Hello, in this post we have discussed about the Bonus. In this post, we will cover the following:. The bonus is a reward that is paid to an employee for his work dedication towards the organization. The basic objective to give the bonus is to share the profit earned by the organization amongst the employees and staff members.
In India, there is a principle law relating to the procedure of payment of bonus to the employees and that law is named as Payment of Bonus Act, The Payment of Bonus Act applies to every factory and establishment which employs not less than 20 persons on any day during the accounting year.
The establishments covered under the Act shall continue to pay the bonus even if the no of employees falls below 20 subsequently. The payment of bonus act applies to the whole of India. Every employee drawing not less than Rs. When an employee is not eligible for the statutory bonus but the company wants to share bonus, it can be given as ex-gratia. The minimum bonus payment was capped at 8.
If the gross earning of your employees is below Rs. Calculation of bonus will be as follows:. Rahul is working as an engineer in a Company in Bangalore. His basic salary is Rs. Siddharth is working as a Sales officer in one of the shops in Delhi. You can find the attachment on Payment of Bonus Act, here. If you have any doubts or questions kindly drop them in the comment section below. Is it that my bonus should be calculated on the minimum wages scheduled by the govt.
Dear Sir, First Bonus will be calculated on your last drawn Basic at a percentage defined by your employer. The minimum percentage for calculation being 8. Also, it may be given on one month basic on more no. For e. Hope this has clarified your doubt. Then what is the purpose of Minimum wages Scheduled by the Govt. Also is their any documented declaration from the company regarding bonus percentages.
Can it differ from person to person.
Payment Of Bonus (Amendment) Act, 2015
Thanks for your your prompt response earlier. Sir, Minimum Wages is to set a standard amount limit in case for an employee with too low wages. For bonus documentation, the company audit report and company report will serve the need also FORM C will be the confirmation from employee end. Bonus rate will be standard across the company. And another doubt Minimum bonus is there any amendments made in that rs.
Sir, Yes. The calculation will change from company to company. As of Rs. My Gross salary is Rs : per month. If applicable, how it calculate my monthly bonus? Sir, Yes, you will be applicable provide your employer is, providing the same.
It is calculated at the rate defined by your employer on your basic earned for the no.The minimum bonus payment was also capped at 8. The calculation ceiling of INR has now been doubled to INR per month " or the minimum wage for the scheduled employment, as fixed by the appropriate Government" whichever is higher. Therefore, the cost associated with bonus payments could double or be greater still, depending on applicable minimum wagesbased on the organization's performance.
The Bonus Act applies to every factory and every establishment that employs 20 or more persons, and unlike other performance linked incentives offered by companies, the bonus payable under this law is not linked to the performance of the employee.
All employees earning up to the wage threshold increased to INR 21, by the Amendmentsand who have worked in the establishment for not less than 30 working days in the year are eligible to receive this statutory bonus.
Therefore, the Amendments could have a significant financial bearing for establishments, especially those in the medium and small scale sectors. We have analyzed the Amendments in some more detail below. Broadly, 'salary or wage' under the Bonus Act includes all guaranteed components of an employee's salary not just the basic salary and specifically excludes certain allowances and concessions. Salary structures adopted by organizations these days can be fairly complex, with multiple allowances and incentives built into the compensation structure.
With the increase in the wage threshold, employers would have to undertake a more detailed assessment to determine which components of their existing salary structure would fall with the definition of 'wages' under the Bonus Act, and accordingly determine which employees are eligible to receive the statutory bonus.
PAYMENT OF BONUS ACT
The appropriate Governments i. State Governments fix different minimum wages for various scheduled employments. Further, even within a particular scheduled employment, different minimum wages are notified for different categories of employees. Thus, employers would have to carry out an assessment of the applicable wage rates for different categories of employees in order to calculate the statutory bonus payable.
This issue would be even more significant for employers having offices in multiple States since the minimum wages for the same scheduled employment also vary from one State to another, and the variation can sometimes be quite significant. For instance, the monthly minimum wage for a skilled employee in a shop or commercial establishment in Delhi is INR 11, while the monthly minimum wage for a skilled employee in a shop or commercial establishment in Maharashtra is INR 8, Another consequence of including this reference to minimum wages is that it creates an additional level of unpredictability in the calculation of the bonus amount.
A lot of companies especially MNCs currently follow a practice of calculating the maximum statutory bonus i. However, since there is now a reference to the minimum wages under the MW Act and since the minimum wages are updated on a periodic basis i.
Employers in India usually follow a financial year from 1 April to 31 March and close their books of accounts accordingly. Therefore, most companies would have already determined the allocable surplus for the financial year - 15 i. Since the Amendments are retrospective, it would impact the distribution of bonus in relation to the financial year - 15 as well. The allocable surplus would need to be re-assessed to account for the increased pool of covered employees and the bonus eligibility re-determined based on the revised calculation ceilings and available surplus.
This would then have to be redistributed among this larger pool of employees, which may result in various outcomes - i companies could now be required to pay an additional bonus to employees who have already been paid, if the bonus amount that was paid earlier is lower than the bonus payable after the Amendments; or ii if the bonus already paid was higher than the bonus payable after the Amendments, there may even be a reduction of bonus entitlement for some individuals either in terms of the amount payable or in the context of percentage of bonus receivedto accommodate bonus payments to the newly covered staff using the allocable surplus.
Therefore, there would be an increase in the financial burden and greater accounting complexities for employers, and in some cases, there may also be issues around recovery of amounts from employees.Home New Signup Login. Statutory Bonus Calculation - As per new bonus amendment Login To Your Account.
Suresh Labour Consultant. Rajesh Kumar Dubey Manager - Hr. Nagaraju Executive Hr. Sanjaysinghrawat hotmail. Masifhe Hr Assistant. Co is a repository of information and resources created by industry seniors and experts sharing their real world insights. Join Network. Please Login To Add Reply. Other Similar Discussions On Cite. Bonus calculation query as per recent amendment - pdf download. Clarification on payment of bonus amendment actcalculation Archive.
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What is the ESIC amount that should be deducted on statutory bonus? Bonus Calculation - employer is restricted to pay bonus for above mention limit? Calculation of Bonus - Whether Over Time is also considered or not?Sir me contract me Kam karta hu 3 sal ho Gaye he hamara contractor hame bonus deta hai contract me Kam karne valoko kitna bonus milna cha hiye apko pata he to reply di jiye.
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Your email address will not be published. Table of Contents. Comments Sir me contract me Kam karta hu 3 sal ho Gaye he hamara contractor hame bonus deta hai contract me Kam karne valoko kitna bonus milna cha hiye apko pata he to reply di jiye. Hello, sir mera naam rohit hai aur me cConsultant of customs,central, excise office me 2 month kaaam kiya tha jisme 1 month ki salery de diya aur dosary month ki salry nhi diya na to me kya karu plazz helpme sir.
Leave a Reply Cancel reply Your email address will not be published.R ecently, the government approved amendments to the Bonus Act, raising the limit for calculations of bonuses. More so, it has also made this act applicable from April 1st, Establishments will now have to pay the unpaid bonus for the previous 2 financial years as well. The amendments have been made with the intention to bring more employees under the eligibility of the Bonus Act.
While this will certainly be cheered by employees, this also creates a financial liability for employers. We came up with 10 questions that would clear all doubts and help you tackle the increase in statutory bonuses head on.
Here are the answers to all the questions that you may have:. A bonus is an additional payment given to employees with the intention to motivate them. According to this act, certain establishments had to pay an amount to their employees based on their profitability each year. This amount was to be over and above their basic salaries. The purpose of the act was to enable employees to partake in the profits of their respective companies.CMA Inter Law and Ethics-Payment of Bonus Act 1965
The bonus, when applicable, also gives employees an opportunity to earn more than the minimum wages. The government has approved amendments that have not only increased the amount paid out but also the number of people who are eligible. Here are the recent changes to the act:. Earlier this act only covered employees that were earning up to Rs.
However, the amendment has raised this ceiling to Rs. This has been done with the intention of bringing more employees under the eligibility of the Bonus Act.
This also means that employers will have to pay employees that fall between the Rs. Before the amendment, the minimum that could be paid to employee under the bonus act was Rs. However, this amount has been doubled to become Rs. Since, companies are expected to pay all arrears sincethis particular change seems to be causing the highest discomfort for employers. In states where the minimum wage is higher than Rs 7, the statutory arrears liability becomes even higher.
The Bonus Actis only applicable when all of the following conditions are met:. Yes, employees that have left the organization are still eligible for their arrears. Employers will have to pay the outstanding bonus of past employees as well. The payment of Bonus for a financial year has to be made within 8 months of its completion. Since the financial year in India ends in March, payments have to be made by the end of October of the next financial year.
Although the bill for the amendment of the Bonus Act has been sanctioned by the government, there has been no formal date that has been declared for the payment of the arrears. It can be assumed that these arrears should be paid out before the due date of the current financial year. Companies can make the payment to current employees using the same medium that they use to transfer salaries. On the other hand, past employees can be paid by issuing individual cheques.
As a current employee, you can simply expect this amount to be transferred to you along with your salary.
Past employees will have to enquire with their companies on how they can make their collection. Companies should prepare and organize cheques for all previous employees to make the payout a smooth process. We understand that calculating the liability can be a little tricky and we wanted to simplify this process for you. Changing the mandatory components of salaries like Basic salary or HRA will only make things more complicated. The amendments to the Bonus Act and its retrospective impact puts labour based companies in an unfavourable position.
This is why planters in Kerala decided to file a petition with the Kerala High court, challenging the retrospective effect of the act. The High Court, in response, has issued an interim order staying the retrospective implementation of the Bonus Act. In the coming months and weeks, other states may also join Kerala in challenging the amendments of the Bonus Act.And whereas copies of the said Official Gazette were made available to the general public on the 23rd April.
Payment of Bonus Act
And whereas the objections and suggestions received on the said draft rules from the public have been considered by the Central Government. Indian Railways is likely to declare bonuses to its non-gazetted employees before the festive season. Now, therefore, in exercise of the powers conferred by section 38 of the Payment of Bonus Act, 31 ofthe Central Government hereby makes the following rules further to amend the Payment of Bonus Rules,namely In the Payment of Bonus Rules,for rule 5, the following rule shall be substituted, namely Annual return.
Provided that during inspection, the inspector may require the production of accounts, books, registers and other documents maintained in electronic form or otherwise. Source: labour. Payment of stipend to apprentices and reimbursement by NAPS. Payment of wages of outsourced employees for the month of March Employees Provident Fund settles 1.
Income Tax Refunds up to Rs. GConnect is now available on Google Play Store. Download now!! Also Read. Sep 14, You might also like. Prev Next.But have you ever wondered how your bonus was calculated? And no, your bonus does not depend on how much your boss likes you!
Inthe government of India implemented the payment of bonus act, which guaranteed a minimum bonus per month to people whose salary was below a certain limit. This means that 8. However, the maximum amount of the bonus can be calculated is on INR Now, knowing whether your company is eligible or not is crucial, so if your company has the following criteria then it is eligible:.
But are you eligible for the bonus? If you satisfy the following criteria, then you are. According to government policy, bonuses are given out around 8 months after the end of every financial year. So, in India, where the financial year ends in March, bonuses are usually due around October-November. This is why companies prefer to give them out during Diwali. We genuinely hope you have learned something new from our blog, and stay tuned for more informative blogs posts?
Jain and Company serve more than companies across India and helping them with their payroll processing needs and EPF consultancy. Know about the EPF Act. Sir, I need your suggestion regarding the payment of bonus act In our organization 50 nos. Hence, our organization is not eligible to get under bonus act ?
So, you are requested to kindly solved the matter to get the bonus. Since you have good presentation skills, it is my sincere request to start writing posts about important points of all Indian Labour Laws or atleast the most important labour laws.
HR professionals often find difficulty in finding relevant and updated information of labour laws. The way you have summarised Bonus act, please do so for other acts too.