Confused About Bonus and Ex-gratia Calculations? Seeking Clarity on New Bonus Act Amendments

I am working in a group of companies in Kolkata and have some confusion regarding the calculation of Bonus and Ex-gratia.

As of now, I have understood that an employee whose salary (BA+DA) is ₹10,000 or less is eligible for a bonus. However, while calculating the bonus, his BA+DA will be considered as ₹3,500 because, as per the amended Bonus Act, the new limit for payment of bonus is ₹10,000 and the new ceiling for calculation is ₹3,500.

Example 1:
If an employee's gross salary is ₹15,000 where BA (45%) + DA (35%) is ₹8,100, he will get a bonus of ₹3,500*12*8.33% = ₹3,499. For the remaining part of the salary, which is (₹8,100-₹3,500) = ₹4,600, he will receive ex-gratia, equivalent to 1 month's BA+DA.

Example 2:
If an employee's gross salary is ₹18,600 where BA+DA is ₹10,044, he will not receive any bonus but only ex-gratia, which is 1 month's BA+DA.

Questions:

1. Are the above two examples correct?
2. Is my understanding correct for the calculation of the bonus?
3. Is there a specific minimum or maximum limit of the percentage for ex-gratia?
4. Is my understanding correct as per the new amendment of the Bonus Act?

Please help with your valuable advice.

If an employee works for 20 days and receives a basic salary of 2,500 for those working days, how would you calculate the bonus for him?

Dear Sarya, you are absolutely correct in both examples. For your clarification, please note that Ex-gratia is not a statutory liability of an employer but merely a term of service stipulated in the contract of employment.

Regards,
Mangesh Wakodkar
Aurangabad

Bonus Calculation on Actual Earnings

If the total earnings of B+DA are less than $3,500.00 in any particular month, the bonus will be calculated on the actual amount earned (B+DA). A minimum of 30 days of working is the eligibility criteria for the payment of the bonus.

Bonus Calculation as per Statutory Requirement

The simple calculation for a bonus, as per statutory requirement, is that the basic salary plus DA should not exceed Rs. 10,000. This is mandatory. The ex gratia component is not mandatory; it is left to the management's discretion.