Confused About Bonus Calculation Under New Amendment: Should It Be 7,000 Rs or 6,500 Rs?

Clarification on Bonus Calculation Under the Payment of Bonus Act, 1965

As per the new amendment to the Payment of Bonus Act, 1965, the ceiling rate has been changed to 7,000 and 21,000 Rs. According to the new circular, in Section 12 of the principal Act, the words "three thousand and five hundred rupees" are to be replaced with "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher."

If an employee's minimum wage is below 7,000 Rs, for example, 6,500 Rs, should the amount considered for bonus calculation be 7,000 Rs or 6,500 Rs? I seek clarification on the bonus calculation as per the law.

I need your valuable advice.

Regards

Hi Mr. Gaurav,

According to the bonus act, we consider a bonus on 6500. For example, if an employee's minimum wage is 7500, then we consider a bonus on 7000 (as fixed by the government).

Sir first of all thanks a lot for your reply but sir what does mean of this sentence The minimum wage for the
scheduled employment, as fixed by the appropriate Government, whichever is higher''shall respectively be substituted . for example minimum wages fixed by appropriate government 6500 rs but minimum bonus ceiling rate is 7000 rs so higher will be 7000 then it shall respectively be substituted. Please sir clear my point

Dear Gaurav, with regard to your query: Suppose an employee's salary is 10K and the minimum wage for scheduled employment fixed by the appropriate government is 6500. As per Section 12, the ceiling limit of 7000 will be considered for bonus calculation. However, if the minimum wage is more than 7000, say 8000, then the minimum wage shall be considered for bonus calculation. If an employee's salary is less than 7000, say 6000, and the minimum wage is 6500, then as per Sections 9 & 10, the actual salary shall be considered for bonus calculation, i.e., 6000.

Please note, Section 12 relates to the ceiling limit, or minimum wages shall come into the picture when the drawn salary exceeds the ceiling limit. If the salary is below the ceiling limit, in that scenario, as per Sections 9 & 10, the actual salary shall be taken down by the employee. Also, note that the bonus shall be calculated on a monthly basis, and check all the necessary compliance pertaining to the act, such as Section 16, whether the establishment or company is eligible to disburse the bonus, etc.

Hope your doubt is clear.

Thanks & Regards,

V. Shakya HR & Labour Law Advisor

Respected Sir,

Now my doubt has been cleared, and I appreciate your valuable feedback.

Dear Seniors,

Can you please guide me if the Bonus Act is applicable to all schools in India now?

Regards,
PSD