Is Bonus Considered Part of Wages Under the Payment of Wages Act, 1936? What’s the Current Wage Ceiling?

Please, can anybody kindly apprise whether the bonus is included in the definition of wages under the Payment of Wages Act, 1936? Also, what is the wage ceiling at present?

Thanks,

Richa

Bonus and Wage Calculation under the Payment of Bonus Act

Bonus is not part of wages under any Act. Under the Payment of Bonus Act, an employee whose salary exceeds Rs. 10,000 is not entitled to get a bonus. At the same time, the bonus of all employees who receive a salary above Rs. 3,500 will be calculated as if their salaries were Rs. 3,500. This means that even though the wage ceiling for the bonus is Rs. 10,000, the calculation will be based on a maximum salary of Rs. 3,500 only. Salary for this purpose will include Basic salary and Dearness Allowance only.

Please note that an amendment is likely to take place in the Payment of Bonus Act very soon.

Regards,
Madhu.T.K

Welcome to CiteHR. This is to inform you that at present, the wage ceiling under the Payment of Wages Act, 1936, is Rs. 10,000/- per month.

Regards,
R.N. Khola

Minimum Bonus Update

The minimum bonus as per the new rule is 11% instead of 8.33%. I am enclosing the circular for your ready reference.

Thanks,
Arun

Can we pay bonuses on a monthly basis? If so, which date should we show in forms D & C?

Regards,
Himanshu

You can pay bonuses in installments, but the entire bonus amount should be paid within eight months of the closing of the financial year. Therefore, the payment of bonuses in monthly installments is not encouraged. Similarly, if you pay it monthly, the amount will be considered as part of wages for deciding the contribution towards ESI. Remember that a bonus (statutory bonus) is a deferred wage.

Eligibility for Bonus

Please confirm if the minimum days of work required to be eligible for the bonus are 30 (as I understand) or 20 days as you posted.

Regards,
Madhu.T.K

Latest Amendment Outcome

From the latest amendment outcome, it is as follows:

• The wage ceiling for the present bonus entitlement is Rs. 15,000/- per month.

• The percentage of the minimum bonus has increased from 8.33% to 11%.

• The maximum wage ceiling to be calculated is Rs. 5,000/- per month.

• Any worker must have worked for a continuous service of a minimum of 30 days in a year.