Is It Non-compliant to Give an 8.33% Bonus When Profits Suggest 20%? Seeking Clarity

ashishsah.hr23
Is it mandatory to disburse bonus at 20% instead of 8.33% if the organization's surplus bonus shows a profit? For example, if a company is over 40 years old, has been earning a profit for the last few years, and the employer is currently disbursing bonus at 8.33%, would this be considered non-compliance? If so, please provide detailed information on the matter.
umakanthan53
Dear Ashish, since your establishment is over 40 years old, had you complied with the provisions of the Payment of Bonus Act, 1965 strictly, I think that this question would not have arisen. The minimum bonus and the maximum bonus contemplated respectively under Section 10 and 11 of the Act are strictly based on the allocable surplus in any accounting year only. However, in any already existing establishment that has crossed the infancy period mentioned in Section 16, the calculation of allocable surplus for any accounting year should be made only with reference to the set on and set off of allocable surplus as provided for under Section 15 of the Act.

Therefore, in an establishment like yours, payment of minimum or maximum bonus for any accounting year has to be determined not only on the basis of the profit or loss in that year. For further clarification, I'd request you to go through Section 15 of the Act with a conjunctive reading of the illustrated calculation provided in Schedule IV of the Act.
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