How Do I Submit a Bonus Letter to the Labor Department? Seeking Guidance

Dear Seniors, please help me with the process of submitting a letter or covering letter to the labor department regarding the issuance of bonuses to employees of our company. Please reply to me soon.

Thanks and regards,
Shekar Valeru

Submission of Annual Return of Bonus

To,
The Assistant Labour Commissioner,
Labour Office,
Bungalow No.5, Pune Mumbai Road,
Shivaji Nagar, Pune-411005.

Dear Sir,
Please find enclosed herewith a return in Form D for the accounting year 01.04.2012 to 31.03.2013, duly completed in all respects and signed by us. This is for your information and record, please.

Kindly acknowledge the receipt.

Thank you,

Yours faithfully,

For COMPANY NAME
AUTHORIZED SIGN

Enclosure: a/a.

If you are going to give a bonus to your workmen, please enter into a settlement under section 18(1), and a copy shall be forwarded to the Labour Officer.

Regards,
C. Manimaran
Coimbatore

Thank you very much for your reply. I am new to this company and do not have much information about the bonus structure. Could you please address the following doubts:

Eligibility and Criteria for Bonus Allocation

1) Who is eligible for the bonus, and what criteria determine the bonus allocation?

Bonus Amount and Calculation

2) What are the minimum and maximum bonus amounts, and how is the bonus calculated on a monthly basis? For example, if an employee has worked for 5 months, how much bonus can they expect?

Basis for Bonus Calculation

3) Should the bonus be calculated based on the basic salary, gross salary, or CTC? Additionally, what is the salary threshold for bonus eligibility?

Timing of Bonus Distribution

4) When is the appropriate time to distribute bonuses? Is it after the completion of the fiscal year?

Rules and Regulations for Bonus Distribution

5) Are there specific rules governing bonus distribution in the company? For instance, can a company that was established 2 years ago provide bonuses to its employees?

Documentation and Submission Requirements

6) What documentation is required for bonus distribution, and which documents need to be submitted to the labor office along with a covering letter (as provided above)? Also, what is the deadline for submitting these documents to the labor office?

Access to Resources for Knowledge Enhancement

7) Lastly, when can I access soft or hard copies of books related to the generalist profile, such as bonus regulations, PF and PT rules, salary guidelines, labor laws, and salary payslip distribution rules, to enhance my knowledge?

If possible, please respond as soon as possible. I need to address these matters at the office tomorrow.

Thank you in advance.

Regards,
Shekar Valeru
Hyderabad, AP

Bonus Payment Under "THE PAYMENT OF BONUS ACT, 1965"

Bonus payment is governed by "THE PAYMENT OF BONUS ACT, 1965" for the calculation of bonuses. Below are a few important points to consider:

• If your establishment is not 5 years old and the balance sheet shows a loss, then your establishment is not entitled to bonus payment.
• If your establishment's balance sheet shows a profit before 5 years, the establishment is entitled to bonus payment.
• The rate of bonus ranges from 8.33% minimum to 20% maximum.
• Any employee whose Basic + DA is less than 10,000 is eligible.
• Eligibility for Bonus
Every employee shall be entitled to be paid by their employer in an accounting year, a bonus, following the provisions of this Act, provided they have worked in the establishment for not less than 30 working days in that year.
• Bonus return is submitted to the labor department in Form D, and bonus payment records are in Form C.

For more details, you must go through the Act and restart this discussion once.

Regards,
Manish

Dear Manish Ji,

Thanks a lot, clearly understood. One more query: for example, if a company's 3-year balance sheet shows a loss and 2 years show a profit, is it eligible for paying bonuses to employees? Also, in one company, one person is earning 22,000 gross PM, and his basic is 12,000 (60% of the gross), and he worked for 9 months and left. Is he eligible or not? Is anyone with a basic + DA of more than 10,000 not eligible, or if he is not eligible, then is he eligible for anything other than the bonus? Please provide clarification and also, please send me how to do the salary partition like basic, DA, and HRA, etc.

Thanks in advance.

Sheka Valeru