Designing Salary Structures: How to Allocate Loyalty, Festival, and Performance Bonuses?

Hi all, I have to design the salary structure of employees and need to add the following variables:

1. Loyalty Bonus
2. Festival Bonus, e.g., Diwali Bonus
3. Performance Bonus

Salary Structure Design

I want to know specifically how much each bonus contributes as a percentage of the basic salary for the Loyalty Bonus, Festival Bonus, and Performance Bonus. Kindly assist me in designing the salary structure with the mentioned variables above.

Regards,

Hi, there are no specific rules or percentages to assign to those components. However, before designing, it's important to note that all the components you mentioned are fully taxable. As per the Bonus Act, a minimum of 8% and a maximum of 20% can be provided.

Regards,

Yes, for bonus calculation purposes, you may refer to section 2(21) of the Payment of Bonus Act, 1965 for the definition of salary or wage. When there is no DA, then the bonus is to be calculated on the basic salary only.