Regarding Statutory Bonus

Hi Community

Hope everyone is safe and healthy.

I have a small confusion regarding statutory bonus calculation. Below is the e.g for reference:

Calculation of Bonus as per Bonus Act (Amendment of 2015)

If the gross earning of your employees is below Rs.21000 you are eligible to pay a bonus. Calculation of bonus will be as follows:

  • If Basic+DA is below Rs.7000 then the bonus will be calculated on the actual amount.

  • If Basic+DA is above Rs.7000 then the bonus will be calculated on Rs.7000.

Example:

Case 1:
If the Basic salary of the employee is less than or equal to Rs 7,000

Saahil is working as an engineer in a Company in Bangalore. His basic salary is Rs. 6,500 per month.

Formula: Basic Salary*8.33% = Bonus per month

6500*8.33% = 541.45 (6497.4 per annum)

Case 2
If the Basic salary of the employee is higher than Rs 7,000

Vedant is working as a Sales officer in one of the shops in Delhi. His basic salary is Rs. 18,000 per month.

Formula: Basic Salary*20% = Bonus per month

7,000*20% = 1400 per month

Case 3
If the Basic salary of the employee is higher than Rs 21,000

There is no bonus applicable to employees having a basic salary of more than Rs. 21000.

I got clarity on Case 1 and Case 3, but I have confusion with Case 2. Can we keep the percentage at 8.33%, or do we have to keep 20% for this, or it can vary between 8.33%-20%.

Kindly help me out.

Regards
Manjot Singh

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Dear Sir/Madam,

Small correction I need to suggest. In the Payment of Bonus Act, 1965, there is no concept called " Gross Salary". There is mention of Wages, which means " Basic Salary’ in corporate terminology. Hence if an employee’s Basic Wage is less than 21000, he will be eligible for the Bonus as per the Act.

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