Is My Friend Entitled to a Bonus After Resigning from a Job with Consolidated Pay?

One of my friends was working in a company for a consolidated pay of 15,000 per month. His salary was not bifurcated as Basic, D.A., HRA, etc. The management did this only to escape from PF & ESI. Now he has resigned. Is he eligible for a bonus from his employer? Please share your opinions.

Regards,
Hareesh HRM

Bonus Eligibility and PF Considerations

The bifurcation for PF has been done, which needs to be considered for the bonus-eligible salary as well. If the salary falls below 10,000/- per month, then the individual is eligible for the bonus when payable for 2012-13.

Regards

As his salary is not bifurcated, even though his monthly salary is Rs. 15,000, according to the law, he is not entitled to receive a bonus.

He is not entitled to a bonus as per the law. Employees with a salary of less than Rs. 10,000 are entitled to a bonus, not those earning over Rs. 10,000.

Thank you.

As per the law, his gross salary is more than ₹10,000/-, so he is not eligible for a bonus.

Regards,
Mahesh

In accordance with the Bonus Act of 1965, those whose Basic + D.A. is less than or equal to Rs. 10,000 per month will not be eligible for a bonus. Since his salary has not been reduced and exceeds Rs. 10,000 per month, no bonus would be expected from his employer.

Thank you.

If the company pays a consolidated salary to avoid PF and ESI, how will they calculate gratuity? Kindly enlighten me on this.

Regards,
K. Lakshmi Devi

If the salary/paycheck is consolidated, then the gratuity will be counted on the gross pay only, as there is no Basic to be calculated. An employee who completes 5 years of continuous service in the establishment is entitled to Gratuity as per the Gratuity Act of 1972. Gratuity can be calculated as 15 days of salary entitlement for each completed year of service, which is calculated as 15/26 X Basic=DA X No. of years of service. This means only 26 days in a month are calculated for gratuity.

Thank you.

Salary Breakdown and Bonus Eligibility

Where no breakdown of salary is provided, the entire salary is considered as basic. All computations will be based on that amount.

Regards

Clarification on Bonus Act Amendments

According to the latest amendments of the Bonus Act 1965, the minimum bonus percentage has been raised from 8.33% to 11%, and the maximum to 20%. The salary limit has increased from ₹10,000 to ₹15,000, and the ceiling amount has been raised from ₹3,500 to ₹5,000. All these changes are as per the new bill. However, it is unclear whether the bill has been amended into the act or if it is still pending approval. Could the seniors provide a clear clarification on this matter? Thank you in advance.

Regards,
MADHAVI

He is not entitled to a bonus. As per the law, employees with a salary of up to Rs. 10,000 are entitled to a bonus, not those above Rs. 10,000.

Bonus Calculation

The salary for the calculation of the bonus, as per the query mentioned above, is to take the amount from the paid PF, as stated in the query, which can be ≤ Rs. 10,000, not Rs. 15,000.

Last drawn monthly wages will be taken into consideration for calculation of gratuity.

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