There is always curiosity in the minds of employees regarding the bonus received at the end of the festive season or the end of the financial year, how much amount will come into their account. The payment of statutory bonus in India is governed by the provisions of the Payment of Bonus Act, 1965 (and the new Code on Wages). According to the law, it is mandatory to give bonus in any institution or company where 20 or more employees are employed. Under the rules, if an employee's monthly salary (Basic Salary + Dearness Allowance i.e. Basic + DA) is ₹ 21,000 or less, then he is legally entitled to receive statutory bonus. If the basic salary exceeds ₹21,000 by even ₹1, the company is not legally obliged to pay a bonus; However, companies can give incentive or ex-gratia bonus under their policy. What is the 30 day rule? (Minimum Service Condition) The most important and mandatory rule of the Bonus Law is '30 Working Days Rule': Any employee is considered entitled to receive bonus in the relevant financial/accounting year only if he has worked for at least 30 working days in the organization during that year. Not necessarily 30 consecutive days: It is not necessary that 30 days be consecutive; The total attendance in the entire year should be 30 days. Probationary, temporary, and new employees: This rule applies to everyone. If an employee leaves the job or joins a new job in the middle of the year and has completed 30 days, then he is fully entitled to get the bonus in proportion to the months he has worked (Pro-rata Basis). If an employee is able to work only 29 days in a year, he will not legally get any bonus. Why doesn't a person earning ₹21,000 get bonus on his full salary? Know the ceiling of ₹ 7,000: Often employees think that if their salary is ₹ 21,000, then the bonus will be withdrawn directly at ₹ 21,000, but this is where the biggest confusion lies. There are two different ceilings set in the law: Eligibility Ceiling: ₹21,000 per month (this decides whether you will get the bonus or not). Calculation Ceiling: ₹7,000 per month or the 'Minimum Wage' fixed by the State Government for the respective work, whichever is higher. That is, if the basic + DA of an employee is ₹ 21,000, then for calculation his monthly salary will not be considered as ₹ 21,000, but only ₹ 7,000 (or higher minimum salary). How much bonus will be made on salary of ₹ 21,000? Accurate Calculation: By law, every company has to give a minimum bonus of 8.33% and a maximum of 20%. It is legally mandatory to pay a minimum bonus of 8.33% even if the company incurs losses. If we take the standard calculation base of ₹7,000 per month (₹84,000 annually) as the base: 1. Minimum Bonus – 8.33%: Calculated Salary: ₹7,000 × 12 months = ₹84,000 Bonus Amount: 8.33% of ₹84,000 = ₹6,997.20 (approximately ₹7,000 or approximately equal to one month's calculated salary) 2. Maximum Bonus (Maximum Bonus – 20%): If the Allocable Surplus of the company is strong and the company gives a maximum bonus of 20%: Bonus amount: 20% of ₹84,000 = ₹16,800 per annum (Note: If the government minimum wage in your state or industry is more than ₹7,000, say ₹10,000 per month, then the calculation will be on the basis of ₹10,000, making the minimum bonus ₹9,996 and the maximum bonus at 20% will make up to ₹24,000). Under what circumstances can I lose my bonus? There are also some strict sections in the law under which an employee can be disqualified from the bonus: If found involved in financial fraud or embezzlement. Violent, indecent or illegal conduct in the workplace. On dismissal from service on charges of theft, vandalism or willful damage to company property. As per the rules, it is mandatory for companies to pay this bonus amount into the bank accounts of eligible employees within 8 months of the end of the financial year.
