Am I Eligible for a Bonus if My Basic Plus DA is Below 21K but Gross Salary is Higher?

Hello Seniors,

My basic plus DA is below 21K, and gross salary is above 21K. In this scenario, whether I am eligible for a bonus or not?

Regards,
Amit

Dear Amit,

Yes, you are entitled to receive a bonus under the Payment of Bonus Act, 1965.

Regards,
R N KHOLA

The correct version of the user input is:

"Sir, whether basic plus DA or gross salary should not exceed 21K to be eligible for a bonus."

Please let me know if you need any further assistance or clarification.

Dear Amit,

The employer is supposed to pay a bonus to his employees if their salary or wages consist of basic plus DA and doesn't exceed 21K per month. Thus, you will be eligible to draw a bonus even if your gross salary exceeds 21k per month.

BS Kalsi
Member Since August 2011

Clarification on Bonus Eligibility

Here, I would like to clarify that, according to the Bonus Act, Amit is not eligible to receive a bonus. The wage ceiling limit for the bonus is based on the gross salary instead of Basic + DA. If your gross salary is above 21K on 31st March 2016, it means you are not eligible to receive a bonus. On the other hand, if your gross salary is below 21K on 31st March 2016, it means you are eligible to receive a bonus (according to the Bonus Act).

Important Note

Do not consider the present salary for the same (Oct - November).

Now, it depends on the employer whether they want to give it to you or not, but the employee cannot force them.

Regards,
Sandeep Sharma

Dear All,

It is not clear what you mean by 'gross' salary. Allowances are excluded, but any payment not qualified as an allowance shall be added. If Basic + DA + unqualified allowance exceeds 21K, you are not eligible; otherwise, you are eligible up to a ceiling of 7K.

P.K. Patodia

Sandeep sir has pointed out differently; according to him, the gross salary should not exceed 21K as of 31/3/2016. Still, I am confused whether I am eligible for a bonus or not because of having different views given by seniors.

Let other experts clarify this issue.

Dear Amit,

If your gross salary (Basic + DA + Other Allowance) exceeds 21k by 31st March 2016, it means you are not eligible. On the other hand, if your gross salary is below 21k by 31st March 2016, it means you are eligible to receive a bonus this coming Diwali (Oct-16).

I hope, Amit, it is clear and resolves all your doubts.

Sir, in this thread, some experts have clearly pointed out that basic plus DA should not exceed 21K. Hence, in this scenario, can you please provide any relevant case law, etc., that states that the gross salary should not exceed 21K instead of basic plus DA.

Thanks,

Hi, I have a related query. One of our client companies says they are a startup company and have not completed 5 years; hence, they are not eligible to pay a bonus to contract employees working at their premises. I request the respected members to please clarify this doubt. If there are any relevant notifications or guidelines, please share. Thanks.

Dear Mr. Amit,

Can you provide a breakdown of your exact salary so that your doubts can be clarified properly?

Thank you.

Definition of Salary/Wages Under the Payment of Bonus Act

Please find the definition of Salary/Wages under the Payment of Bonus Act. Please follow the same for bonus purposes:

“Salary or wage” means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment. It includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include:

(i) Any other allowance which the employee is for the time being entitled to;

(ii) The value of any house accommodation or supply of light, water, medical attendance, or other amenity or of any service or of any concessional supply of food grains or other articles;

(iii) Any traveling concession;

(iv) Any bonus (including incentive, production, and attendance bonus);

(v) Any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;

(vi) Any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;

(vii) Any commission payable to the employee.

Regards

Whoever is saying that (Basic + DA + Other allowances) for bonus eligibility is Rs. 21k, please provide any Government Order (GO) or amendment notification to support this claim.

In reference to your query, I wish to mention that Section 16 of the Payment of Bonus Act deals with the special provisions applicable to certain newly set up establishments. As per these provisions, the first five accounting years following the accounting year in which the bonus is payable are only in respect of the accounting year in which profits are derived. If any organization did not make a profit in the first year, in that case, the bonus shall not be paid. However, if in the next year the company makes a profit in the financial year, the organization has to pay the bonus as per the Act. Again, in the next year, if the organization does not make a profit, then the bonus is not payable. (This is applicable only for the first 5 years). From the 6th year onwards, the bonus is payable whether the organization makes a profit or not.

First of all, you need to check whether the Act is applicable to your client company as mentioned in Section 1(3)(b) of the Act or not.

Regards,
BS Kalsi

Dear Mazumdar ji,

You are correct that as a layman, it is quite difficult to ascertain the assessment of the profitability of the company. Under Section 26, an employer is required to maintain the relevant registers and records, etc. The inspectors appointed under the Act have been empowered under Section 27 to check whether the employers have complied with the provisions of the Act, including the examination of the accounts of the firm.

BS Kalsi,
Member Since August 2011