Understanding Annual Leave Payments and Bonuses
I am new to HR work and have some doubts regarding annual leave payments. Can you please explain fixed bonuses and variable bonuses? I have heard that Basic and DA constitute fixed bonuses, while the remaining daily position bonus and other production-related bonuses belong to the variable bonus category.
Specific Query on Annual Leave Payments
I have a specific query: when we pay annual leave payments, which bonuses do we need to consider? Additionally, if we deduct casual leave amounts per hour from their salary, should we follow the same method?
Please assist me in clarifying the above issues.
Thanks,
From India, Salai
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1I am new to HR work and have some doubts regarding annual leave payments. Can you please explain fixed bonuses and variable bonuses? I have heard that Basic and DA constitute fixed bonuses, while the remaining daily position bonus and other production-related bonuses belong to the variable bonus category.
Specific Query on Annual Leave Payments
I have a specific query: when we pay annual leave payments, which bonuses do we need to consider? Additionally, if we deduct casual leave amounts per hour from their salary, should we follow the same method?
Please assist me in clarifying the above issues.
Thanks,
From India, Salai
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When you raise any query, please be specific about your doubt. Please do not complicate the query by combining multiple doubts or issues arising from various enactments. You have raised queries about (i) Annual Leave Payments, (ii) Fixed Bonus and Variable Bonus, and (iii) Deduction for Casual Leave.
Since you are new to the HR department, I would advise you to mention the type of company, size of manpower, nature of business carried out, etc., and have a specific query. We need to check the applicability of the Act & rules to the particular organization. Once it is clarified, it is easy to address your doubts or answer your query. You also have the option to raise various queries in different threads on this site.
Annual Leave Payments
When you say Annual Leave Payments, I presume you mean encashment of Earned Leaves/Privilege Leaves. The number of leave entitlements in a company depends upon the state you are located in. Every state has different leave entitlements and leave policies, which should be reviewed before defining the leave policy of your company. The leave policy of a company cannot be less than that mentioned in the statutes. These are the leaves that are earned in the previous year and enjoyed in the preceding years. These leaves can be carried forward for a quantum up to a total of three years and vary from state to state as per the state's Shop & Establishment Act or Factories Rules. These are encashable on basic salary to the employee, normally upon their termination. The conditions for availing these leaves usually differ from company to company but normally require at least 15 days' notice in advance.
Bonuses
Regarding your query about bonuses, it all depends on the company, which may have different types of bonuses to encourage the enhancement of production, quality, or individual performance. These may be named as production bonus, target bonus, performance bonus, which may be fixed or variable. As far as statutory bonus is concerned, it is governed under the Payment of Bonus Act, 1965. It is applicable to all establishments that employ 20 or more persons. Employees drawing a salary up to 10,000/- per month are covered, but the limit for calculations is fixed at Rs 3,500/- per month.
Deduction for Casual Leave
Your last query where you mentioned "deduct casual leave amount per hour from their salary is the same method" is not clear. However, I can only say that the law does not provide for this kind of deduction against casual leave. Of course, you have the right to make proportional deductions from the wages of the workers for their absence from duty than the normal fixed hours under Section 15 of the Minimum Wages Act, 1948.
Regards,
BS Kalsi
Member since Aug 2011
From India, Mumbai
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Since you are new to the HR department, I would advise you to mention the type of company, size of manpower, nature of business carried out, etc., and have a specific query. We need to check the applicability of the Act & rules to the particular organization. Once it is clarified, it is easy to address your doubts or answer your query. You also have the option to raise various queries in different threads on this site.
Annual Leave Payments
When you say Annual Leave Payments, I presume you mean encashment of Earned Leaves/Privilege Leaves. The number of leave entitlements in a company depends upon the state you are located in. Every state has different leave entitlements and leave policies, which should be reviewed before defining the leave policy of your company. The leave policy of a company cannot be less than that mentioned in the statutes. These are the leaves that are earned in the previous year and enjoyed in the preceding years. These leaves can be carried forward for a quantum up to a total of three years and vary from state to state as per the state's Shop & Establishment Act or Factories Rules. These are encashable on basic salary to the employee, normally upon their termination. The conditions for availing these leaves usually differ from company to company but normally require at least 15 days' notice in advance.
Bonuses
Regarding your query about bonuses, it all depends on the company, which may have different types of bonuses to encourage the enhancement of production, quality, or individual performance. These may be named as production bonus, target bonus, performance bonus, which may be fixed or variable. As far as statutory bonus is concerned, it is governed under the Payment of Bonus Act, 1965. It is applicable to all establishments that employ 20 or more persons. Employees drawing a salary up to 10,000/- per month are covered, but the limit for calculations is fixed at Rs 3,500/- per month.
Deduction for Casual Leave
Your last query where you mentioned "deduct casual leave amount per hour from their salary is the same method" is not clear. However, I can only say that the law does not provide for this kind of deduction against casual leave. Of course, you have the right to make proportional deductions from the wages of the workers for their absence from duty than the normal fixed hours under Section 15 of the Minimum Wages Act, 1948.
Regards,
BS Kalsi
Member since Aug 2011
From India, Mumbai
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Sumary of Annual Leave--Sample.x ls
COM102 Annual Leave Policy 2009.doc