Am I Entitled to a Bonus After Resigning? Seeking Advice on Eligibility

Good morning all, can anyone clarify this issue? I worked in my previous organization from 01.04.2016 to 31.03.2017 and resigned on 30.04.17. In my full and final settlement, I didn't receive my bonus. Now, the management has declared a bonus for that financial year and released it to on-roll employees. However, they have not released the bonus to me, stating that I am not eligible as a resigned employee. Could you please advise me on whether I am eligible to receive the bonus or not?

Same thing happened with me. Now my query is, even after knowing that as per the Bonus Act, if you worked more than 30 days in the bonus year, you are entitled to a bonus. But what if my salary is more than 21000/- and I am a resigned employee, then can the employer deny the bonus.

In general, when an employee resigns, the statutory bonus is not part of the final settlement. It will be paid as and when the company declares it for the rest of the employees. However, the criteria will be if an employee has put in at least 30 days of service in the financial year, or it will be pro-rata for the days the employee worked in the previous financial year to be eligible for the current year.

Since you are a resigned employee, it will be paid upon your request for the bonus in writing and by way of check/DD to your account, once the written request is received.

Dear Aniket,

You have confirmed that you do not come under the purview of The Payment of Bonus Act, 1965 by virtue of your salary being more than Rs 21,000/- in a financial year. You come under the purview of the Bonus Act if your Basic Salary + DA + VDA is Rs 21,000/- or less per month.

Hi Aniket,

Employees who do not come under the Bonus Act will be paid ex-gratia in a few companies. Whether your company pays ex-gratia or not may be confirmed if it was paid in earlier years. You will not be eligible for a bonus if your salary exceeds Rs. 21,000 per month.

Your ex-gratia will be paid assuming your gross is at Rs. 7,000 per month and will be limited to the bonus percentage (amount) declared for the year.

Thanks and regards

Dear Sir,

My question is, if my company pays a bonus based on 3500/- to all employees, can their salary be above 21000/- as this case pertains to 2014-15, above 10000/-? In such a scenario, can they term the bonus amount as ex-gratia and deny it to employees who have resigned?

Thank you.

Dear Mr. Aniket,

Please peruse the Bonus Act for the year 2014-15. Employees with a Basic Salary of up to Rs10,000/- per month were covered under the act. The calculation of Bonus was limited to Rs3,500/-. You need to verify whether you were within the purview of the Bonus Act during 2014-15. We are unable to comment on the Company's Policy or Practices followed. Our role is to interpret laws, not policies, as those are solely at the discretion of Management.

Dear Team, My question is about the calculation of a resigned employee's bonus (Bonus calculation for 2021-22). If an employee joined on February 1, 2021, and then resigned on December 15, 2021, and is eligible for the bonus criteria, what would be the calculation for his bonus? His monthly gross salary is $21,000.

Bonus Calculation Duration
My query is regarding the number of months he is eligible for the bonus. Should it be 10 months or 11 months because he only worked for 15 days in the month he resigned? Therefore, should the bonus calculation be based on 11 months on a pro-rata basis?

I would appreciate your clarification on whether my understanding is correct or incorrect. Please assist me with this matter.

Thank you.

Amendments to the Payment of Bonus Act, 1965

Not needless to mention the amendments carried out to the following sections of the Payment of Bonus Act, 1965 in 2015 as hereunder for the sake of clarity:

Section 2(13): The cap on the monthly salary limit in the term 'employee' for the purpose of the Act has been raised to Rs. 21,000.00.

Section 12: The notional monthly salary limit for the purpose of calculation of bonus under the Act has been raised from Rs. 3,500 to Rs. 7,000. Furthermore, this limit is linked to the statutory minimum wages in respect of employees covered under the Minimum Wages Act, 1948, in such a manner that the limit would be Rs. 7,000 per month or the minimum wages for such employment, whichever is higher.

Prakash's Question on Bonus Eligibility

Coming to Prakash's question:
(1) The employee joining on the 1st day of February 2021 and continuing in service from there onwards would be eligible to get a bonus for the accounting year 2020-21 as he would have worked for more than 30 working days in that accounting year.
(2) Regarding the following accounting year 2021-22, in which he worked up to December 15, 2021, and then resigned on the same date, he would be eligible to get a bonus under the Act for the period from April 1, 2021, to December 15, 2021, only when it becomes payable anytime between April 2022 and November 2022.
(3) The employee's salary is mentioned as Rs. 21,000 gross. I would like to request him to carefully go through the definition of the term 'salary or wage' as given under Section 2(16) of the Act. Then he would understand that it is not "gross monthly salary" but only the basic pay and the dearness allowance, if any, in view of the excluded components of the salary therein. Therefore, Prakash has to calculate himself the amount of bonus payable to him for the two accounting years based on the actuals. It is not known how the bonus for 2020-21 was not paid to him even after his resignation on December 15, 2021.
(4) We should remember that the bonus under the Act is payable to the employee based on the salary or wage earned by him during the accounting year in question in terms of percentage and not on the basis of the days or months served. In other words, the scheme of the Payment of Bonus Act, 1965, would suggest that the factor of time duration is introduced in the Act only in respect of fixing the accounting year, providing for set on and set off, setting the time limit for payment of bonus, extension of the time limit, and the minimum qualifying service for a bonus.