Payment Of Bonus To Employees With Salary Higher Than Specified Limit

I agree with Mr.Suresh2511. Even if the employee's wages were more than 15000, for the purpose of Employer PF contribution, it can be restricted to the max.ceiling limit i.e. 15000/-. Hence, for the purpose of bonus it can not be construed as his wages were @ 15000, and then bonus is payable. NO bonus eligible to him as his wages (repeat NOT GROSS salary) were higher than 21000 of ceiling limit.
Pls re-examine the wages part of payment in your system.
with wishes

Mr. Kanthan, the salary paid was Rs. 35,000/- per month. There is no break-up to this amount. The PF contribution is restricted to 1,800/- (12% of Rs. 15,000/- ceiling).
The issue that we are facing now is that the employee is claiming that irrespective of his salary, he must get bonus, since other employees got it. It is conveniently forgotten that no other employee had a salary above Rs. 21,000/- which was the new limit notified by the government.
We feel now that while giving a salary raise, we should have taken an undertaking from the employee that he will not make any such demands & any more payment would be entirely at the sole discretion of the company.

Dear powercube,
Does the appointment letter duly signed by concern employee state that full salary is as basic component (No other component)
Did you issued him/her the Notice atleast 21 days before of your intention u/s 9A of ID act. 1947 as salary increment is also change in service conditions & agreement thereof,
Did you issued him/her increment letter stated the Hike is only in basic salary.
However if you have the appointment letter duly signed by employee accepting the entire salary in basic which is exceed the threshold limit u/s 2(13) of Payment of bonus act. 1965 therefore legally his/her claim of bonus is immaterials. Try to convince amicably 'else' let him/her prove the eligibility of bonus through labour authorities or court
Thanks & Regards
V SHAKYA
HR & Labour, Corporate Laws Advisor

Dear V Shakya,
1] The appointment letter states as CONSOLIDATED SALARY. No other component is stated in the appointment letter nor shown on the pay slip.
2] We have not issued any 21 days notice. We were not aware that a notice needs to be issued for increment, since it amounts to change in service rules.
3] The increment letter states the hike in CONSOLIDATED salary. And other things such as leaves, PF & bonus AS PER COMPANY RULES. It is implied as
performance bonus. Nowhere in the appointment letter or the increment letter it is stated that XYZ amount of bonus will be paid every year.
The entire salary was always BASIC & duly accepted by the employee. His argument is others got bonus at the time of diwali. Why not me, it is my rightful due..

Dear Powercube,
You need not to worry since the claimant is not eligible for payment of bonus. To counter him before the Controlling Authority, where he can file claim, produce relevant records. Notice under ID act, increment letter etc. are have no much importance if salary slip or signature on payment of wages/salary registers are obtained.
P K Sharma

Dear powercube,

legally you should have issued him Notice u/s 9A of ID act. 1947 No excuse that we were not aware about that. however since it is subjected to employee increment Hence Labour authorities may not object for it.

statutory bonus is not to disbursed on only diwali as per sec 19 of payment of bonus act. 1965 bonus should be disbursed within the 8 month after closing FY. employer may provide the gift on diwali according to their discretion No employee can force the employer to get any gift or money on diwali.

do remember always appointment letter should clearly expressed the clause of salary component such as basic Not as consolidated salary.

since you have appointment letter duly signed by concern employee accepting the salary in consolidation No bifurcation thereof therefore you have nothing to worry for the payment of statutory bonus to him. first try to convince him if he remain adamant then you can take this matter before the union if any? or you can even intimate the same to your range labour commissioner but before that keep ready all the required document i.e. appointment letter, offer letter, increment letter in your support?

Thanks & Regards

V SHAKYA

HR & Labour, Corporate Laws Advisor

Dear Sir,
Many thanks for your comments, suggestions & inputs.

Dear V. Shakya,
From your comments, it is understood that at the time of annual increments, each employee must be issued a notice u/s 9A of ID act.
Is my inference correct.
We do not disburse bonus at the time of Diwali. It is always paid within 8 months of the closure of the FY. The concerned employee has probably misunderstood because in 2016 the payment was made in October.
Copies of salary slips issued are very much on record. Furthermore, the salary is always credited to the employee account directly, thus creating a proper record.