Managing Monthly Leave and Bonus Payments: How Do You Keep an Accurate Register?

If the organization pays leave and bonus on a monthly basis, how can the leave and bonus register be maintained?

Salary in Lieu of Leave

You cannot pay salary in lieu of leave every month. Leave is an employee welfare measure meant to be availed and not surrendered or encashed. The law mandates encashment of leaves only upon termination of employment, not during service.

Bonus Payment Regulations

Bonus is an annual payment and cannot be paid in monthly installments. According to the law, any bonus payable for the preceding financial year should be paid within 8 months of the current year. Extending it to 12 months would be considered illegal.

Hi Madhu T K,

Sir, a few companies bifurcate bonuses, with one part paid in monthly installments and the other as per the Bonus Act annually, as you mentioned.

I have seen or read about a few companies doing that. Let's say the total bonus is 12k. 6k/12 = 500 is paid as a monthly bonus, and 6k is paid at the time of Diwali.

Is this practice correct? Can it be considered a statutory bonus or part of a bonus-incentive scheme?

Thanks

Bonus Payment and Legal Compliance

If the bonus element or a part of the bonus is paid monthly, it will not be treated as part payment of the bonus, Pooja bonus, or customary bonus, as permitted under Section 17 of the Act. If permitted, the very objective of the act will be defeated.

You are right; there are companies that pay it in parts, but there are companies that deviate from the law.

Difference Between Incentive and Bonus

An incentive is different from a bonus. An incentive is additional remuneration based on targets, and it is purely an amount payable on the fulfillment of certain conditions. It is outside the scope of the Payment of Bonus Act or any statute governing the payment of wages.