Understanding Bonus Eligibility: What Are the Criteria and Minimum Payouts Under the Payment of Bonus Act?

Eligibility Criteria for Bonus under the Payment of Bonus Act

What are the eligibility criteria for employees to receive a bonus under the Payment of Bonus Act? What is the minimum percentage of salary that must be paid as a bonus to eligible employees?

As per the Payment of Bonus Act, individuals with a basic salary below Rs. 21,000 are eligible to receive a statutory bonus at the rate of 8.33% of their basic salary. The minimum amount payable to the employees is 8.33% of their basic salary. If the company has generated good profits, the available and allocable surplus is calculated as per the act, and a maximum eligibility of 20% of their basic salary should be paid.

In addition to what Lucy has said, an employee is entitled to receive a bonus only if they have worked in the establishment for at least 30 days in the financial year for which the bonus is paid in the current year.