I work with a multinational corporation under off rolls. We have the 2nd and 4th Saturdays, as well as Sundays, off. When calculating the bonus, should we base it on 26 days per month (excluding Sundays) or 24 days per month (excluding Sundays, 2nd & 4th Saturdays)? Kindly advise.
From India, Bengaluru
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1From India, Bengaluru
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Eligibility for Bonus Under the Bonus Act
In accordance with the provisions of the Bonus Act, every employee who earns a salary of Rs. 10,000 or below per month and has worked for not less than 30 days in an accounting year is eligible for a bonus. This bonus is calculated as per the methodology provided under the Act at a rate of 8.33% of the salary. If the salary of an employee is less than Rs. 7,000, then the bonus is calculated on the actual amount. According to the Bonus Act, a minimum of 8.33% up to 20% of the basic (earned) wages is to be paid to the employee.
Definition of Salary or Wage
- Section 2(21) in The Payment of Bonus Act, 1965
"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. It includes dearness allowance (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 entitled to;
(ii) The value of any house accommodation or supply of light, water, medical attendance, or other amenity or service or concessional supply of foodgrains 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 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 form part of the salary or wage of such employee.
Comments
(i) Lay-off compensation is included in the term "salary" or "wages"; Mohan Kumar v. Deputy Labour Commissioner, (1991) 62 FLR 903 (Ker).
(ii) Dearness allowance and city compensatory allowance are included in the definition of "salary" or "wages" under section 2 (21) of the Act; S. Krishnamurthy v. Presiding Officer, Labour Court, (1986) 55 FLR 535.
(iii) Dearness allowance is a part and parcel of wages; Scindia Navigation Co. Ltd. v. Scindia Employees Union, (1983) 2 LLN 63.
(iv) Retaining allowance comes within the purview of section 2 (21); Chalthan Vidyut Sehkari Udyog v. Government Labour Officer, AIR 1981 SC 905.
(v) Remuneration in case of overtime work and commission payable to employees are excluded from the definition of "salary" or "wages"; All India Voltas & Volpart Employees' Federation v. Voltas Ltd., 1973 Lab IC 645.
(vi) Overtime allowance does not form part of "wages"; Associated Cement Co. Ltd. v. Their Workmen, AIR 1959 SC 925.
For more details on the number of working days, read from this link: https://www.citehr.com/499643-no-day...days-30-a.html
From India, Bangalore
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In accordance with the provisions of the Bonus Act, every employee who earns a salary of Rs. 10,000 or below per month and has worked for not less than 30 days in an accounting year is eligible for a bonus. This bonus is calculated as per the methodology provided under the Act at a rate of 8.33% of the salary. If the salary of an employee is less than Rs. 7,000, then the bonus is calculated on the actual amount. According to the Bonus Act, a minimum of 8.33% up to 20% of the basic (earned) wages is to be paid to the employee.
Definition of Salary or Wage
- Section 2(21) in The Payment of Bonus Act, 1965
"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. It includes dearness allowance (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 entitled to;
(ii) The value of any house accommodation or supply of light, water, medical attendance, or other amenity or service or concessional supply of foodgrains 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 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 form part of the salary or wage of such employee.
Comments
(i) Lay-off compensation is included in the term "salary" or "wages"; Mohan Kumar v. Deputy Labour Commissioner, (1991) 62 FLR 903 (Ker).
(ii) Dearness allowance and city compensatory allowance are included in the definition of "salary" or "wages" under section 2 (21) of the Act; S. Krishnamurthy v. Presiding Officer, Labour Court, (1986) 55 FLR 535.
(iii) Dearness allowance is a part and parcel of wages; Scindia Navigation Co. Ltd. v. Scindia Employees Union, (1983) 2 LLN 63.
(iv) Retaining allowance comes within the purview of section 2 (21); Chalthan Vidyut Sehkari Udyog v. Government Labour Officer, AIR 1981 SC 905.
(v) Remuneration in case of overtime work and commission payable to employees are excluded from the definition of "salary" or "wages"; All India Voltas & Volpart Employees' Federation v. Voltas Ltd., 1973 Lab IC 645.
(vi) Overtime allowance does not form part of "wages"; Associated Cement Co. Ltd. v. Their Workmen, AIR 1959 SC 925.
For more details on the number of working days, read from this link: https://www.citehr.com/499643-no-day...days-30-a.html
From India, Bangalore
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The term "employee," as defined under Section 2(13) of the Payment of Bonus Act, 1965, is limited in its application to those whose monthly salary or wage does not exceed Rs. 21,000 per mensem starting from April 1, 2014. Section 8 of the Payment of Bonus Act, 1965, stipulates that an employee must work for a minimum of 30 working days in the establishment during an accounting year to be eligible for bonus payment.
Sections 10 and 11 of the Act, which address the payment of minimum and maximum bonus respectively, link the respective payments as a certain percentage of the total salary or wage earned by the employee in an accounting year only. Therefore, whether one is an "on-roll employee" or an "off-roll employee" in the establishment, and the actual number of working days and weekly holidays in a month, are not relevant for calculating their bonus under the Payment of Bonus Act, 1965, as long as they meet the requirements of Sections 2(13) and 8 of the Act.
From India, Salem
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Sections 10 and 11 of the Act, which address the payment of minimum and maximum bonus respectively, link the respective payments as a certain percentage of the total salary or wage earned by the employee in an accounting year only. Therefore, whether one is an "on-roll employee" or an "off-roll employee" in the establishment, and the actual number of working days and weekly holidays in a month, are not relevant for calculating their bonus under the Payment of Bonus Act, 1965, as long as they meet the requirements of Sections 2(13) and 8 of the Act.
From India, Salem
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Subject to what Mr. Umakanthan said, as Sundays (weekly offs) and Saturdays in case of five-day working establishments are paid holidays, they will form part of the monthly wages for monthly rated employees.
B. Saikumar
HR & Labour Relations Consultant
Navi Mumbai
From India, Mumbai
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B. Saikumar
HR & Labour Relations Consultant
Navi Mumbai
From India, Mumbai
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