Understanding Bonus Calculations: Is It Based on 10,000 or 20,000 Salary?

Can you tell if someone having a basic salary of ₹20,000 per month, how much amount is applicable for bonus calculation: ₹10,000 or ₹20,000?

For example, ₹20,000 x 12 = ₹240,000
₹240,000 x 8.33% = ₹19,992

According to my knowledge, the maximum limit for a bonus is ₹5000, and the salary limit is ₹15000. For salaries above ₹15000, we can decide whether to give the bonus, which is desirable.

Please confirm if my understanding is correct.

Regards,
Vikas Chopra

Bonus Eligibility and Calculation

Whether your question is regarding a bonus or in lieu of a bonus? For a salary above Rs. 10,000, there is no statutory claim for a bonus. Regarding ex-gratia/in lieu of a bonus, it is as per your organizational policies.

Abbas.P.S

Bonus Calculation Guidelines

Bonus is payable as per statutory terms limited to ₹3,500 of Basic Salary, i.e., at 20% = ₹8,400 (Maximum). More than that, there is no statutory claim for a bonus. However, you can pay ex gratia in lieu of a bonus; it is as per your organizational policy.

Regards,
Mohan

At the time of my above posting, I did not see your response. The salary ceiling limit for bonus coverage is still Rs. 10,000, and for the calculation of bonus payment, it is Rs. 3,500. Even though there is a proposal for enhancement, it hasn't been enacted yet.

Regards,
Abbas.P.S

Requesting you to search articles on CiteHR before posting your queries. There have been numerous discussions based on the payment of Bonus.

Bonus Calculation Guidelines

1. Bonus is calculated on Basic + DA.
2. The maximum eligible amount for Bonus is ₹3,500 per month.
3. Employees earning more than ₹10,000 (Basic + DA) monthly are not covered under the Bonus Act. Companies can still go ahead and pay them a bonus; it's their personal choice, not a mandate.
4. If one earns ₹2,800 as Basic + DA, then the Bonus will be ₹2,800 per month.

Regards,
Rahul Chhabra

Eligibility Criteria for Bonus Calculation

What are the eligibility criteria for bonus calculation? Kindly provide a brief detail on the number of present days and whether leaves will be included or not, such as ML (Maternity Leave) and disability leave.

Thanks,
Aparna

According to my knowledge, the bonus calculation is based on 8.33% of 3500, which is the minimum percentage according to the law. However, this is not an upper limit for the bonus; it represents the minimum percentage. There is no set limit for the maximum bonus amount.

In my opinion, the eligibility criteria for bonus calculation should be based on the number of present days in a year according to an individual's pay schedule. If an employee is on leave but receives full salary with adjustments for their leaves, we should increase their pay days considering the leave adjustments. Therefore, bonuses should be paid out even for leaves taken.

Thank you.

Sincerely

For example, ₹20,000/- x 12 = ₹240,000/-. No bonus is payable under the Payment of Bonus Act 1965.

Can you tell if someone having a basic salary of ₹20,000 per month, how much amount is applicable for bonus calculation: ₹10,000 or ₹20,000?

For example, ₹20,000 X 12 = ₹240,000
₹240,000 x 8.33% = ₹19,992

The individuals drawing wages (Basic + DA) up to ₹10,000 are only eligible for a bonus. In this case, as the wages are more than ₹10,000, the bonus is not applicable.

I think the question on the bonus was about the calculation method and not about what is allowed as per the Indian system. There are countries where such limits are not imposed by the government. Also, I doubt big companies in India are applying such limits on bonuses.

If you give a one-month bonus, it is 1/12, which means 8.333333%. So, if the basic salary is ₹20,000, then the calculations are ₹20,000 x 12 = ₹240,000 per annum. Bonus ₹240,000 x 8.33333% = ₹19,999, which can be rounded off to ₹20,000. The trick is to use all the decimals of 8.33%!!

Regards,
Abhay Urankar

Eligibility Criteria for Bonus Calculation

Eligible employees are those whose basic salary was less than Rs. 10,000 during the period from April 2009 to March 2010.

Please let me know if you need any further assistance.

As per the Bonus Act, the calculation for the basic is ₹3,500. For employees whose basic is ₹10,000, they are all entitled to a bonus. The minimum bonus percentage is 8.33%, and the maximum is 20%.

Regards,

Dear All,

There seems to be confusion regarding the amendments in the Payment of Bonus Act 1965. Many members have claimed that the amendment bill has been passed, and the new bonus will be 11% (bonus) + 9% (ex-gratia) of Basic+DA, rather than the previous 8.33% + 11.67%.

As per the information that I have, this bill was forwarded by Shri Oscar Fernandes and is still pending. Once it is approved, it will be called the Payment of Bonus Act, 2007.

If any of you have a copy of the passed bill, I request you to kindly share the same.

Regards,
Rahul Chhabra

My company provides 12 CL and 30 PL in a year. I took 12 CL and 14 PL till 31.03.2010 and worked an extra day on 16.5 days. My basic salary is Rs. 9000. Could you please suggest how much bonus I will receive for 2009-2010?

With regards,
Virender Singh Gusain

Dear Virendra, The bonus is calculated based on the payable days. If the leaves you took were utilized from your remaining leaves and were approved, then you are entitled to a bonus for those days. However, if you took leaves and your salary was deducted for those days, then you are not eligible for a bonus on those days.

Please search on citehr for bonus calculation details.

Regards, Rahul Chhabra

Bonus Eligibility and Payment

The bonus is payable to those whose basic salary is up to Rs. 10,000 per month. If someone is earning Rs. 20,000 per month, then the company is not liable to pay a bonus to them. However, if management is willing to pay something, they can offer it as an ex-gratia or any award/reward.

Regards,
Ashok Gupta

You are absolutely correct. You provided the most suitable reply, but in accordance with the amended Act, which is yet to be enforced. According to the current rule, the maximum limit of the bonus is ₹3,500/- and the salary limit is ₹10,000 (basic + DA). For salaries above ₹10,000/-, it is up to the company whether it pays a bonus or not.

Regards

Bonuses are variable as per company rules, and this varies from company to company based on HR/management decisions. One more question: how many times does an employee receive a bonus from a company as per the rules?

The mark-up value of the bonus is ₹3,500/- per month BASIC, and the minimum percentage is 8.33%. That means the total limit of bonus calculation is 3,500 x 12 = 42,000. If an employee gets more than ₹42,000/-, then the bonus amount is calculated on ₹42,000/-. If an employee gets less than ₹42,000/-, then the bonus amount is calculated on gross earnings in a financial year. However, a person who is working less than 30 days is not eligible for a bonus.

Reply to your example: Person received ₹3,500 @ 8.33%.

Thanks & Regards,
Parimal Kishore

Bonus Payment Under the Bonus Act

Under the Bonus Act, bonus payment is statutory for those drawing a salary up to ₹10,000. Accordingly, after arriving at the allocable surplus, there is no possibility of variation from company to company. To provide more payment than stipulated in the Bonus Act or for a salary exceeding ₹10,000, the employer may pay an amount called 'Ex-gratia.' This amount may vary from company to company.

As per the Act, there is only one bonus payment in one financial year. However, there is a maximum time span of 8 months to finalize bonus payment after the completion of the financial year, which is November 30. If an important festival falls before the finalization of the bonus, some employers may pay a provisional bonus, and after finalization, the settlement will be completed.

Regards,
Abbas.P.S

In the above-cited case, Rs. 10,000 will only be considered towards salary for bonus payment.

Regards, Abbas. P. S.