Confused About Bonus Calculation: Should We Count 365 or 306 Working Days?

Dear respected seniors,

Number of working days in a year

Please solve my problem related to the number of working days in a year. Form C of the Bonus Act has a column for the number of working days in a year. What entry should be made in this column - 365 or 306 (after deducting Sundays and national and public festival holidays)?

My company calculates salary by dividing the salary by 30 or 31 (as applicable) and then multiplying it by the number of working days of the employee. The company remains closed on Sundays and all national and festival holidays.

Calculating employee bonus

There is confusion regarding how to calculate the bonus of employees: should it be based on the number of actual days worked by the employee / 365 * 84000 or the number of actual days worked by the employee / 306 * 84000, followed by calculating 8.33% of the resultant amount.

Please share your views on this matter.

Thank you.

Dear Sunny, I believe your confusion stems from your initial premise that the computation of the bonus amount is solely based on the particulars listed in the Form-C register. However, this is not the case as the Form-C document only displays the net bonus amount paid to employees after deductions in accordance with sections 17 and 18 of the PB Act, 1965.

Secondly, your misunderstanding may also be due to the interpretation of the term "working days." Literally, "working days" refers to the number of days the establishment was operational and the number of days each employee was present for work. However, when calculating bonus entitlement, the interpretation of "working days" should align with section 14 of the Act, which clarifies how to determine the number of working days for bonus reduction purposes outlined in section 13. Section 14 stipulates that certain days of absence must be included in the count of working days, such as days of lay-off, paid leave, absence due to temporary disablement from a work-related accident, and maternity leave.

Thank you.