How Can Employers Fairly Distribute Bonuses Across Different State Wage Levels?

Hi, Greetings to All Members! We are a pharma marketing-based company with employees across PAN-India. The query is related to the Bonus amendment—how the profit-sharing of one employer with a single balance sheet can be distributed according to state-level minimum wages for employees in different locations. How can the employer address this disparity?

Experts suggest that we should follow the amendment stating that 7000 or minimum wages, whichever is higher, should be considered for bonus calculation. Please explain the calculation process for sales promotion employees deputed in various locations.

Thanks,
Shanti Raghavan

It seems a bit difficult for me to understand your question. In labor jurisprudence, the place of employment decides the issues of statutory benefits and jurisdictional aspects of remedial measures for employees, not the location of the corporate/managerial headquarters. When the employment locations of the same class of employees of the same company are scattered across the country and the employment is a scheduled employment under the Minimum Wages Act, 1948, disparity in their wages is bound to arise due to the interstate differences in the prevailing statutory minimum wages. It cannot be discrimination but only spatial differentiation in wage structure, for which the decisive factor is the place of work only.

Besides, bonus under the Payment of Bonus Act, 1965, is computed only as a particular percentage of the total earnings of the eligible employees in the accounting year. Therefore, what is important to ensure equitability or to eliminate discrimination is the uniformity in the declared percentage of the bonus and not the actual sums received by the employees. I don't think that the notional fixation of wages under Section 12 of the Act for the purpose of bonus calculation based on the "whichever higher clause" with reference to statutory minimum wages can disturb this concept.