Understanding Variations in Bonus Act: Basic Salary Cap, Payment Adjustments in Real Estate Firms

Bonus Act Queries

1. According to the Bonus Act, is the bonus the same for all employees?

2. Is the cap for a basic salary set at 7000 correct?

3. If the basic salary exceeds 7000, can we adjust payments based on the actual amount?

Please suggest, especially in the context of a real estate firm.

1. The Bonus Act does not mandate a uniform bonus for all employees. It allows for variations based on factors such as performance, tenure, or other specified criteria within the legal framework.
2. The cap for a basic salary at 7000 is not accurate. The Bonus Act does not specify a fixed cap for basic salary in relation to bonus calculations.
3. When the basic salary exceeds 7000, adjustments to bonus payments should be made in accordance with the actual salary amount. The Bonus Act provides guidelines on how such adjustments can be calculated to ensure compliance with legal requirements. It is essential to follow the provisions of the Bonus Act and any specific regulations applicable to real estate firms to determine the correct bonus payments based on actual basic salary figures.

Understanding Bonus Qualifying Salary

Bonus qualifying salary means Rs. 7000 or the notified minimum wages, whichever is higher.

The rate of bonus may be equal, but the amount of bonus will depend upon the salary earned. If you are calculating bonus strictly according to the Payment of Bonus Act, you can restrict the bonus qualifying wages to Rs. 7000 or the statutory minimum wages applicable to each category of employees, whichever is higher. Therefore, if your notified minimum wage is higher than Rs. 7000, say Rs. 10000, then you cannot restrict the bonus to a certain percentage of 7000, but it should be based on Rs. 10000.

If the statutory minimum wage is Rs. 7000 or less than Rs. 7000, then you have to calculate the bonus considering that the wage is Rs. 7000, even if the employee is earning a salary above Rs. 7000. For instance, if the actual basic pay is Rs. 10000, and the minimum wage notified is Rs. 6900, then you can pay the bonus calculated assuming the wage is Rs. 7000. The employee need not be paid a bonus calculated on Rs. 10000. However, if the minimum wage is above Rs. 7000, say Rs. 19900, and the employee is paid Rs. 15000 per month as wages, then you have to calculate the bonus based on Rs. 19900. Obviously, you cannot pay wages less than the notified minimum wage.

Dear Ramesh,

1. According to the Bonus Act, employees receiving a monthly salary up to ₹21,000 are eligible for a bonus. The bonus amount is not the same for all employees.

2. The calculation of the bonus is to be done with the minimum basic salary cap set at ₹7,000 (where the minimum wages are below ₹7,000) and the maximum wage limit at ₹21,000.

3. If the basic salary exceeds ₹7,000, you need to calculate the payments based on the actual amount.

There is no separate provision in the Bonus Act for real estate establishments. It is advised to follow the bonus rules of your state if there are specific regulations for real estate firms.