Understanding the 2016 Bonus Act: Am I Eligible for a Bonus with My Current Salary?

We are working in a private company in Agra. Referring to the latest amendment in the Bonus Act, which was enacted in January 2016, I would like to inquire about the following:

1. What are the new criteria for bonus distribution? Currently, my basic salary is Rs. 10,500.00. Will I be eligible for a bonus under this new act?

2. I joined this organization on February 3, 2014, and in my appointment letter, I agreed to a condition stating that "you will not be entitled to a bonus." With the new bonus act in place, are we now eligible for a bonus? If so, from what time should I expect to receive the bonus - from the date of joining or later?

3. According to this act, until when should the employer pay off pending bonuses to their employees?

Thank you.

Dear Shailendra,

If your gross salary exceeds 21000 PM, then you are not entitled to a bonus. Since you have already signed the appointment advice stating that you are not entitled to a bonus, why are you so worried? Your HR person/company must have a strong argument to show that you are not covered by the Payment of Bonus Act. However, if you still want to, please provide your salary slip details.

Hi,

For the 2014-15 retrospective stay in the high court and the period of 2015-16, you are eligible for the bonus.

Regards,
Kotresha R

The new bonus act provides that all employees with wages of up to ₹21,000 will be eligible for a bonus. So, you are eligible for a bonus. A right under an act cannot be contracted out, so the fact that you signed a letter stating you are not eligible for a bonus is immaterial. The money is payable within 8 months from the end of the financial year.

However, the bonus will be based on the ceiling of ₹7000 or the minimum wages applicable, whichever is higher.

You are definitely entitled to a bonus. Merely signing any agreement or including any clause in the Appointment Letter can't override the law. There are certain laws that must be complied with by the company under adequate regulations.

The Payment of Bonus Act

The Payment of Bonus Act is a compulsory statutory obligation. The company is bound to pay a bonus if they have 10 or more employees. The wage ceiling for the bonus is Rs. 21,000 per month. A bonus should be paid at a rate of 8.33% of the minimum wages or Rs. 7,000 (whichever is higher).

Mentioning such clauses in the Appointment Letter is not only unethical but also against the law. I suggest you discuss this matter with your HR. You will definitely receive the bonus.

Regards

Dear Shri Shailendraji,

When an Act/Law of the country prescribes certain rules, it is for every company/HRD to comply and implement it sincerely. Putting any condition contrary to the Act is wrong. The HRD must convince the management about statutory compliance. Why disrespect the laws of the land? It is a welfare act and unethical to deny small money/benefit to the employees. The aggrieved can contest and get the benefit.

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Dear Sir,

Thank you for your email.

With reference to your email, if we resign today, should I claim for two years of bonus (joining date: 3rd Feb 2014) or one year of bonus? Also, could you provide us with the government order copy for the issuance of this new bonus amendment?

I am awaiting your reply.

Thanks & Regards,
Shailendra

You are eligible to receive a bonus. Your contract of service, particularly the condition relating to your eligibility to receive a bonus, is contrary to Section 34 of the Payment of Bonus Act, 1965, which will prevail over your contract of service.

Thanks,
Samir Kr. Bhattacharya
HR & IR Consultant

Dear Sir,

Thank you for all your replies. As I have mentioned earlier, my joining date is the 3rd of February 2014. Am I entitled to receive a bonus for the year 2014 as well? Please update.

Thank you,
Shailendra

You will be eligible for a bonus for the year ending March 2016.

The retrospective amendment has been put on hold by the courts.

Dear Mr. Shailendra,

As stated by fellow members, you will be entitled to a bonus. Bonuses are usually paid according to the financial year, so you will be paid for the following periods:

- 03.02.2014 to 31.03.14 (As per the previous rule)
- 01.04.2014 to 31.03.15 (As per the revised rule)
- 01.04.2015 to 31.03.16 (As per the revised rule)
- 01.04.2016 to the current period (Last working day) - If you worked, as applicable.

Please find attached the latest Bonus Notification.

Dear All,

All of you have advised that Mr. Shailendra is eligible for a bonus only upon clarifying that his basic salary is around Rs 10K. Since he has not provided information on his other salary components, how can we determine if he will qualify for the bonus?

Thank you.

Dear Mr. Banerjee,

As per my understanding, please correct me if I am wrong. The higher minimum wage is applicable only for scheduled employment, i.e., the sector that operates on seasonal employment. However, for the organized sector, the bonus calculation has to be based on ₹7000.

V S Chauhan
9871897789

Mr. Chauhan,
The concept of minimum wages is not limited to seasonal employment only. The scheduled employment are not necessarily seasonal.
So long as the employment is listed under the latest minimum wages schedule, the bonus need to be paid on minimum wages. Today, there are very few items that are excluded from the minimum wages list. The residue will close that is there in most of the notifications takes care of…

Dear All,

In this case, I wanted to add that the company said that the Statutory bonus will be part of your CTC. Is it ethical? Also, I wanted to know if the limit is based on the Gross salary or the basic salary?

Thank you.