How Do I Calculate Bonuses and Determine Salaries in a Glass Manufacturing Company?

I am working with a manufacturing company of glass as an HR manager. Please advise me on how to calculate the bonus in a manufacturing company, what the basic salary for this division is, what the criteria for the bonus are, and how it should be calculated according to the current norms.

Looking forward to hearing from you soon.

Warm Regards,
Kavita Pal

As per the Bonus Act, wages should be Rs. 3500 per month. The percentage ranges from 8.33% to 20%, depending upon the profit of the company.

Hence, 3500 x 8.33% = Rs. 292 per month or Rs. 3504 per annum.

If you calculate for the maximum percentage, then 3500 x 20% = Rs. 700 per month or Rs. 8400 per annum.

First of all, it is essential to calculate the bonus as per Schedule II of the Payment of Bonus Act (non-banking organization) to determine the available surplus, allocable surplus, set on, and set off. Only then is it possible to arrive at the quantum of the bonus, as mentioned by Vignesh Kumar. Please consult the Accounts department, which will take care of this. It is always better to audit the bonus account every year to ensure compliance with the Payment of Bonus Act; otherwise, it may become a customary bonus.

Regards,
S. K. Bandyopadhyay
USD HR Solutions

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1. For the calculation of the bonus, the salary/wage of all employees whose monthly salary (Basic + DA) exceeds Rs. 3500 but is less than Rs. 10,000 shall be considered as Rs. 3500 only.

2. The computation of the bonus is to be worked out as per Schedule I to IV of the Act.

Method for Calculation of Annual Bonus

Calculate the Available Surplus.
Available Surplus = Gross Profit – (deduct) the following:
- Depreciation admissible u/s 32 of the Income Tax Act
- Development allowance

Calculation of Bonus

- Minimum Bonus: Rs. 3500 x 8.33% = Rs. 3504 per annum
- Maximum Bonus: Rs. 3500 x 20% = Rs. 8400 per annum

Regards

Hi Sibabrata, can you please tell me the amount for the bonus to be calculated for the employees whose salary exceeds Rs 10,000?

Regards,
Aishwarya

In response to your query, I would like to submit that if an employee is drawing a salary of more than Rs 10,000 per month (assuming Basic & DA), he does not fall within the purview of the Bonus Act. Hence, he is not entitled to receive any bonus under the Act.

However, some good employers, in order to motivate their employees, consider paying ex-gratia payment at their discretion instead of a bonus.

Regards