Ordinance Impact on Bonus Calculation
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.
Those employed through a contractor on building operations have now been covered under the Payment of Bonus Act.
Although 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 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 the 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 year (3500 x 12) for bonus computation.
Salary above Rs. 3,500 is not considered for the calculation of the bonus [section 12]. An employee drawing a salary/wage exceeding Rs. 10,000 is not entitled to any bonus under the Act.
For more details, see the thread:
https://www.citehr.com/366684-eligib...get-bonus.html
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