Understanding Bonus Payments: Do Companies Have to Pay Bonuses Without Profits?

Queries Regarding Payment of Bonuses

I have certain queries regarding the payment of bonuses:

• Is it mandatory to pay bonuses to employees even when the company makes no profit?

• What is the eligibility of employees to receive a bonus under the act?

• When should the bonus be paid to employees?

My company is a private limited company with a workforce of 90+ employees located in Tamil Nadu. Kindly help me understand.

Thanks.

Even though the company doesn't make a profit, 8.33% is to be paid towards a bonus. If the salary is Rs. 10,000/- or below, the bonus is eligible for the employee. The bonus has to be paid within 8 months from the concerned accounting year (Accounting year is April - March, hence the last date to pay the bonus is November 30).

Regards,
Abbas.P.S

Dear Abbasiti, thank you very much for your response. Kindly clarify for me: if an employee is drawing $25,000 per month, is he not eligible for a bonus, or is there any salary threshold up to which he is eligible for a bonus?

Apart from what Abbas has replied, it is not mandatory to pay a bonus under the Act if the pay is more than Rs. 10,000 per month. The company is at liberty to pay Ex Gratia in lieu of a bonus if it desires to do so.

As a rule of thumb, do we need to pay one month's salary to the employee as a bonus? For example, if an employee is earning $8500 per month, do we need to pay him $8500 as a bonus? Kindly clarify.