Payment Of Bonus Act-basic Or Gross Salary?? - DOC Download

There has been an amendment in the Payment of Bonus Act by an ordinance issued in 2007, which mandates an organization to give a bonus to employees drawing wages or salary up to Rs. 10,000.

Please let me know if the 'wages' or 'salary' referred to in the act means basic salary or gross salary.

My friend is having a problem in getting his bonus because his company is saying the act refers to gross salary (and his is greater than 10,000) while I have seen companies handing out bonuses on basic salary.

Is there any government document my friend can show to his company to demonstrate that the act refers to basic salary? What can he do? Please guide.

For bonus purposes, the definition of salary/wages includes the following factors and not only Basic+DA, so please be aware it is not counted only on Basic and DA.

"Salary or wage" means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-

any other allowance to which the employee is currently entitled;

the value of any house accommodation or the supply of light, water, medical attendance, or other amenities, or any service, or any concessional supply of food grains or other articles;

any traveling concession;

any bonus (including incentive, production, and attendance bonus);

any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law currently in force;

any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;

any commission payable to the employee.

From Shailesh (Statutory Manager)

Dear All,

Although the ceiling is 10,000 and the payable amount is 3,500/-, nowadays limited companies are adding a bonus in the employees' Cost to the Company to avoid issues. The bonus minimum percentage is 8.33%, and the maximum depends on the company's willingness and the profit generated for the budget year. I hope you have understood.

Thanks & Regards,
B. RAVI MURUGAN

Hi all,

Could anybody tell me if an ex-employee would also be eligible for this period? Suppose I worked for an organization from Nov 2005 to Jan 2008 and then joined a new organization in Feb. Would the ex-organization also give me the bonus or not?

Thank you.

Yes. Your bonus due will have to be paid to you when your full and final settlement is given to you from your previous employer.
- Saravana Rajan

I needed help. Can anyone share with me on what the Bonus Act is? I require a hard copy of its rules and regulations. Waiting for all positive responses.

Thanks,
Vandana

Dear All,

I want to know what is the ceiling in the Bonus Act of 1965. If an employee is receiving a salary higher than the ceiling, does the company have to give a bonus to that employee? Also, please clarify whether the ceiling is based on the basic salary or gross salary.

Regards, P. R. Paliwal

Bonus is mendatory if the Salary is not above 10000 and will be calculated on Rs. 3500 (Min 8.33 to Max 20%)
But if your salary exceeds 10000 then it is on employer's will

Please check below section 21 of bonus ACT about the salary and Wages means under this act

“salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation. – Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to from part of the salary or wage of such employee;

Dear Vipin,

I am sending a mixture of everything. It will help you.

Regards,
Vipin

If a person worked only 28 days in a month during the year, should we take 28 days of basic salary for that month for bonus calculation, or do we take the full month?

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In this scenario, for bonus calculation purposes, the standard practice is to consider the actual number of days worked in the month. Therefore, if the individual worked only 28 days in a particular month, the bonus calculation should be based on the salary earned for those 28 days, rather than the full month's salary. This approach ensures a fair and accurate reflection of the individual's contribution for that specific period.

If a person worked only 28 days in a month during the year, should we take 28 days of basic salary for that month for bonus calculation, or do we take the full month?

Shifali, it depends upon the cash you have given to the employee. If you have paid him the salary for 28 days, then you will calculate the bonus on 28 days' salary. However, if you have considered the remaining days as leave and paid him the full salary for the month, then you will calculate the bonus on the full month's salary.

Ensure there is a single line break between paragraphs.

Dear,

It is rightly pointed out that an employee is required to work for 30 working days in an accounting year to become entitled to a bonus.

Regards,
R N Khola

If an employer is willing to pay a bonus based on the basic salary, i.e., more than $10,000, is it possible to do so? Please suggest. If not, then why not?

Dear all,

In our company, one employee's Basic+DA is Rs. 7500. He works the whole accounting year (12 months). Now, for the calculation: 7500 * 12 * 11% = Rs. 9900. Is it correct? Will the limit for Basic+DA = Rs. 6500 come into play here?

- Rajasekar

If an employer terminates an employee without notification, what kind of case can be filed against the employer?

Thank you.

Dear Friends,

I am Bhupinder Kumar, working as an HR executive in Patiala. I want to know if any employer does not pay bonuses and other payments to their employees, how can the employee claim their benefits under the Factory Act 1948?

Dear Sirs,

Please let me know if the Statutory bonus will attract ESI deduction, i.e., we are planning to give the bonus to contract laborers monthly to attract them. Will this monthly payment attract ESI deductions?

Kindly help me.

Chaitra

Although there is no provision for payment of bonus on a monthly basis, the bonus has to be paid annually. Yes, if you are paying the bonus on a monthly basis, it will attract ESI contributions. Any payment that is being made to workers regularly for more than two months will attract ESI contributions as per the second part of the definition of wages under the ESI Act.

Regards

Payment of Bonus Act

Hi all,

My question is: Is the bonus applicable in hospitals or not?

Regards,
bnpandey

Hello Friends,

I'm confused about the amounts of 3500/- and 10000. Let's consider a scenario where a person has worked for 4 months in one accounting year. Out of these 4 months, the person worked for 3 full months, while in the 4th month, they attended the office for only 4 days. It's noted that the salary for 10 days has been given after adjustments for available leave.

Now, the question is, what would be the bonus amount and how should the calculation be done? Would it be 8.33% of 3500 or 8.33% of the total wages, for example, 8000/-?

Thanks & Regards,
Karuna Sharma

Dear Member,

When your basic salary is more than Rs 10,000 per month, you are not eligible to receive payment of bonus from the employer under the Payment of Bonus Act, 1965.

R.N. KHOLA
Welcome Skylark Associates

Dear All,

I have a few queries regarding the Payment of Bonus Act:

1. Is the payment of bonus calculated from the basic salary or the gross salary?
2. The salary or wages have been revised to Rs. 10,000 with effect from November 2007. Are there any changes to the wages? Please confirm.

I am awaiting your positive reply.

Regards,
Gayathri

As per CA Hitesh Juneja, "The Payment of Bonus (Amendment) Act, 2015 received the assent of the President on 31st December 2015". The act has been recently amended, and there has been an increase in the eligibility limit for coverage of employees, as well as the limit for the calculation of bonus.

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Please, I need your help, friends. Our salary components are as follows - basic, HRA, Conveyance, Special or working allowances, and tiffin. May I will get the bonus whether on basic or the sum of all components? Please clarify.

Can a bonus be calculated on the Gross Salary, or does it have to be Basic + DA? Our company previously used to provide it based on the Gross Salary but has now abruptly shifted to Basic + DA.