Payment Of Bonus - Bonus Payment [Thread 363696]

Hello jayantaHR,

Sorry, I have NOT understood your post.

We all know that Bonus as a profit sharing mechanism provides a formula in the Payment of Bonus Act 1965.

The formula provides the percentage of Bonus that should be paid to all eligible employees (past or present is NOT the question when the person has qualified under the act to receive Bonus.

The law has provided for a MINIMUM bonus @ 8.33% of the bonusable salary/wage and it has also provided 20% as MAXIMUM bonus under the act.

The law has further provided a mechanism of "set on" and "set off" so that eligible employees will generally get maximim possible bonus.

I am afraid your understanding that "there is no such type of rules to provide bonus of maximum percentage" is NOT supported by law which does state that a maximum of 20% bonus could be paid if the calculation as provided under the act (of available and allocable surplus) shows such a figure. But certainly no employer can pay as bonus under the act a sum exceeding 20% of the bonusable salary/wage as Bonus. There are more stipulations under the act but more about these later as the occassion arises.

May be you would like revisit the Payment of Bonus Act 1965 provisions to satisfy yourself!!

Regards

samvedan

September 18, 2011

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As per Payment of Bonus Act, minimum bonus= 8.33% and maximum bonus= 20%. If all the eligible employees (in terms of salary ceiling and min 30 days of employement criteria) are paid bonus within the upper and lower limt, I don't think its illegal to pay different bonus to current and ex-employees.
Regards
Peonka

Payment of bonus must be the same for existing and left empoyees, there is no doubt. However, there is a mechanism to have the differentiation.
1. 8.33% (or any other higher percentage) must be the declared bonus for all people (who qualify for receiving bonus)
2. Management may show distinction in paying ex-gratia to the existing people which need not be extended to the resigned employees. Ex-gratia payment is the discretion of management. There is no rule that compels the management to make it uniform for resigned and existing employees.
3. This way you would fulfill the requirement of law by maintaining same percentage of bonus across the board.
Balaji