Can Customary Bonuses Be Counted Towards Statutory Bonuses Under the Payment of Bonus Act?

Does bonus under the Payment of Bonus Act include customary bonus?

Is customary bonus adjustable against the statutory bonus?

Understanding the Payment of Bonus Act

In the context of the Payment of Bonus Act, it is crucial to understand the distinction between a customary bonus and a statutory bonus. A customary bonus is typically given by an employer out of goodwill or tradition, whereas a statutory bonus is mandated by law and must be paid as per the provisions of the Act.

Interaction between Customary and Statutory Bonuses

When it comes to the interaction between customary and statutory bonuses, it is important to note that customary bonuses are usually not adjustable against statutory bonuses. Statutory bonuses are separate and distinct entitlements that employees have under the law, and they should not be offset by any customary bonuses that may be provided by the employer.

Compliance with the Payment of Bonus Act

Employers should ensure compliance with the provisions of the Payment of Bonus Act regarding the payment of statutory bonuses to eligible employees, in addition to any customary bonuses they may choose to provide.

Customary Bonuses and Statutory Bonuses

As per Sec-17 of the PB Act, any organization can adjust the customary bonus with the statutory bonus.

Customary bonuses are very common in India. They are for different customs such as Durga Puja, Eid, Diwali, Christmas, etc., where bonuses are paid to employees. Moreover, there are many organizations that pay bonuses without considering the available surplus, allocable surplus, set on, and set off. This is also considered a customary bonus.

We have one client who is paying a bonus equivalent to two months of Basic & DA without any upper limit, which is also a customary bonus.

Regards, S. K. Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity