Understanding Minimum Bonus Payments: How Does It Affect Young Employees?

Payment of Minimum Bonus

Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 percent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year:

Provided that if an employee has not reached fifteen years of age at the beginning of the accounting year, the provision of this section shall have effect in relation to such employee as if for the words "one hundred rupees," the words "sixty rupees" were substituted.

We pay a 20% bonus with a calculation ceiling of Rs. 3500, which amounts to around Rs. 8400. Additionally, this is as per the settlement in force. Now, the Union has raised their demand to withdraw the ceiling and pay a 20% bonus on actual wages. Is their demand for a 20% bonus without a ceiling legally acceptable?

Regards,
RR Sawant

Employee Wage Ceiling for Bonus Calculation

Employee drawing wages up to Rs. 3500 per month or less. For calculation purposes, Rs. 2500 per month maximum will be taken even if an employee is drawing up to Rs. 3500 per month as per Section 12. Note that the proposal to enhance the existing ceiling of Rs. 3500 is under active consideration by the government.