Dear friends and seniors,
Could you provide an example of the calculation of a bonus as per the recent amendment? I would like to have a clear idea about the conditions.
Waiting for a reply 😳
Thanks & Regards,
GrHrm
From India, Hyderabad
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11Could you provide an example of the calculation of a bonus as per the recent amendment? I would like to have a clear idea about the conditions.
Waiting for a reply 😳
Thanks & Regards,
GrHrm
From India, Hyderabad
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Dear Friend,
Kindly click on the following link; it will provide you with the necessary information:
https://www.citehr.com/download-list...t+in+Bonus+Act
Please let me know if this information was useful. If not, let me try to find more information to share.
Regards,
Mohamed Sardhar
91 93831 93832
From India, Coimbatore
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Kindly click on the following link; it will provide you with the necessary information:
https://www.citehr.com/download-list...t+in+Bonus+Act
Please let me know if this information was useful. If not, let me try to find more information to share.
Regards,
Mohamed Sardhar
91 93831 93832
From India, Coimbatore
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Hello,
The recent amendment to the Payment of Bonus Act 1965 is yet in the form of an "Ordinance" though fully binding on all employers.
The said ordinance has four parts. But let me tell you that the method of "calculating" bonus has not changed. The applicability has changed in the following manner.
1) The changes are applicable from 1st April 2006, meaning that the bonus for the financial year 2006-2007 (payable before 30th November 2007) will have to be paid as per the provisions of the ordinance.
2) In the past, the maximum salary/wage was Rs. 3500/- per month for being covered in the Act. This limit has been raised to Rs. 10,000/-. This means that employees receiving a salary/wage less than this amount would benefit from the amendment.
3) Previously, derived bonus was payable at the actual salary/wage up to Rs. 2500/- per month. If the salary/wage was greater than Rs. 2500/- p.m. but less than Rs. 3500/- p.m., then the bonus was payable as though the salary/wage was Rs. 2500/- p.m. only. If the salary/wage was greater than Rs. 3500/- p.m., the concerned employee was NOT eligible to receive a bonus!
4) Now, with this ordinance/amendment, if the salary/wage is below Rs. 3500/-, then the bonus will be payable on the actual salary/wage. If the salary/wage is greater than Rs. 3500/- p.m. but less than Rs. 10,000/- p.m., then the bonus will be paid as though the salary/wage was Rs. 3500/- p.m. only. If the salary/wage is greater than Rs. 10,000/- p.m., then one would not be eligible to receive any bonus!
I hope the position is now clear to you. Kindly do not forget to look up the definition of wage under the act. It is "Basic Wage+D.A."
If you have queries, please do not hesitate to raise them.
Regards,
Samvedan
November 3, 2007
From India, Pune
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The recent amendment to the Payment of Bonus Act 1965 is yet in the form of an "Ordinance" though fully binding on all employers.
The said ordinance has four parts. But let me tell you that the method of "calculating" bonus has not changed. The applicability has changed in the following manner.
1) The changes are applicable from 1st April 2006, meaning that the bonus for the financial year 2006-2007 (payable before 30th November 2007) will have to be paid as per the provisions of the ordinance.
2) In the past, the maximum salary/wage was Rs. 3500/- per month for being covered in the Act. This limit has been raised to Rs. 10,000/-. This means that employees receiving a salary/wage less than this amount would benefit from the amendment.
3) Previously, derived bonus was payable at the actual salary/wage up to Rs. 2500/- per month. If the salary/wage was greater than Rs. 2500/- p.m. but less than Rs. 3500/- p.m., then the bonus was payable as though the salary/wage was Rs. 2500/- p.m. only. If the salary/wage was greater than Rs. 3500/- p.m., the concerned employee was NOT eligible to receive a bonus!
4) Now, with this ordinance/amendment, if the salary/wage is below Rs. 3500/-, then the bonus will be payable on the actual salary/wage. If the salary/wage is greater than Rs. 3500/- p.m. but less than Rs. 10,000/- p.m., then the bonus will be paid as though the salary/wage was Rs. 3500/- p.m. only. If the salary/wage is greater than Rs. 10,000/- p.m., then one would not be eligible to receive any bonus!
I hope the position is now clear to you. Kindly do not forget to look up the definition of wage under the act. It is "Basic Wage+D.A."
If you have queries, please do not hesitate to raise them.
Regards,
Samvedan
November 3, 2007
From India, Pune
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Hi Samvedan,
As you have mentioned in your point 4:
"If the salary/wage is greater than Rs. 3500/- p.m. but less than Rs. 10,000/- p.m., then the bonus will be paid as though the salary/wage was Rs. 3500/- p.m. only. If the salary/wage is greater than Rs. 10,000/- p.m., then one would not be eligible to receive any bonus!"
Can you explain to me what is written in Section 10 and 11 of the Bonus Act 1965?
Section 10 states that a minimum bonus shall be 8.33 percent of the "salary or wage earned by the employee during the accounting year" or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year.
Section 11 mentions that in lieu of such minimum bonus, the employer shall be bound to pay to every employee in respect of that accounting year a bonus that shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty percent of such salary or wage.
I want to focus on the salary paid during the year.
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As you have mentioned in your point 4:
"If the salary/wage is greater than Rs. 3500/- p.m. but less than Rs. 10,000/- p.m., then the bonus will be paid as though the salary/wage was Rs. 3500/- p.m. only. If the salary/wage is greater than Rs. 10,000/- p.m., then one would not be eligible to receive any bonus!"
Can you explain to me what is written in Section 10 and 11 of the Bonus Act 1965?
Section 10 states that a minimum bonus shall be 8.33 percent of the "salary or wage earned by the employee during the accounting year" or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year.
Section 11 mentions that in lieu of such minimum bonus, the employer shall be bound to pay to every employee in respect of that accounting year a bonus that shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty percent of such salary or wage.
I want to focus on the salary paid during the year.
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Hello,
Conceptually, a bonus is a "profit-sharing scheme" sanctioned by the state in the form of payment under the Bonus Act 1965. In doing so, the state has introduced the concept of "deferred wage" into the act.
A bonus is a replacement for the old system of "Bakshis" that employers used to give on festive occasions. Naturally, each employer could have followed a different system, resulting in differential amounts being paid to employees working under the same employer. To a large extent, to eliminate such non-judicious differential systems that began causing dissatisfaction among employees, this law was enacted to standardize and regularize such payments. That is the background of this act.
The concept of a minimum bonus (8.33%) is the deferred wage that covered employees will receive even if the organization incurs a loss. This percentage is to be applied to the bonusable salary/wage of the employee during the relevant financial year. The law also specifies that if an employee works for an employer for even 30 days in total during that financial year, they would be entitled to the declared bonus or the minimum bonus, as the case may be. The amount of Rs. 100 looks too meager as a bonus, but it was included in the act many years ago. This means that if an employee, based on the salary/wage received by them during that financial year, becomes entitled to less than Rs. 100 as a bonus (applying 8.33%), the law states that they should receive at least Rs. 100.
Is the point clear now?
Regards,
Samvedan
November 3, 2007
From India, Pune
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Conceptually, a bonus is a "profit-sharing scheme" sanctioned by the state in the form of payment under the Bonus Act 1965. In doing so, the state has introduced the concept of "deferred wage" into the act.
A bonus is a replacement for the old system of "Bakshis" that employers used to give on festive occasions. Naturally, each employer could have followed a different system, resulting in differential amounts being paid to employees working under the same employer. To a large extent, to eliminate such non-judicious differential systems that began causing dissatisfaction among employees, this law was enacted to standardize and regularize such payments. That is the background of this act.
The concept of a minimum bonus (8.33%) is the deferred wage that covered employees will receive even if the organization incurs a loss. This percentage is to be applied to the bonusable salary/wage of the employee during the relevant financial year. The law also specifies that if an employee works for an employer for even 30 days in total during that financial year, they would be entitled to the declared bonus or the minimum bonus, as the case may be. The amount of Rs. 100 looks too meager as a bonus, but it was included in the act many years ago. This means that if an employee, based on the salary/wage received by them during that financial year, becomes entitled to less than Rs. 100 as a bonus (applying 8.33%), the law states that they should receive at least Rs. 100.
Is the point clear now?
Regards,
Samvedan
November 3, 2007
From India, Pune
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