Is It Fair for Companies to Skip Bonuses for Employees Earning Over Rs. 7000?

Is it true that the employee who is earning more than Rs. 7000/- is not eligible for getting the bonus? In other words, the company is not bound to pay a bonus to the employees whose salary is more than Rs. 7000/-. Is it true?

In our company, we do not get a bonus as all are earning a salary over Rs. 7000/-. Previously, this amount was Rs. 3500/-.

As per the Payment of Bonus Act, employees whose wages do not exceed Rs. 21,000 per month are eligible for bonus. In cases where the wage of such an employee exceeds Rs. 7,000 per month, the bonus payable to him may be calculated as if the wage is Rs. 7,000 per month.

MOHAN KUMAR
mohan.kumar551@gmail.com

Thank you so much for the reply. I think I have understood what you are saying. Just to reiterate—employees having a salary of Rs. 21,000 or less will at least get Rs. 7,000 as a bonus if not 8.33%. Please confirm.

Steps to Pay the Bonus

What steps should we take to pay the bonus now? We have not paid the bonus in the last 15 years, right from the inception of the firm. Do we need to pay the arrears of the bonus for so many years? Also, what will happen to the employees who have left the firm? Please guide me. Thanks in advance.

Employees getting Basic+DA less than or equal to Rs. 21,000 are eligible for a bonus. If Basic+DA is less than or equal to Rs. 7,000, the bonus will be not less than Rs. 7,000. However, if basic+DA is more than Rs. 7,000, then the bonus will be Rs. 7,000 or the minimum wages, whichever is more.

Dear Professional Colleagues,

Clarification on Bonus Wage Calculation

What happens to employees drawing a bonus wage/salary greater than Rs. 7,000 but up to Rs. 21,000? According to my understanding, a bonus is payable on actual wages drawn on a pro-rata basis, and only for the purpose of coverage under the Bonus Act, the ceiling limit fixed is Rs. 21,000. Is the upper wage limit for the calculation of the bonus limited to Rs. 7,000? In other words, if somebody is drawing a basic salary plus VDA of Rs. 10,000, should their salary for the purpose of calculation be considered as Rs. 7,000 only?

If someone could clarify this point, it would be a great help to everyone like me.

1. If wages are greater than 7000 but less than 21000, then the minimum bonus paid is based on the minimum wages notified for respective industries in scheduled employment.

2. The clause of 3500/7000 has been removed. Instead, the actual wages or minimum wages, whichever is higher, is now substituted.

I feel that employees whose Basic + VDA is up to or less than ₹21,000 but more than ₹7,000, then Actual Basic + VDA has to be taken as the basis for Bonus calculation for the FY 2016-17 and in proportion to the number of days' salary/wages actually earned in each month during the period April 2016 to March 2017. I hope this is clear. Can anyone confirm this?

Sharing views expressed by Mr. K K Mishra, employees getting Basic+DA less than or equal to Rs. 21,000 are eligible for a bonus. If Basic+DA is less than or equal to Rs. 7,000, the bonus will be not less than Rs. 7,000. However, if Basic+DA is more than Rs. 7,000, then the bonus calculation should be done on the Basic Wages/Salary + VDA actually fixed, and this can be taken up to the actual basic wages/salary + VDA up to Rs. 21,000. I strongly feel that this is the spirit of the Payment of Bonus Amendment Act, 2015.