus for employees whose monthly wage is less than Rs. 10,000/- only (i.e., Monthly Basic + DA should not exceed 10,000/-). If exceeded, he is not entitled to a bonus. If the employer desires to pay a bonus, they can be paid as per their wish by calling it an "ex-gratia" and not a bonus, i.e., out of the purview of the bonus act.

5. They should maintain the Bonus Register in Form C. It may be a little confusing for the first time calculation, but it is easy. If you have any queries, please do not hesitate to call: 09704233306 (MADHAVA RAO G - Industrial Labour Law Consultant, Hyderabad).

Dear Madhava Sir,

Query 1: Kindly let me know in which section your answer Sl No 4 is mentioned.

Query 2: I have 100 employees, out of which around 85 employees have a basic salary of less than 10,000, and 15 employees are getting more than 10,000. However, we have paid all employees a gross salary as a bonus. Kindly let me know how I should fill out Form C and Form D in this case.

Your help will be highly appreciated.