How Do You Calculate Employee Bonuses and Determine Eligibility Periods? Seeking Expert Advice

I would like to know how to calculate the bonus for employees and the periodicity, i.e., from which month of the previous year to which month of this year an employee will be eligible for a bonus, say a minimum of 8.33%. Additional components can also be considered based on individual performance.

The main doubt is that since the bonus chapter typically opens during the event of Diwali, which occurs in the month of October or November every year, whereas the financial year runs from April to March. Tax factors also need to be properly considered.

I request expert help from you.

Thank you in anticipation.

V.G. Kalyana Raman
Manager - HR
+91 98403 22799

Dear Mr. Raman,

Recently, an ordinance, The Payment of Bonus (Amendment) Ordinance, was promulgated by the President. All those employees drawing Basic + DA up to Rs 10,000 per month are eligible to get a bonus. For the calculation of the bonus, the maximum Basic+DA to be considered is Rs. 3,500 per month. If you calculate the minimum bonus at 8.33% of (Basic + DA) for the complete year, it will amount to one month's (Basic+DA). In short, the minimum bonus to be paid for the year is one month (basic+da), subject to a maximum of Rs. 3,500.

As for the period, it is usually taken as the financial year in most cases. However, some companies also consider the period up until the month of Diwali when calculating bonuses.

Amit Goyal
9811558950

All those employees drawing Basic + DA up to Rs 10,000 per month are eligible to get a bonus. For the calculation of the bonus, the maximum Basic + DA to be considered is Rs. 3,500 per month. I'm confused by these two statements. Please clarify.

All those drawing Basic + DA up to 10000/- per month are eligible for the bonus, but they will receive a maximum of Rs. 3500/- only due to the restriction on Basic + DA of 3500/-.