Want To Know About The Payment Of Bonus Or Payment Of Performance Pay In IT Companies

Dear All,

It's very urgent... Please help me out. Can anyone assist me with deciding between the payment of a bonus or payment of performance pay in other companies? I am new to this process and need some guidelines.

Regards,
Archana R.
HR Executive

Dear Archana,

First of all, let me welcome you to this knowledge-sharing forum. Here, you can seek guidance as well as guide others.

You have to follow the Payment of Bonus Act for deciding about the Bonus Payment. The eligibility is one must work for 30 working days in the financial year, and their salary should not be more than 10,000/-. The maximum salary limit for calculating the Bonus is Rs. 3,500/-, and the company must pay a minimum of 8.33% of Bonus and a maximum of 20%. The bonus must invariably be paid whether your company earned a profit or not, or if allocable surplus is available or not.

The performance pay will be given by the company according to the profit earned by the company. It will be fixed for the employee based on their performance and the ratings given by the immediate superior. The moderation committee will finalize the ratings altogether and decide on fixing the performance pay for each individual staff member. For this pay, there are no specific criteria available, but the company will have its own policy.

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Hi Bhaskar,

I am happy to be here to meet you guys. Apart from the explanation given to Archana, I just want to know if there is any specific experience required to be eligible for a bonus.

For example: If an employee has newly joined the organization three months before the bonus period, are they eligible to receive it?

Thank you.

Dear Bhaskar,

Greetings!

According to the Payment of Bonus Act - 1965, every employee of an establishment covered under the Act is entitled to a bonus from his employer in an accounting year provided he has worked in that establishment for not less than 30 working days in the year on a salary less than Rs. 10,000 per month (Section 2(13) read with Section 8).

If you want, kindly refer to the attachment.

Regards,
Archana R.

Dear Archana,

I have also mentioned the same in my reply to that query. However, for calculating the bonus, it must be calculated for Rs. 3,500. You do not need to show the amount Rs. 3,500 in case the employee earns more than Rs. 3,500 but less than Rs. 10,000.

Dear Archana
If you are planning to move towards “Variable Performance Pay” then please ensure that you pay Variable Performance Pay as per your company policy.
In case you come across with such a case that performance was zero and you are not paying any bonus to employee. In this case please see to it that person is not covered under Bonus Act, otherwise minimum bonus you have to pay as per Bonus Act.
Bonus Act supersedes company Variable Performance Pay Policy.
BrainLight HR Solutions

Dear Sir,

I left the company on June 14, 2012. Am I eligible for a Diwali bonus for the year 2012 (November 2012)? I served in that company from August 1999 to June 14, 2012. I have not received my PF until now. Could you please explain this to me?

Thank you,
J. Venkataraman
venkat74ji@yahoo.co.in

Dear Mr. Venkataraman,

This November, you are eligible for the full-year bonus as the bonus paid during this November is for the period from 01/4/2011 to 31/3/2012. For the following year, you will be eligible for only 2 months and 14 days of the bonus for the period from 01/4/2012 to 14/6/2012. It will be calculated on a pro-rata basis.

Whether any undisciplined contractual labor is eligible for a bonus under the Bonus Act?

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In accordance with the Bonus Act, the eligibility criteria for receiving a bonus may vary depending on the terms of the contract and the specific circumstances of the laborer. It is important to consider the provisions outlined in the Bonus Act to determine whether undisciplined contractual laborers are entitled to receive a bonus. Additionally, it is advisable to consult with legal experts or HR professionals to ensure compliance with relevant regulations and to address any concerns regarding bonus eligibility for this category of laborers.

Case law: Is any indisciplined contractual labor eligible for a bonus under the Bonus Act of 1965?

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In the context of the Bonus Act of 1965, a question arises regarding the eligibility of indisciplined contractual labor to receive a bonus. It is essential to consider relevant case law and precedents to determine the applicability of bonuses to such employees. By examining past legal decisions and interpretations, clarity can be achieved on the entitlement of bonuses for indisciplined contractual labor under the provisions of the Bonus Act.