Understanding the Bonus Act: Can Leave Days Affect Your Bonus Calculation?

Dear all seniors, please clarify doubts on the Bonus Act.

1. Leave Days and Bonus Computation

If an employee is on leave, for example, maternity, casual leave, or earned leave, can we count leave days as working days for the computation of the bonus?

2. Bonus Calculation Days

Is the bonus calculated based on 26 days or 30/31 days?

3. Bonus Limit Calculation

If the bonus limit is Rs. 10,000 (Basic+DA), how is the maximum bonus payment limit of Rs. 42,000 calculated? What does it mean that 3500*12=42000? How did this value of 3500 come about?

4. Bonus Entitlement for New Employees

Suppose an employee joined in May 2013, are they entitled to a bonus in the same year 2013 or the following year, 2014? Some organizations calculate the total working days from one financial year to another. For example, the number of days is calculated from April 1st, 2012, to March 31, 2013, and the bonus is paid based on the working days in 2013. But if an employee joins after March 2013, are they entitled to a bonus in the same year? This is a significant doubt. Please clarify.

Thanks in advance. Early replies are appreciated.

1. Yes, since these are paid leaves (salary/wages are payable for these absences), one has to include leave days and rest days (Sundays) for bonus calculations.

2. Bonus is calculated for 30/31 days.

3. Whatever the gross salary may be, if anyone's basic + DA is below Rs. 10,000/-, they are eligible for a bonus. Also, if anyone's basic + DA is more than Rs. 3,500/-, say Rs. 6,000/-, the company has to make calculations considering a minimum of Rs. 3,500/-. If basic + DA is less than Rs. 3,500, say Rs. 3,000, then the calculation will be on Rs. 3,000/-.

4. The minimum bonus payable is 8.33% of the monthly basic + DA, multiplied by the number of months. For example, if basic + DA is Rs. 6,000, and the person has worked for 12 months in the previous accounting year, then the minimum bonus will be 8.33% of Rs. 3,500 x 12 = Rs. 3,500/-. In short, one basic + DA is a minimum bonus.

5. It is management's decision to announce more bonuses, either by increasing the percentage, say 12 percent, or increasing the limit of basic + DA. For example, 8.33% on Rs. 5,000 x 12, etc.

6. An employee who joined in May 2013 is not eligible for a bonus since the bonus is related to the previous year's profitability and previous year's basic + DA. Considering the festive mood of employees, management gives some payments to new joiners also, but it is called ex-gratia and not a bonus. Even if any employee joins on 1st March 2013, they should be paid a bonus for one month.

Hope I have clarified most of the points. Experts can correct me if any discrepancies are noticed.