Hi Sir/Madam, Can you please help me with the bonus calculations? Is it calculated on the current minimum wage or the previous as per month?
From India, Pune
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From India, Pune
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Bonus Calculation for Financial Year 2023-24
A bonus is a deferred wage, which means the bonus for the financial year 2023-24 should be paid based on the minimum wages for 2022-23.
Regards, S K Bandyopadhyay
From India, New Delhi
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367A bonus is a deferred wage, which means the bonus for the financial year 2023-24 should be paid based on the minimum wages for 2022-23.
Regards, S K Bandyopadhyay
From India, New Delhi
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Bonus paid this year is the bonus earned during the last financial year, right? Then the amount of bonus should reflect the amount paid last financial year, ie, 2022-23.
From India, Kannur
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From India, Kannur
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Thank you sir, can you also please tell me the formula to calculate the bonus.
From India, Pune
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From India, Pune
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Bonus Calculation Steps
1.0% of Bonus is to be paid - From the P&L account of the balance sheet, the available surplus must be found first. A certain percentage of the available surplus will be the allocable surplus. Then, considering Set On & Set Off, the percentage of the bonus needs to be determined. In most organizations, this is done by the Finance Department.
Base Amount to Calculate Bonus
If the Basic and DA of employees are 7000/- or more, then the minimum wages of the employee must be determined based on published minimum wages average data for the financial year for which the bonus is to be paid. That amount will be the base amount on which the bonus has to be paid.
Individual Employee Eligibility
For the financial year for which the bonus has to be paid, the employee's Basic & DA should be less than or equal to 21,000/- and a minimum of 30 working days should be present during the financial year.
Bonus Payment Based on Presence
Based on individual presence in the year with pay (including paid leave), proportionately, the actual amount of the bonus has to be paid. For Leave Without Pay (LWP), it will be proportionately less.
Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] www.usdhrs.in
From India, New Delhi
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1.0% of Bonus is to be paid - From the P&L account of the balance sheet, the available surplus must be found first. A certain percentage of the available surplus will be the allocable surplus. Then, considering Set On & Set Off, the percentage of the bonus needs to be determined. In most organizations, this is done by the Finance Department.
Base Amount to Calculate Bonus
If the Basic and DA of employees are 7000/- or more, then the minimum wages of the employee must be determined based on published minimum wages average data for the financial year for which the bonus is to be paid. That amount will be the base amount on which the bonus has to be paid.
Individual Employee Eligibility
For the financial year for which the bonus has to be paid, the employee's Basic & DA should be less than or equal to 21,000/- and a minimum of 30 working days should be present during the financial year.
Bonus Payment Based on Presence
Based on individual presence in the year with pay (including paid leave), proportionately, the actual amount of the bonus has to be paid. For Leave Without Pay (LWP), it will be proportionately less.
Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] www.usdhrs.in
From India, New Delhi
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Calculation of a Bonus
Calculation of a bonus involves different steps. First, the establishment should be covered under the Payment of Bonus Act. Second, we have to decide who all are entitled to get a bonus and the salary that would qualify for the bonus. Third, we have to determine how much amount can be appropriated for the payment of the bonus. This will depend on the profit of the organization, surplus available for the payment of the bonus, and the amount that can be allocated for it for the financial year. Accordingly, the rate of the bonus shall vary from 8.33% to 20%.
Coverage Under the Payment of Bonus Act
A factory is covered by the Payment of Bonus Act without reference to the number of employees working in it, but other establishments will come under the purview of the Act when they employ 20 employees. Under any case, there is infancy protection available for five years. But if the establishment makes profits in any of these years, the establishment becomes liable to pay a bonus to its employees. Obviously, it will continue once covered, even if the company suffers a loss thereafter.
Eligibility for Bonus
An employee whose salary does not exceed Rs 21,000 per month and who has worked at least 30 days in the preceding financial year would be entitled to get a bonus. Therefore, all employees whose salary exceeds Rs 21,000 will be out of the purview of the bonus. However, the entire amount of salary would not qualify for a bonus. In respect of employees whose salary is more than Rs 7,000, the bonus will be calculated on Rs 7,000 or the minimum wages fixed by the government. Therefore, if the government has notified minimum wages for your industry, that minimum wage will be the base for calculating the bonus. Suppose that for your industry, the government has notified a minimum wage of Rs 15,000 for a class of employees. Then, his bonus shall be calculated as if his salary is Rs 15,000. Even if his salary is less than Rs 15,000, you should calculate the bonus with Rs 15,000 as the base. This is because you are not expected to pay a salary less than the notified minimum wage. This applies to the calculation of Gratuity (at the time of discharge) as well. The leave days in the financial year without pay (LOP) shall be deducted proportionately from this Rs 15,000. Very simply, it will be Rs 15,000 X 12 (months or such lesser months he was with the organization) LESS the wages for LOP days would be the gross salary qualifying for a bonus. If there were no LOP, the gross salary would be Rs 180,000. In the case of an employee who joined during the year or in the case of left employees, there will not be a 12 months' payout, and the amount of gross salary would be less accordingly.
Minimum Wage and Bonus Calculation
Suppose that your industry is not in the scheduled employment for which minimum wages have been notified, then in respect of employees whose salary exceeds Rs 7,000, the bonus qualifying salary would be Rs 7,000 per month. From this Rs 7,000, you can make a proportionate deduction for the loss of pay leaves to arrive at the annual gross salary. If there is no LOP, the gross salary would be Rs 84,000.
In case the minimum wage is more than Rs 21,000 (as in Kerala where the revised minimum wages are almost above Rs 23,000), no one would be entitled to any bonus.
Statutory Minimum Bonus
The statutory minimum bonus payable is 8.33% of the annual gross salary earned by each employee in the financial year. If the establishment has sufficient profits, they can pay a higher percentage. In larger organizations where the employees have Unions for their collective bargaining, the rate is decided after long discussions with the Union(s). Once the rate of the bonus is decided, the Personnel department shall proceed with the calculation of the bonus payable to each employee. It is just getting the amount by multiplying the rate of the bonus with the annual gross salary arrived at as explained above. As such, if the minimum wage is Rs 15,000, and the employee has worked all the days in the year, and the rate of the bonus is 8.33%, then the amount of the bonus will be approximately Rs 14,996, almost Rs 15,000.
From India, Kannur
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Calculation of a bonus involves different steps. First, the establishment should be covered under the Payment of Bonus Act. Second, we have to decide who all are entitled to get a bonus and the salary that would qualify for the bonus. Third, we have to determine how much amount can be appropriated for the payment of the bonus. This will depend on the profit of the organization, surplus available for the payment of the bonus, and the amount that can be allocated for it for the financial year. Accordingly, the rate of the bonus shall vary from 8.33% to 20%.
Coverage Under the Payment of Bonus Act
A factory is covered by the Payment of Bonus Act without reference to the number of employees working in it, but other establishments will come under the purview of the Act when they employ 20 employees. Under any case, there is infancy protection available for five years. But if the establishment makes profits in any of these years, the establishment becomes liable to pay a bonus to its employees. Obviously, it will continue once covered, even if the company suffers a loss thereafter.
Eligibility for Bonus
An employee whose salary does not exceed Rs 21,000 per month and who has worked at least 30 days in the preceding financial year would be entitled to get a bonus. Therefore, all employees whose salary exceeds Rs 21,000 will be out of the purview of the bonus. However, the entire amount of salary would not qualify for a bonus. In respect of employees whose salary is more than Rs 7,000, the bonus will be calculated on Rs 7,000 or the minimum wages fixed by the government. Therefore, if the government has notified minimum wages for your industry, that minimum wage will be the base for calculating the bonus. Suppose that for your industry, the government has notified a minimum wage of Rs 15,000 for a class of employees. Then, his bonus shall be calculated as if his salary is Rs 15,000. Even if his salary is less than Rs 15,000, you should calculate the bonus with Rs 15,000 as the base. This is because you are not expected to pay a salary less than the notified minimum wage. This applies to the calculation of Gratuity (at the time of discharge) as well. The leave days in the financial year without pay (LOP) shall be deducted proportionately from this Rs 15,000. Very simply, it will be Rs 15,000 X 12 (months or such lesser months he was with the organization) LESS the wages for LOP days would be the gross salary qualifying for a bonus. If there were no LOP, the gross salary would be Rs 180,000. In the case of an employee who joined during the year or in the case of left employees, there will not be a 12 months' payout, and the amount of gross salary would be less accordingly.
Minimum Wage and Bonus Calculation
Suppose that your industry is not in the scheduled employment for which minimum wages have been notified, then in respect of employees whose salary exceeds Rs 7,000, the bonus qualifying salary would be Rs 7,000 per month. From this Rs 7,000, you can make a proportionate deduction for the loss of pay leaves to arrive at the annual gross salary. If there is no LOP, the gross salary would be Rs 84,000.
In case the minimum wage is more than Rs 21,000 (as in Kerala where the revised minimum wages are almost above Rs 23,000), no one would be entitled to any bonus.
Statutory Minimum Bonus
The statutory minimum bonus payable is 8.33% of the annual gross salary earned by each employee in the financial year. If the establishment has sufficient profits, they can pay a higher percentage. In larger organizations where the employees have Unions for their collective bargaining, the rate is decided after long discussions with the Union(s). Once the rate of the bonus is decided, the Personnel department shall proceed with the calculation of the bonus payable to each employee. It is just getting the amount by multiplying the rate of the bonus with the annual gross salary arrived at as explained above. As such, if the minimum wage is Rs 15,000, and the employee has worked all the days in the year, and the rate of the bonus is 8.33%, then the amount of the bonus will be approximately Rs 14,996, almost Rs 15,000.
From India, Kannur
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The Payment Of Bonus Act 1965-Update-02- 01.01.16-Wage - 21K- Min Bons 7K-01.04.14.pdf
Amendment to Payment of Bonus Act 2015.jpg