Is My Bonus Calculation for Earned Basic+DA of 20,000 Correct? Seeking Advice from HR Peers

Hi, I am working as an HR in a private limited company. In our organization, some of the employees have an Earned Basic+DA of 20,000/- per month. Bonus Calculation The calculation is as follows: 20,000 * 12 = 240,000 * 8.33% = 19,992. Is the above calculation correct? I would appreciate your advice.

Regards, Asha

As per my knowledge, the bonus calculation is Basic + DA / Number of days in the month * Number of payable days in a month * 8.33% (Bonus Calculation Month-Wise).

Examples:
- April '22 payable days - 20
- May '22 payable days - 26
- June '22 payable days - 10

Dear Ashavasanth, As per the amended Section 12 of the Payment of Bonus Act, 1965, when the salary or wage of the employee exceeds Rs. 7,000.00 per month, the bonus payable under Section 10 or 11, as the case may be, shall be calculated as if the salary or wage were Rs. 7,000/= or the minimum wages fixed, whichever is higher.

Therefore, in the given case, the minimum bonus payable would be Rs. 7,000 x 12 x 8.33% = Rs. 6,997.00 if no minimum wages are fixed or if the minimum wage fixed is less than Rs. 7,000/-. If, on the contrary, the minimum wage fixed is more than Rs. 7,000/=, the actual minimum wages should be taken into account for calculation.

Dear Asha, The work is correct as such (other than the fact that you are paying it at higher wages than mandatorily required - refer to posts above on the ceiling). However, you are assuming that the bonus is payable only at the minimum rate of 8.33%. You need to maintain the allocable surplus register, available surplus register, and from that compute the rate of bonus. It can be up to 20% of the salary.

Hello, Ashavasanth. Divide the bonusable salary by 12 to determine the correct amount of bonus. (100/12 = 8.3333%) As a result of this, Rs. 2,40,000 / 12 = Rs. 20,000/-. Therefore, instead of multiplying by 8.33%, please use the divisor 12 from now on.

Regards,

Suresh