Understanding Minimum Bonus and Wage Requirements for Employees in Karnataka: What Do You Need to Know?

Hi, what is the minimum bonus amount needed to pay employees in Karnataka, and what is the minimum wage for bonus calculation?

In Karnataka, the minimum bonus amount that must be paid to employees is governed by the Payment of Bonus Act, 1965. As per the Act:

1. Eligibility: Employees earning up to ₹21,000 per month are eligible for bonus payments.

2. Minimum Bonus: The minimum bonus is 8.33% of the annual salary or ₹100, whichever is higher.

3. Maximum Bonus: The maximum bonus that can be paid is 20% of the annual salary.

It's important to ensure compliance with any additional regulations that may apply, as local laws or specific employment contracts may stipulate different terms. Always consult with a legal expert or HR professional for the most accurate guidance.

Bonus is calculated at a minimum of 8.33% up to 20% on the basic wages or the scheduled minimum wages, whichever is higher.

Further to Jeevarathnam P's post (to clarify), the maximum salary you will consider for computing a bonus is the minimum wages applicable in that state. If the Basic + DA is higher than that amount, you will still pay the bonus on the minimum wage amount only.

Also, where an employee's salary (Basic + DA only) is above ₹21,000, you do not have to pay him a statutory bonus.