Dear all, can anybody clarify about Payment of bonus as per New amendment. should we pay the minimum wage or the 7000/- which is correct. please clarify as per the act.
From India, Hyderabad
Acknowledge(0)
Amend(0)
2From India, Hyderabad
Acknowledge(0)Amend(0)
Summary of Bonus (Amendment) Act, 2015
Please read the summary of the Bonus (Amendment) Act, 2015, as below:
1. This Act may be called the Payment of Bonus (Amendment) Act, 2015.
2. It shall be deemed to have come into force on the 1st day of April, 2014.
In section 2 of the Payment of Bonus Act, 1965 (hereinafter referred to as the principal Act), in clause (13), for the words "ten thousand rupees," the words "twenty-one thousand rupees" shall be substituted.
In section 12 of the principal Act:
- For the words "three thousand and five hundred rupees" at both places where they occur, the words "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher" shall respectively be substituted.
Thus, it is clear that an employee getting a salary up to Rs. 21,000/- will be covered under this act. For the purpose of calculating the bonus, the maximum salary amount considered will be Rs. 7,000/- or the actual paid amount if it is below Rs. 7,000/-.
Regards
From India, Pune
Acknowledge(1)
Amend(0)
Please read the summary of the Bonus (Amendment) Act, 2015, as below:
1. This Act may be called the Payment of Bonus (Amendment) Act, 2015.
2. It shall be deemed to have come into force on the 1st day of April, 2014.
In section 2 of the Payment of Bonus Act, 1965 (hereinafter referred to as the principal Act), in clause (13), for the words "ten thousand rupees," the words "twenty-one thousand rupees" shall be substituted.
In section 12 of the principal Act:
- For the words "three thousand and five hundred rupees" at both places where they occur, the words "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher" shall respectively be substituted.
Thus, it is clear that an employee getting a salary up to Rs. 21,000/- will be covered under this act. For the purpose of calculating the bonus, the maximum salary amount considered will be Rs. 7,000/- or the actual paid amount if it is below Rs. 7,000/-.
Regards
From India, Pune
Acknowledge(1)Amend(0)
Dear Suresh, it should be Rs7,000/- or applicable Minimum Wages, which ever is higher not as mentioned in your question.Please go through the Act, once again
From India, New Delhi
Acknowledge(0)Amend(0)
From India, New Delhi
Acknowledge(0)Amend(0)
Calculation of Bonus Post Amendment
Criteria
Eligibility Limit
The eligibility limit has been raised from Rs. 10,000 to Rs. 21,000/-. Employees who draw a salary up to Rs. 21,000 per month would be eligible for a bonus.
Calculation of Bonus
The wage ceiling for calculating the bonus has been raised from Rs. 3,500 to Rs. 7,000 per month or the minimum wage for the scheduled employment, whichever is higher.
Example for Contract Employees
If the Minimum Wage is Higher than 7,000
Aman is working as a Fitter in a Pharma Company in Mumbai through a contractor. He is paid wages as per the minimum wages. The minimum wage in Maharashtra for the Skilled Category for Pharma is Rs. 10,164/-.
Calculation of Bonus
Basic Salary x 8.33% = Bonus p.m.
10,164 x 8.33% = 847 (10,164 p.a.)
Here, the minimum wage is higher than Rs. 7,000; hence, we have considered the minimum wage which is higher than Rs. 7,000 for calculating the bonus. So the ceiling of Rs. 7,000 is not applicable in this case. For contract employees, we have to pay a bonus based on the criteria that is higher.
Examples for CTC Employees
For CTC employees, they have a fixed structure of pay which consists of many components where the gross salary is much higher than the minimum wages. It is not governed by minimum wages. We always ensure that CTC Employees are paid much higher than the Minimum Wages.
1) If Basic Salary is Less than 7,000 & Also Less than Minimum Wages
Karan is working as an Accounts Clerk in a Pharma Company in Mumbai. His basic salary is 6,800/- per month. The minimum wage in Maharashtra for the Skilled Category for Pharma is Rs. 10,164/-.
Calculation of Bonus
Basic Salary x 20% = Bonus p.m.
6,800 x 20% = 1,360 (16,320 p.a.)
6,800 x 8.33% = 566 (6,792 p.a.)
Here, the basic salary is less than Rs. 7,000; hence, we have considered the actual basic salary of Rs. 6,800 for calculating the bonus. So the ceiling of Rs. 7,000 or higher than the minimum wages is not applicable in this case.
Example 2
If Basic Salary is Higher than Rs. 7,000 but Less than Minimum Wages
Rajendra is working as a Stores Officer in a Chemical Fertilizer Company in Mumbai. His basic salary is 8,500/- per month. The minimum wage in Maharashtra for the Skilled Category for the Chemical Fertilizer Company is Rs. 6,903/-.
Calculation of Bonus
Basic Salary x 20% = Bonus p.m.
7,000 x 20% = 1,400 (16,800 p.a.)
7,000 x 8.33% = 583 (6,996 p.a.)
Here, the basic salary is more than 7,000 and also the minimum wages; hence, we have considered Rs. 7,000 as the basis for calculating the bonus. So the ceiling of Rs. 7,000 is higher than the minimum wages; hence, the 7,000 criteria is applicable in this case.
Example 3
If Basic Salary is Higher than 7,000 & Also Higher than Minimum Wages
Vivek is working as a Sales Officer in a Bank in Delhi. His basic salary is 15,000/- per month. The minimum wage in Delhi for the Skilled Category in Shops & Commercial Establishments is Rs. 12,662/-.
Calculation of Bonus
Basic Salary x 20% = Bonus p.m.
12,662 x 20% = 2,532 (30,384 p.a.)
7,000 x 8.33% = 1,055 (12,660 p.a.)
Here, the basic salary is more than 7,000 and also higher than the minimum wages; hence, we have considered the minimum wage of Rs. 12,662 as the basis for calculating the bonus. So the ceiling of Rs. 7,000 is not applicable since the minimum wages are higher; hence, the 12,662 criteria is applicable in this case.
Hope the above examples will help you understand the calculation. In case of any queries, I would be happy to answer the same.
Current Status
Verdict by High Courts
About 12 out of 16 High Courts have given a stay on the retrospective effect on the implementation of the amendment. High Courts including Bombay, Karnataka, Allahabad, Madras, Kerala, Punjab, Haryana, Rajasthan, Gujarat, Madhya Pradesh, Calcutta, and Andhra Pradesh have also passed ad interim orders staying the retrospective operation of the Amendment Act. The Government has initiated action to move the matter to the Supreme Court against the stay orders given by 12 High Courts. Hopefully, we will get clarity on it very soon before Diwali when the majority of companies pay bonuses to their employees.
Regards,
S. Boopathi
From India, Coimbatore
Acknowledge(0)Amend(0)
Criteria
Eligibility Limit
The eligibility limit has been raised from Rs. 10,000 to Rs. 21,000/-. Employees who draw a salary up to Rs. 21,000 per month would be eligible for a bonus.
Calculation of Bonus
The wage ceiling for calculating the bonus has been raised from Rs. 3,500 to Rs. 7,000 per month or the minimum wage for the scheduled employment, whichever is higher.
Example for Contract Employees
If the Minimum Wage is Higher than 7,000
Aman is working as a Fitter in a Pharma Company in Mumbai through a contractor. He is paid wages as per the minimum wages. The minimum wage in Maharashtra for the Skilled Category for Pharma is Rs. 10,164/-.
Calculation of Bonus
Basic Salary x 8.33% = Bonus p.m.
10,164 x 8.33% = 847 (10,164 p.a.)
Here, the minimum wage is higher than Rs. 7,000; hence, we have considered the minimum wage which is higher than Rs. 7,000 for calculating the bonus. So the ceiling of Rs. 7,000 is not applicable in this case. For contract employees, we have to pay a bonus based on the criteria that is higher.
Examples for CTC Employees
For CTC employees, they have a fixed structure of pay which consists of many components where the gross salary is much higher than the minimum wages. It is not governed by minimum wages. We always ensure that CTC Employees are paid much higher than the Minimum Wages.
1) If Basic Salary is Less than 7,000 & Also Less than Minimum Wages
Karan is working as an Accounts Clerk in a Pharma Company in Mumbai. His basic salary is 6,800/- per month. The minimum wage in Maharashtra for the Skilled Category for Pharma is Rs. 10,164/-.
Calculation of Bonus
Basic Salary x 20% = Bonus p.m.
6,800 x 20% = 1,360 (16,320 p.a.)
6,800 x 8.33% = 566 (6,792 p.a.)
Here, the basic salary is less than Rs. 7,000; hence, we have considered the actual basic salary of Rs. 6,800 for calculating the bonus. So the ceiling of Rs. 7,000 or higher than the minimum wages is not applicable in this case.
Example 2
If Basic Salary is Higher than Rs. 7,000 but Less than Minimum Wages
Rajendra is working as a Stores Officer in a Chemical Fertilizer Company in Mumbai. His basic salary is 8,500/- per month. The minimum wage in Maharashtra for the Skilled Category for the Chemical Fertilizer Company is Rs. 6,903/-.
Calculation of Bonus
Basic Salary x 20% = Bonus p.m.
7,000 x 20% = 1,400 (16,800 p.a.)
7,000 x 8.33% = 583 (6,996 p.a.)
Here, the basic salary is more than 7,000 and also the minimum wages; hence, we have considered Rs. 7,000 as the basis for calculating the bonus. So the ceiling of Rs. 7,000 is higher than the minimum wages; hence, the 7,000 criteria is applicable in this case.
Example 3
If Basic Salary is Higher than 7,000 & Also Higher than Minimum Wages
Vivek is working as a Sales Officer in a Bank in Delhi. His basic salary is 15,000/- per month. The minimum wage in Delhi for the Skilled Category in Shops & Commercial Establishments is Rs. 12,662/-.
Calculation of Bonus
Basic Salary x 20% = Bonus p.m.
12,662 x 20% = 2,532 (30,384 p.a.)
7,000 x 8.33% = 1,055 (12,660 p.a.)
Here, the basic salary is more than 7,000 and also higher than the minimum wages; hence, we have considered the minimum wage of Rs. 12,662 as the basis for calculating the bonus. So the ceiling of Rs. 7,000 is not applicable since the minimum wages are higher; hence, the 12,662 criteria is applicable in this case.
Hope the above examples will help you understand the calculation. In case of any queries, I would be happy to answer the same.
Current Status
Verdict by High Courts
About 12 out of 16 High Courts have given a stay on the retrospective effect on the implementation of the amendment. High Courts including Bombay, Karnataka, Allahabad, Madras, Kerala, Punjab, Haryana, Rajasthan, Gujarat, Madhya Pradesh, Calcutta, and Andhra Pradesh have also passed ad interim orders staying the retrospective operation of the Amendment Act. The Government has initiated action to move the matter to the Supreme Court against the stay orders given by 12 High Courts. Hopefully, we will get clarity on it very soon before Diwali when the majority of companies pay bonuses to their employees.
Regards,
S. Boopathi
From India, Coimbatore
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Amendment to Payment of Bonus Act 2015.jpg
Payment of Bonus Act Amendment.pdf