Bonus Calculation for Salaries Above 21,000 Rs.
If an employee's gross salary is above 21,000 Rs., then how do we calculate the bonus?
As per the law, the maximum gross salary eligible for a bonus is 21,000 Rs. If the gross salary exceeds 21,000 Rs., then the bonus is not applicable.
For example, if the gross salary is 15,000 Rs. and the basic + DA is 8,000 Rs., then the bonus calculation is: 8,000 * 8.33% = 666 Rs.
If the salary is 22,000 Rs., how do we calculate the bonus?
From India, Chennai
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1If an employee's gross salary is above 21,000 Rs., then how do we calculate the bonus?
As per the law, the maximum gross salary eligible for a bonus is 21,000 Rs. If the gross salary exceeds 21,000 Rs., then the bonus is not applicable.
For example, if the gross salary is 15,000 Rs. and the basic + DA is 8,000 Rs., then the bonus calculation is: 8,000 * 8.33% = 666 Rs.
If the salary is 22,000 Rs., how do we calculate the bonus?
From India, Chennai
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When the monthly salary of an employee exceeds the threshold of Rs. 21,000.00, he is excluded from the definition of "employee" under Section 2(13) of the PB Act, 1965. From that point onwards, he is not entitled to the statutory bonus contemplated under the Act. Until that point, his bonus amount shall be calculated as per Section 12 of the Act, applying the notional monthly salary of Rs. 7,000 or the statutory minimum wages for that job, whichever is higher.
From India, Salem
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From India, Salem
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Definition of Salary or Wage Under PB Act
As per the PB Act, the definition of "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 (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 form part of the salary or wage of such employee.
Bonus Eligibility Based on Salary Definition
As per the above definition, the salary for bonus eligibility will be based on Basic & DA. Therefore, it is not the monthly gross salary.
Moreover, the bonus is considered deferred wages, i.e., in 2021, the bonus will be paid for 2020, depending on the accounting year of the organization. Accordingly, the Basic & DA amount to be considered is for 2020, not for the payable year 2021.
Regards,
S K Bandyopadhyay (WB, Howrah)
CEO-USD HR Solutions
[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
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As per the PB Act, the definition of "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 (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 form part of the salary or wage of such employee.
Bonus Eligibility Based on Salary Definition
As per the above definition, the salary for bonus eligibility will be based on Basic & DA. Therefore, it is not the monthly gross salary.
Moreover, the bonus is considered deferred wages, i.e., in 2021, the bonus will be paid for 2020, depending on the accounting year of the organization. Accordingly, the Basic & DA amount to be considered is for 2020, not for the payable year 2021.
Regards,
S K Bandyopadhyay (WB, Howrah)
CEO-USD HR Solutions
[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
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What should be taken as base to calculate the bonus amount?
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(Fact Checked)-The base to calculate the bonus amount for employees with a gross salary above Rs. 21,000 is still their Basic + DA. This remains consistent regardless of the gross salary amount. (1 Acknowledge point)
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Bonus Calculation Guidelines
For bonus calculation, the base will be 7000/- or the minimum wages of the grade, whichever is higher. If the Basic & DA is less than 7000/-, it will be based on the actual Basic & DA.
Percentage of Bonus
The percentage of bonus will be calculated based on the available surplus, allocable surplus, set on & set off. The percentage of bonus varies between 8.33% to 20%.
Regards, S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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For bonus calculation, the base will be 7000/- or the minimum wages of the grade, whichever is higher. If the Basic & DA is less than 7000/-, it will be based on the actual Basic & DA.
Percentage of Bonus
The percentage of bonus will be calculated based on the available surplus, allocable surplus, set on & set off. The percentage of bonus varies between 8.33% to 20%.
Regards, S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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BONUS CALCULATION FOR W.B.Govt employee for 2010-2011.xls
Employee Benefits.doc
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(Fact Checked)-[response] As per the Payment of Bonus Act, the bonus eligibility is based on Basic & DA, not gross salary. Bonus is paid for the previous accounting year. Thank you for sharing. (1 Acknowledge point)