Understanding Bonus Eligibility: How Long Before Employers Must Pay?

I would like to know after how many years an employer is liable to pay a bonus.

Thank you.

There is no specific rule regarding the compulsory payment of bonuses at a particular time. It varies from company to company as to when or to which employee they choose to give it.

There is no specific rule regarding compulsory bonuses being payable at a particular time. It varies from company to company as to when or to which employee they choose to give it.

Please refer to section 16 of the Payment of Bonus Act, 1965 for your query.

R.N. Khola
www.skylarkassociates.com/

As per the act, it is not compulsory to pay a bonus for up to five years from the starting year of the company if there is no allocable surplus amount.

Regards

Employer's Obligation to Pay Bonus

An employer is liable to pay a bonus only after 5 years of its establishment. After the completion of this period, even if there is no allocable surplus, the employer must pay the employees the minimum bonus.

Regards,
Ranjit Kumar
Sr. Officer (HR & Admin)

First of all, decide whether the Payment of Bonus Act is applicable to you or not. The Act has a wage ceiling, and accordingly, it needs to be paid. Furthermore, as some colleagues suggested, if it is a new company, it need not pay a bonus until the completion of 5 years, unless it earns a profit in those years.

Regards,
S N Sitaram

The employee is obligated to pay the Bonus after a period of 5 years from the year in which he sets up his establishment or factory. He has to pay the Bonus at a rate depending upon the allocable surplus, subject to a maximum of 20%. Even in the absence of allocable surplus, he must pay the Minimum Bonus, which is currently 8.33%. He is required to pay the Bonus even before 5 years if he earns profits and has allocable surplus.

Regards,
D. Phani Kumar
DGM-HR, VASAVADATTA CEMENT.

As per my understanding, the government has revised the minimum bonus payment from 8.33% to 11%.

Regards,
Haris
Human Resources

As per my understanding, the government has revised the minimum bonus pay from 8.33% to 11%.

Regards,
Haris
Human Resources

As per the Bonus Act, the minimum bonus is still 8.33%. There has been no amendment passed by the Parliament up to this point.

Regards,
Abbas.P.S

Please go through the Payment of Bonus Act; it can help you solve all your problems.

Regards,
Manish S. Joshi

Thank you for your reply regarding the bonus. I have a follow-up question: Is it required or mandatory to give the bonus every year once it has been started?

One more query: When we refer to five years, does it mean five years after the company's production has started? In other words, if there is no production within the first five years, what happens?

I would appreciate it if you could please clarify this for me.

Regards,
Murali

Once the bonus is paid, it is mandatory at 8.33% for all eligible workmen (drawing a gross salary of less than 10K). If production does not begin, then even after a 5-year incubation period, it becomes payable. Please check the act for the exact number of years, whether it is 5 or 6 years.

Thanks,
Manish S Joshi

Bonus is to be paid every year once it is started. Under Section 16 (1A), the employer has to pay the bonus to its employees within five years if he gets any profit in the particular financial year. That is, if he sells any goods produced or manufactured by him or renders services and gets profits in a particular year, he has to pay the bonus in the next financial year.

Section 16(1B): After five years, he has to pay the bonus as per Section 15 of the Act, i.e., as per Set on and Set off of Allocable Surplus.

Hope I have clarified your doubt.

Regards,
D. Phani Kumar
DGM- HR
VASAVADATTA CEMENT