How Should Our Startup Distribute Diwali Bonuses: Fixed Amount or Based on Salary?

Hello Everyone, I am working in a startup company in the Edtech industry. Recently, the management decided to give bonuses to all employees during the Diwali festival. They have asked me to come up with a few options on how to disburse a fixed amount to all employees or to give a bonus based on their gross CTC. Please suggest.

Note: This is the first bonus being given to the employees by the management.

Thank you in advance.

Regards
**Location**: Hyderabad, India

Options for Bonus Disbursement

Considering the festive season and the significance of rewarding employees, here are some practical options for disbursing bonuses in your startup company:

1. Fixed Amount for All Employees:
- Calculate a reasonable fixed amount that aligns with the company's budget and financial capabilities.
- Distribute this fixed bonus amount equally among all employees, irrespective of their roles or salaries.
- This approach promotes a sense of equality and inclusivity among the workforce, especially since it's the first bonus being offered.

2. Bonus Based on Gross CTC:
- Alternatively, you can opt to provide bonuses based on employees' gross Cost to Company (CTC).
- Calculate a percentage of the gross CTC that each employee will receive as a bonus. This method ties the bonus amount to individual performance and contribution.
- Ensure transparency in the calculation process to maintain trust and fairness within the organization.

3. Employee Engagement:
- Regardless of the chosen method, communicate the bonus structure clearly to all employees. Transparency fosters trust and appreciation.
- Consider organizing a small celebration or recognition event during the Diwali festival to enhance employee engagement and morale.

4. Legal Compliance:
- Ensure that the bonus disbursement complies with relevant labor laws and regulations in India, particularly regarding bonus payments during festivals.
- Refer to the Payment of Bonus Act, 1965, for specific guidelines on bonus calculations and disbursements.

5. Feedback and Evaluation:
- After implementing the bonus structure, gather feedback from employees to assess their satisfaction and gather insights for future bonus programs.
- Evaluate the impact of the bonus disbursement on employee motivation and engagement to refine future reward strategies.

By carefully considering these options and aligning them with your company's culture and financial capacity, you can effectively reward and motivate your employees during the festive season. Happy Diwali celebrations to you and your team! 🎉🪔