what does Seton & Set off means in Bonus Act. This information will be used to know how company decide the percentage of amount to b paid as bonus. Also help us to calculate bonus for the employees.
From India, Mumbai
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From India, Mumbai
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As per the Bonus Act, the minimum is 8.33%, and the maximum is 20%. If the allocable surplus is below 8.33%, it can be adjusted for the forthcoming 4 years, known as Set Off. Similarly, if the allocable surplus is more than 20%, the balance amount up to another 20% can be carried forward to the forthcoming 4 years, referred to as Set On.
Abbas.P.S
From India, Bangalore
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530Abbas.P.S
From India, Bangalore
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Dear Patel,
Section 15 of the Payment of Bonus Act, 1965 dealing with set-on and set-off of allocable surplus will apparently baffle anyone at the first reading. Further effort to understand by reading it together with Schedule IV will dull one's thirst due to the arithmetic examples shown therein. This may finally compel the reader to move away, deciding the necessity for oneself. Therefore, let me elaborate on what Abbas has briefly stated.
The determination of the bonus payable as per the Bonus Act in an accounting year is made from the amount of available surplus that can be allocated. However, Sec. 10 of the Act compels the employer to pay the statutory minimum bonus even in years where there is no allocable surplus or when a loss is sustained by the management. Similarly, Sec. 11 of the Act, with a liberal notion coupled with some restrictions, enjoins upon the employer to pay a higher bonus in any accounting year where the allocable surplus exceeds the minimum bonus of 8.33%, subject to a maximum of 20% of the salary or wage earned.
What should be done with the remaining allocable surplus above 20%? Can the employer keep it for themselves? No, because a bonus is conceptually considered as "deferred wages," and the practice must continue until the attainment of "living wages" for the working classes. To ensure this, it is imperative to have an alternative arrangement in place to utilize the allocable surplus exceeding the maximum bonus. Hence, Sec. 15 deals with the set-on and set-off of surplus allocable surplus.
Whenever the allocable surplus in an accounting year exceeds the maximum bonus payable, the excess should be carried forward to be set on in the succeeding accounting year, continuing up to the fourth year. It should be noted that the total amount set on to the succeeding year should be limited to only 20% of wages payable in that accounting year. Whenever in any accounting year the allocable surplus is nil or less than the minimum bonus, the amount already set on in the previous accounting years should be set off to make up for the shortfall in the current year for which the bonus is payable. By closely following the calculations illustrated in Schedule IV, the principles of set-on and set-off can be easily understood.
From India, Salem
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Section 15 of the Payment of Bonus Act, 1965 dealing with set-on and set-off of allocable surplus will apparently baffle anyone at the first reading. Further effort to understand by reading it together with Schedule IV will dull one's thirst due to the arithmetic examples shown therein. This may finally compel the reader to move away, deciding the necessity for oneself. Therefore, let me elaborate on what Abbas has briefly stated.
The determination of the bonus payable as per the Bonus Act in an accounting year is made from the amount of available surplus that can be allocated. However, Sec. 10 of the Act compels the employer to pay the statutory minimum bonus even in years where there is no allocable surplus or when a loss is sustained by the management. Similarly, Sec. 11 of the Act, with a liberal notion coupled with some restrictions, enjoins upon the employer to pay a higher bonus in any accounting year where the allocable surplus exceeds the minimum bonus of 8.33%, subject to a maximum of 20% of the salary or wage earned.
What should be done with the remaining allocable surplus above 20%? Can the employer keep it for themselves? No, because a bonus is conceptually considered as "deferred wages," and the practice must continue until the attainment of "living wages" for the working classes. To ensure this, it is imperative to have an alternative arrangement in place to utilize the allocable surplus exceeding the maximum bonus. Hence, Sec. 15 deals with the set-on and set-off of surplus allocable surplus.
Whenever the allocable surplus in an accounting year exceeds the maximum bonus payable, the excess should be carried forward to be set on in the succeeding accounting year, continuing up to the fourth year. It should be noted that the total amount set on to the succeeding year should be limited to only 20% of wages payable in that accounting year. Whenever in any accounting year the allocable surplus is nil or less than the minimum bonus, the amount already set on in the previous accounting years should be set off to make up for the shortfall in the current year for which the bonus is payable. By closely following the calculations illustrated in Schedule IV, the principles of set-on and set-off can be easily understood.
From India, Salem
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Bigger bonuses for more as Lok Sabha amends Payment of Bonus Act - The Economic Times.pdf
Amendment to Payment of Bonus Act 2015.jpg