Understanding Set-On and Set-Off Conditions Under the Payment of Bonus Act
As per the Payment of Bonus Act, the conditions for set-on and set-off of allocable surplus are as follows:
- If the allocable surplus is less than the minimum bonus, "set off" shall be applicable.
- If the allocable surplus is higher than the maximum bonus, "set on" shall be applicable.
I would like to understand what action to take if our allocable surplus is higher than the minimum bonus but lower than the maximum bonus. For instance, if the minimum bonus is 1 lakh and the maximum bonus is 3 lakhs, and the allocable surplus (including any previously available set-on) is 2 lakhs, what should be done?
Additionally, in a scenario where the minimum bonus is 1 lakh and the maximum bonus is 3 lakhs, and the allocable surplus (excluding any previously available set-on) is 2 lakhs, what steps should we take?
Thank you in advance.
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As per the Payment of Bonus Act, the conditions for set-on and set-off of allocable surplus are as follows:
- If the allocable surplus is less than the minimum bonus, "set off" shall be applicable.
- If the allocable surplus is higher than the maximum bonus, "set on" shall be applicable.
I would like to understand what action to take if our allocable surplus is higher than the minimum bonus but lower than the maximum bonus. For instance, if the minimum bonus is 1 lakh and the maximum bonus is 3 lakhs, and the allocable surplus (including any previously available set-on) is 2 lakhs, what should be done?
Additionally, in a scenario where the minimum bonus is 1 lakh and the maximum bonus is 3 lakhs, and the allocable surplus (excluding any previously available set-on) is 2 lakhs, what steps should we take?
Thank you in advance.
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Action Steps for Allocable Surplus Between Minimum and Maximum Bonus:
In the scenario where the allocable surplus falls between the minimum and maximum bonus thresholds, specific actions need to be taken to comply with the Payment of Bonus Act. Here's a practical guide on what to do in each situation:
1. [Icon] Allocable Surplus (Including Set-On):
- If the allocable surplus, including any previously available set-on amount, is higher than the minimum bonus but lower than the maximum bonus:
- Calculate the difference between the allocable surplus and the maximum bonus.
- Allocate the surplus amount up to the maximum bonus limit.
- Any remaining surplus after reaching the maximum bonus should be retained for future bonus payments or as per company policy.
2. [Icon] Allocable Surplus (Excluding Set-On):
- If the allocable surplus, excluding any previously available set-on, is between the minimum and maximum bonus:
- Determine the exact surplus amount available for distribution.
- Ensure that the bonus payments are made to all eligible employees based on the surplus within the permissible range.
- Communicate transparently with employees about the bonus calculation and distribution process to maintain trust and clarity.
By following these steps, you can effectively manage the allocable surplus within the specified bonus limits as per the Payment of Bonus Act. It is essential to adhere to legal requirements while ensuring fair and equitable bonus distribution among employees.
From India, Gurugram
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54In the scenario where the allocable surplus falls between the minimum and maximum bonus thresholds, specific actions need to be taken to comply with the Payment of Bonus Act. Here's a practical guide on what to do in each situation:
1. [Icon] Allocable Surplus (Including Set-On):
- If the allocable surplus, including any previously available set-on amount, is higher than the minimum bonus but lower than the maximum bonus:
- Calculate the difference between the allocable surplus and the maximum bonus.
- Allocate the surplus amount up to the maximum bonus limit.
- Any remaining surplus after reaching the maximum bonus should be retained for future bonus payments or as per company policy.
2. [Icon] Allocable Surplus (Excluding Set-On):
- If the allocable surplus, excluding any previously available set-on, is between the minimum and maximum bonus:
- Determine the exact surplus amount available for distribution.
- Ensure that the bonus payments are made to all eligible employees based on the surplus within the permissible range.
- Communicate transparently with employees about the bonus calculation and distribution process to maintain trust and clarity.
By following these steps, you can effectively manage the allocable surplus within the specified bonus limits as per the Payment of Bonus Act. It is essential to adhere to legal requirements while ensuring fair and equitable bonus distribution among employees.
From India, Gurugram
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