Is an Employee Eligible for a Bonus After Just 41 Days of Work? Seeking Advice

Dear Seniors,

One of the employees has only worked for 41 days in the financial year 2015-16. After working for 41 days, including weekly offs, he resigned. Please suggest whether he is eligible for a 1-month bonus, a 2-month bonus, or the full amount of 7000/-.

Regards,
Anil Jha

Please find the extract of the act. Follow the same.
Section 8 in The Payment of Bonus Act, 1965
8. Eligibility for bonus.—Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.

Dear Anil,

As per the provisions of the Payment of Bonus Act, he is entitled to a bonus based on the number of working days in a particular financial year. However, considering his earnings are less than 21000 PM, he will be paid a bonus pro rata at 7000 PM for the specific days only.

Thanks

Dear Anil,

As per Section 8 of the Bonus Act, if an employee has worked for 30 working days, they can be eligible for a bonus in that year. Out of 41 days, you can count the number of working days, and if it is 30 or more, then the employee is eligible for a bonus. You can then pay them a bonus based on their earnings.

Thank you.

Dear All,

The employee salary is as follows:

- 16000 basic
- 2000 Conveyance allowances, total 18000/- PM

However, our state minimum wage is 7980/-. As the employee has worked only 41 days, please tell me how the bonus will be calculated in this situation.

Bonus Calculation for Partial Employment

Please note, if the basic salary is Rs. 16,000/- per month, the bonus will be calculated as follows:

Suppose for the 1st full month, the salary earned is Rs. 16,000/-. For the next month (41-30=11 days), the salary earned is Rs. 5,867/-. The total is Rs. 21,867/-. The bonus is calculated as Earned Wage x Percentage of Bonus (e.g., 21,867 * 8.33% = Rs. 1,822/-). The percentage depends on the allocable surplus for the year.

However, please ensure that the person concerned has worked for at least 30 days in the accounting year. The minimum wages of your State do not matter in this case. According to the notification, where the minimum wage in any State is less than Rs. 7,000/- per month, the wage for bonus purposes will be taken into account at Rs. 7,000/- per month, and in other cases, Rs. 7,000/- or the actual wage, whichever is higher.

Regards, P. K. Sharma

Correction on Bonus Calculation

The previous explanation is incorrect. The bonus should be paid based on the actual bonus subject to a ceiling of ₹7000 or the minimum wages, whichever is higher. Since the minimum wages are higher, they will be considered.

Please calculate his total basic salary for the entire period of his employment with you, based on the minimum wage level, and provide a bonus of 8.33% of that amount. However, if the allocable surplus is higher (indicating high profitability), you will need to pay at 20%, not 8.33%. This bonus should be disbursed to the employee at the time of the bonus payment next year. Most people don't actually bother with this detail.

Regards,
[Username]

Sir,

I am a bit confused whether the bonus will be calculated on earned wages*8.33% or on our state minimum wages as it is higher than the ceiling limit of 7000.

Dear Anonymous, Mr. Anil Jha and others,

Anil is saying that a person has 41 working days during that financial year. Why then confuse him? The calculation shown with an example of Apex Management given by Mr. PK Sharma is correct. Anil, you take care of the percentage part to arrive at the bonus amount.

Regards, RDS Yadav Labour Law Advisor navtaranghrs@gmail.com 08439811539

Dear Seniors,

I also have a doubt regarding how to calculate the bonus. One employee's joining date is 23/5/2015, and she left the company on 16/7/2016.

Please let me know how the bonus will be calculated for FY 2015-16 and for FY 2016-17. Will it be calculated based on earned wages, the 7000 ceiling limit, or our state minimum wages?

Best Regards,
Aman

Dear PK Sharma,

In your earlier post, you calculated the bonus on earned wages. However, in practice, I have observed many HR and Labour Laws consultants who calculate the bonus either based on the 7000 ceiling limit or the state minimum wages, whichever is higher.

Please clarify in which case the bonus will be calculated on 7000 or state minimum wages.

Thanks,
Aman

Aman, you have to follow the law. The Bonus Act is very clear. You have to pay a bonus in wages earned, subject to a ceiling of ₹7,000 or state minimum wages, whichever is higher. So, you need to pay the higher of:

- earned wages
- the higher of state minimum wages or ₹7,000

Dear All,

My query is: suppose an employee's basic salary is 15K per month, which formula should be used to calculate the bonus?

(1) 15000*8.34/100
(2) 7000*8.33/100
(3) 8234*8.33/100 (based on minimum wages)

Regards,
Aman

In this thread, on post No. 10, you mentioned that the bonus is calculated only on earned wages. In this regard, I am keen to know, according to you, what the meaning of the ceiling limit of 7,000/- is. However, according to me, the bonus should be calculated either on 7,000 or on the minimum wages for the scheduled employment fixed by the state government, whichever is higher.

I have gone through this thread, and all the members have replied differently. In this situation, how can the thread raiser get a solution? Anyway, I agree with Saswata sir. Dear P K Sir, if you still stand in support of your answer, I request you to support your answer with any relevant section, clause, or case law.

Thanks & Regards,
Devesh Chauhan
Practicing in Accounts, Finance, Taxation, Labour Laws