Is Special Pay Part of Salary for Eligibility Criteria? Need Clarification on Bonus Act

Hi All,

Kindly guide me on the following issue - We are paying Gross Salary, divided into the following components: 50% basic + 50% flexi plan. Under the Flexi plan, we offer the employee to opt for the best-suited options for them. Hence, the components came as HRA, Food Coupons, Medical reimbursement, and Special Pay. Special pay is the balance amount left after all other components in the Flexi plan, and it is taxable.

For example, if Gross Salary is 4 lac, Basic is 2 lac, and 2 lac per annum is Flexi plan (1 lac HRA, 13k Food Coupons, 15k Medical, and the rest 72k will be Special Pay). Hence, we may say that this is a fixed amount based on the choice of the employee for the Financial Year.

My query is regarding calculating salary (eligibility criteria of 10k): Will this Special Pay be considered as part of the Salary or not?

Thanks in advance.

Swati Saxena

Unless otherwise provided, Special Pay will be taken as part of the salary for the calculation of the bonus. This is because you have no Dearness Allowance in your pay structure. I doubt this will attract EPF contributions as well.

In any case, the maximum bonus qualifying salary is Rs. 3500 only, though employees whose salary (Basic + DA) is not more than Rs. 10,000 are eligible for the bonus.

Regards,
Madhu.T.K

As per the eligibility criteria, the salary should not exceed $10,000. Is this the base salary that should also not exceed $10,000?

Ms. Swati,

As per the Payment of Bonus Act, the bonus payable is a maximum of Rs. 8,400, and the qualifying salary is Rs. 3,500 only (20% of 3,500 = 700 * 12 = 8,400). The employee's basic salary should not exceed Rs. 10,000 to be eligible for the bonus. Up to Rs. 10,000 basic, the bonus is compulsory, and if you have a Dearness Allowance (DA), it should be inclusive of DA but should not exceed the eligibility criteria at any time.

Santosh

Dear Swati,

Greetings for the day :)

As per the Payment of Bonus Act:
- Bonus payable max. 8400
- The freezed salary for the calculation of Bonus is Rs. 3500 only (it is not an eligibility criteria; eligibility criteria are a salary below 10000 and 30 days employment in an establishment)
- Bonus will be Minimum 8.33% and Maximum 20% of 3500
- It will be calculated as follows:
1. 8.33% of 3500 = 291.55 X 12 = 3498.60
2. 20% of 3500 = 700 X 12 = 8400

The employee's Gross salary should not exceed Rs. 10000 to avail bonus.

Hi friends

Kindly solve my problem

As per my information qualifying amount for bonus is Basic + DA

But as per bonus act the mentioned Meaning of salary is as below

“salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.

Kindly clarity me qualifying amount for bonus is basic+da or Gross

And minimum bonus payment amount and if salary is Rs 8,000.00 pm

Ravikumar