Bonus Policy - New Policy

In our Organization Management has decided to frame a new policy where there would be a deduction from monthly salary(Gross monthly salary/ 12) and this entire accumulated amount would be paid as bonus at the end of the year. Can there be any policy like this?? Is this can be termed as Bonus?? Need your suggestions

Dear,
First of all, this can not be call as bonus (Statutory Bonus, which is under the Bonus act.), as bonus is paid on profite & Loss of the company & which need to pay minimum amount as mentioned in said act.
Secondly,deducting the bonus amount from gross on monthly basis & repaying the same on yearly, it is unauthorized deduction, cheatting / lead as misinterpreted the employee by showing as bonus, as well as unlawfull.
Regards,
Tushar Swar

Strictly speaking, as per law, if an establishment do incur, loss, even at that point of time also
employer is liable to declare minimum bonus and disburse bonus amount to all employees, who
have worked for atleast 30 days.
If the company reap profit, management can declare maximum bonus or at a percentage
at the discretion of management.. Bonus can not be paid as accumulated amount of money
which is deducted monthly from the salaries of employees.
Please go through Payment of Bonus Act and highlight relevant portions to your company
management.
Thanks
R K Nair

Dear Trishna,
When you raise a query,you need to mentioned all the particulars of the organisation including the location, the nature of work perform, no. of persons employed including contract labour, casual etc.and many more.Your query is about the Payment of Bonus Act,1965.You need to answer the following facts before a proper clarification is given to your query.
(i) Whether your organisation has twenty no. of persons employed ?
(ii) Whether you organisation is banking or non-banking company ?
(iii) Whether Section 16 of the Payment of Bonus Act,1965 has application in your case ?
(iv) Whether all the employees are employed on a salary less tha Rs 10000/-?
I agree with the advice of Sh R K Nair that you go through Payment of Bonus Act thorougly. I am sure many of your doubts will be cleared.
BS Kalsi
Member since Aug 2011