How Do You Calculate Bonuses: Should Gross or Basic Salary Set the Ceiling Limit?

Dear all,

How to calculate a bonus for the below CTC:

PARTICULARS AMOUNT IN RS
BASIC 13720
HRA 6860
CONV 2500
MED 2000
CANTEEN 2500
ATTENDANCE ALLOW 6720
MONTHLY GROSS 34300

PF EE'R CONT 1646.4
PTAX 200
TAKE HOME 32454
CTC/MONTH 35946

Is the employee eligible for a bonus? Should the gross salary or the basic salary be considered for the ceiling limit?

Thank you.

If you take the gross (fixed salary) for the calculation of the bonus, then the same gross amount can be taken for deciding eligibility for the bonus. If you consider only the basic pay for calculating the amount of the bonus, then you should take the same basic pay only for deciding the eligibility. That means there cannot be two formulas for calculating the amount of the bonus and making an employee ineligible to get the bonus.

Setting a Bonus on EPF Gross Salary

How can I set a bonus on the EPF gross salary, and what is the ceiling limit for the bonus (21,000 or below)?

Statutory bonus is an annual lump sum payment to an eligible employee, purely based on the performance of the establishment and the attendance of the employee during an accounting year. Strictly speaking, it is a statutory requirement of profit sharing between the employer and the employees.

EPF, on the contrary, is a terminal benefit to employees that requires a periodic contribution from both the employer and the employee.

Even though salary is one of the determinants for both, the componential structure for the calculation of each benefit differs according to the definition of the term salary/wages under each Act. Therefore, there cannot be any comparison to draw an analogy since the purpose of these statutory employment benefits is totally distinct and different.