Am I Missing Out on My Diwali Bonus After Resigning? Seeking Advice on Eligibility

I am an employee of PVT Co., and I have been working for the last three years with the same company. I resigned last month, and my last working day is on 3rd October 2011. The company is planning to give a bonus during Diwali, but they have informed me that I am not eligible for it. Can anyone help me determine whether I am really ineligible or eligible for the bonus?

Clarification on Bonus Eligibility Under the Payment of Bonus Act

In your query, you had not mentioned what your basic and other allowances are. As per the provisions of the Bonus Act, if you are earning less than Rs 10,000 (Basic) as salary and have worked for 30 days in an accounting year, you will be entitled to a bonus. The bonus will be calculated on less than or equal to Rs 3,500 per month (sec 12) at a rate of minimum 8.33% (sec.10) and a maximum of 20% (sec.11). The percentage depends on the allocable surplus of the company, but an employer will have to pay a mandatory 8.33% even if they are not making a profit. There is also a provision that for a new company, the act provides a relaxation of 5 years, but if the company earns a profit during the year, then the company will have to pay a bonus for that particular year (sec.16).

I hope I have been able to clarify the position under the Payment of Bonus Act.

Regards,
MG

As per the Bonus Act, any employee who completes 30 days of service at the time of declaring the bonus would be eligible for the bonus. Even a resigned employee would be eligible.

Regards,
Ksk.

An employee who has worked in the establishment for thirty days during the accounting year to which the bonus relates is entitled to receive a bonus. It is incorrect to state that any employee who completes 30 days of service at the time of declaring the bonus would be eligible for the bonus.

For example, if the accounting year is from 1-4-2010 to 31-3-2011 and the establishment declares a bonus for that accounting year on 1-10-2011, then an employee who joined the establishment on 1-8-2011 and is still employed as of 1-10-2011 is not entitled to the bonus as they have not worked for thirty days in the accounting year 1-4-2010 to 31-3-2011. Please refer to Section 8 of the Payment of Bonus Act.

Regards,

Bonus Entitlement and Calculation Updates

With the promulgation of this Ordinance, the salary ceiling has been increased to Rs. 10,000/- per month. The entitlement for the calculation of the bonus will be Rs. 3,500/- per month, effective from 01/04/2006. The current ceiling of Rs. 3,500/- for the bonus was fixed in April 1995. The bonus ceiling had been fixed at Rs. 1,600/- in 1965, which was raised to Rs. 2,500/- in 1985 and Rs. 3,500/- in 1995 by amending section 2 (13) of the Payment of Bonus Act.

Employees employed through contractors on building operations have now been covered under the Payment of Bonus Act.

Though the cover is for employees earning basic and DA up to Rs. 10,000/-, you should restrict their basic and DA to Rs. 3,500/- per month or the actual basic and DA for the month, whichever is lower, for bonus computation.

An employee should be in service for a minimum of 30 days during the previous financial year. Payments should be made before the expiry of 8 months from the start of a financial year, i.e., before the end of November.

The statutory rate of bonus is a minimum of 8.33% on basic and DA for the year. The maximum basic and DA cannot exceed Rs. 42,000/- per annum (Rs. 3,500 x 12) for bonus computation.

All the best

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Dear Sir, My basic salary is under 10,000/-, and I am receiving an HRA of 3,930/- per month along with my salary. My query is about the payment of the bonus. Last year (2010-2011), I attended my office for over 300 days, but not for 365 days, and my bonus amount was 3,021/- for the last year 2010-2011. Please tell me the accurate amount of my bonus for the last (2010-2011) and inform me of what my bonus amount is for the last year. I believe the amount I have mentioned in this message is not the accurate bonus amount for the last year. Please provide clarification on this query.

Thanks & regards,
Amit Jain
[Phone Number Removed For Privacy Reasons]
Haryana

It doesn't matter how many days you worked; how many months you worked is important. Before 31st March 2011, if you earned more than ₹3,500 per month, then it will be calculated on this amount. Either it will be 20% or 8.33% of ₹3,500 per month.

Regards

Bonus need not be either 8.33% or 20%, as stated by you in your last post. It can be anything from 8.33% to 20%. Please go through the provisions of the Payment of Bonus Act.

With regards,

Understanding Bonus Eligibility Under the Payment of Bonus Act

Wages for the purposes of bonus under the Payment of Bonus Act comprise of basic pay and dearness allowance only. Other components of wages are not considered when calculating the bonus. If the basic pay plus dearness allowance of an employee exceeds Rs. 10,000 per month, the employee is not eligible to receive a bonus under the Payment of Bonus Act.

Regards,

Of course, you are eligible for the bonus if you come under that ₹10,000 clause. Even I claimed my bonus after a year, and I received it.