Bonus Calculation - Actual Wages Is > Minimum Wages Or < 7000

Thanks to all for your kind suggestion and valuable feedback.....!

I agree with Mr. PK Sharma,
In the case of the query, wages ceiling is Rs.5500 which is less than 7000, but for the bonus calculation, min 7000 has to be taken and accordingly statutory bonus payable is 7000.
PL Kanthan

Hitherto, we are restricting the Bonus wages to the Ceiling wage if the wages exceed ceiling wage of Bonus.
As of now also the same procedure.
Recently, the Govt. revised the Bonus Act stating that if the minimum wages prescribed beyond ceiling wage, the bonus to be calculated on minimum wages only but not on ceiling wage. But several companies challenged the revision of Bonus Act. It has to be decided by the courts.
But as of now the calculation of Bonus on the ceiling wages only.

Mr.Soni,
A Minimum Bonus of 8.33% shall be payable as per Sec 10 of Bonus Act. In your case, you need to take Rs.5500/- per month as Bonus Salary. If any Loss of Pay was reported in any particular month that can also be proportionally deducted from the above salary. In such a case, the Maximum Bonus @8.33% would works out to Rs.5500/-

Dear All,

The amendment in original is being reproduced here under:-

MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 1st January, 2016/Pausha 11, 1937 (Saka)

THE PAYMENT OF BONUS (AMENDMENT) ACT, 2015 NO. 6 OF 2016 [31st December, 2015.] An Act further to amend the Payment of Bonus Act, 1965.

BE it enacted by Parliament in the Sixty-sixth Year of the Republic of India as follows:—

1. (1) This Act may be called the Payment of Bonus (Amendment) Act, 2015.

(2) It shall be deemed to have come into force on the 1st day of April, 2014.

2. In section 2 of the Payment of Bonus Act, 1965 (hereinafter referred to as the

principal Act), in clause (13), for the words ‘‘ten thousand rupees’’, the words ‘‘twenty-one

thousand rupees’’ shall be substituted.

The following Act of Parliament received the assent of the President on the 31st December, 2015, and is hereby published for general information:—

2. In section 2 of the Payment of Bonus Act, 1965 (hereinafter referred to as the principal Act), in clause (13), for the words ‘‘ten thousand rupees’’, the words ‘‘twenty-one thousand rupees’’ shall be substituted.

3. In section 12 of the principal Act,—

(i) for the words ‘‘three thousand and five hundred rupees’’ at both the places where they occur, the words ‘‘seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher’’ shall respectively be substituted;

(ii) the following Explanation shall be inserted at the end, namely:—

‘Explanation.—For the purposes of this section, the expression ‘‘scheduled employment’’ shall have the same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, 1948.’.

Now where is the confusion. Section 12 which stipulate ceilings / restriction of calculations is amended and clearly says " seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher’’ shall respectively be substituted;

So many experts in the thread are doing wrong interpretations.

P K Sharma

Dear All,
My interpretation of latest Amendment to Bonus Act and as notified in the Gazette is :
1. Those drawing >=21,000 pm are not eligible for Bonus
2. Those drawing < 7,000 pm to be paid min. bonus 7000 if his/her attendance is full for the period(i.e. without any reduction in wages). Or 7000 devided by 312 days multiply by no. of attendance ( i.e. Rs.22.42 x no. of attendance)
3. Those drawing > 7,000 & < 21,000, then their annual min.wages multiplied by 8.33% as min. bonus.
If I am wrong, kindly correct me.
Regards

In Section 12, says that “Calculation of bonus with respect to certain employees. Certain employees means some specific class of employees & not all. Who is this specific class of employees? This specific class of employees is whose wages “Exceeds” 7000/- as clearly mentioned in Section 12. Hence if wages are not more than 7000/- calculation of Bonus will be calculated as per Section 10 or 11.
Accordingly, according to me, if Minimum Wages are less than 7000/-, actual wages would be taken. Further, in 2007, when the Bonus calculation limit was 3500/- in most of the states the Minimum wages was less than 3500/- and Bonus was used to calculate on actual wages earned.
The intent of recent amendment was only to revise the wages ceiling and not the change of calculation method.
Regards,
Kamlesh Kumar Agrawal
09824442149

Thanks for such valuable input.I am enriched.
S.N.Bhattacharya

It is very clear that the bonus is now to be calculated on Rs.7000/- or the State Wages whichever is higher. In most of the cases as the bonus is paid on yearly basis, computation of bonus is not difficult as at the end of year, we have the figures of actual basic drawn.
If the bonus is to be paid on monthly basis, it is better to be calculated on actual wages drawn.

Dear Kamlesh Kumar Aggarwal ji,
Please go through the amendment once again and try to understand its intentions once again. Your interpretations are contrary to the language/meanings of the amendment.
P K Sharma