Is It True That Salaries Over 10k Don't Get Bonuses? Seeking Clarity on Labor Rules

Respected seniors, by the comments of my boss, there is no rule for a bonus if your salary is higher than 10 thousand. This is the circular of the labor department. I want to know what the fact is.

This is already given in the Payment of Bonus Act. If your basic + DA is more than 10k, then the Bonus Act does not apply to you. So, your bonus is absolutely right.

Regards,

Payment of Bonus Act, 1965: Eligibility and Provisions

Every factory where 10 or more persons are employed with the aid of power, or an establishment in which 20 or more persons are employed without the aid of power on any day during an accounting year, is subject to the provisions of the Payment of Bonus Act, 1965.

Employees drawing wages up to Rs. 10,000.00 per month or less are eligible to receive a bonus as per the rules outlined in the Payment of Bonus Act, 1965. For calculation purposes, a maximum of Rs. 3,500.00 per month will be considered, even if an employee is drawing up to Rs. 10,000 per month (Section 12).

Regards,
DK Sharma
Executive

I have also been dealing with the same situation at a senior level. Yes, it is true that if your basic pay plus DA exceeds more than 10k, then you are not eligible for the bonus. However, it depends on your boss how to handle it.

Regards,
Permeshwer Nath

Yes, as per the Bonus Act, a worker whose salary is up to 10,000 is eligible for a bonus. A company can give a bonus even if you have a salary higher than 10,000, but it depends on the company's customary bonus policy.

Thanks and regards,

Swati Singh

C.S

Please ask your boss for a performance bonus; this is different from a statutory bonus.

Yes, Mr. Viraj is very right. If an employee's salary is more than $10,000, then a performance bonus is applicable to those employees, which is generally given at the end of the financial year.

Bonus Eligibility Under the Payment of Bonus Act 1965

I would like to inform you that as per the Payment of Bonus Act 1965, any employee whose basic salary is up to Rs. 10,000 will be eligible for a bonus. In the case of workers, we need to calculate the wages as Basic + D.A. up to Rs. 10,000 for bonus eligibility. Employees whose basic salary exceeds Rs. 10,000 will not be entitled to receive a bonus as per the Payment of Bonus Act 1965.

If an employer chooses to provide a bonus to employees with a basic salary above Rs. 10,000, it will be considered a performance bonus and not a statutory bonus under the Payment of Bonus Act 1965.

Thanks & Regards,
Sunil Sharma
V3S Group

Respected seniors, thank you for your valuable time and insightful comments. It appears that I had been dreaming of a bonus, and although that dream may have been shattered, not all my aspirations have been destroyed. The bonus I anticipated was a recognition of the hard work I put in during the last financial year, and I accept that.

I will consider approaching my boss to discuss the possibility of a performance-based reward. If he is unwilling to consider it, I will not hesitate to resign promptly. The reasoning behind this decision is that my current salary surpasses 10k, indicating my worth to the organization.

If my performance is indeed commendable, then why should the provisions of labor laws or bonus regulations come into play?

Thank you for your attention.

Best regards,
[Your Name]

Clarification on DA and Bonus Calculation

Please clarify my doubt: why does DA have to be added to the Basic Salary when calculating the Bonus, especially when there is a margin of Rs. 10,000 in Basic? I am waiting for your reply, please.

Thanks,
Nirmala

Minimum bonus is 8.33% and the maximum is 20%. Performance bonus is an incentive designed by the respective management. As per my understanding, there is no fixed pattern for it; it can vary from person to person, and the slab to slab will vary.

Nimesh Paul
Stringz - HR Consulting, Staffing, Recruiting in Kerala