How Do You Determine Minimum Wages for Bonus Calculation After Employee Transfers?

Hello,

For the calculation of bonus under the Payment of Bonus Act, should we consider the minimum wages as per the current location of the employee, or should we consider the location where the employee was based during the period for which the bonus is being paid?

For example, there is an employee who was transferred from Hyderabad to Chennai in September 2017. If we are paying a bonus for the year 2017-18, should we consider the minimum wages for Hyderabad or Chennai? Please clarify.

Dear Ganesh, a bonus is a deferred payment since it is paid at any time during the year immediately following the Accounting Year for which the bonus is calculated. Therefore, logically, it should be a certain percentage of the earnings of the employee pertaining to the AY only. It automatically follows that the minimum rates of wages pertaining to the locality where the employee worked during the AY should be taken into consideration and not the location of his employment at the time of calculation or disbursement of the bonus.

Thank you.

Hi,

This is to inform you that the bonus needs to be calculated on the basis of "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher." Thus, you may use the same process that you are following for all the employees, keeping in mind the said stipulation.