Bonus Calculation Confusion: Should It Be Based on Rs. 8,000 or Rs. 7,500?

The Key Changes In The Payment Of Bonus (Amendment) Act, 2015

1. Effective April 1, 2014. Retrospective.
2. Eligible Salary (Basic) up to Rs. 21,000/- P.M.
3. The Bonus Calculation Ceiling Limit revised to Rs. 7,000/- Per Month or the Minimum Wages for the Scheduled Employment, as fixed by the appropriate government, whichever is higher.

Now my query is if any employee is getting a basic salary of Rs. 8,000/- P.M., which is over the limit mentioned in the Minimum Wages Act. As per the Minimum Wages, he is to be paid Rs. 7,500 P.M.

In the given situation, on which amount will the bonus calculation be done: Rs. 8,000/- or Rs. 7,500/-?

Thanks,
Mamta

Hi Mamta,

As per the amendment in the rules for bonus calculation ceiling, the calculation will be done on INR 7500.

Regards,
Neetu

As per my knowledge, the bonus to be paid is Rs. 8,000. The Act states that the bonus should be Basic (+ DA) or Minimum Wage, whichever is higher, with a minimum of Rs. 7,000.

Please let me know if you need any further clarification.

As per my knowledge, the bonus paid is Rs. 7500/- (April to June, July to December, and January to March). Three minimum wages were taken; this is higher than Rs. 7000/-. This amount is for bonus wages.

Mojes Pereira

See, the rule is as follows:

1. Rs. 7500/-
2. Minimum wages fixed by the State Govt.
3. Amount equal to 8.33% of salary paid in the last year (basically it comes to one month's salary)

The base amount for the calculation of Bonus will be the amount whichever is higher among the above 3 points.

Regards,
Debasish Bhattacharya

Sorry, there is a mistake in my earlier post.

In case the 8.33% salary amount exceeds Rs. 7500/-, then Rs. 7500/- will be treated as the base for bonus calculation.

For example:

1. Salary equal to 8.33% amounting to Rs. 8000/-
2. Minimum wage is Rs. 7000/-

In this scenario, the bonus will be calculated based on Rs. 7500/-

Regards,
Debasish Bhattacharya

According to my understanding, as per the new amendment, the bonus will be calculated as follows:

Bonus Calculation Method

Minimum Bonus at 8.33% of Basic + DA (maximum 20%), keeping in mind a ceiling of Rs. 7000/- or the applicable minimum wages, whichever is higher. That is, where Basic + DA exceeds Rs. 7000/- or the minimum wages, the bonus will be calculated on Rs. 7000/- or the minimum wages, whichever is higher. This applies to employees earning less than Rs. 21000/- (Basic + DA).

In other words, those earning more than Rs. 7000/- or the minimum wages will receive an equal bonus regardless of their salary (Basic + DA) up to the cap of Rs. 21000/-.

Please explain/clarify if this is incorrect.