Hey Guys, Can anyone able to tell me what is the limitation on the Bonus % for Executive HR ??? Min is 8.33% & Max ??? Please do reply, its urgent... Thanks in advance Regards. Chanda
From India, Mumbai
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From India, Mumbai
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Dear Friend,
With reference of your quesry please go through the below lines, where I have mentioned the details as per Payment of Bonus Act, 1965, whereas the nos. are indicating the respected sections and subsections....
8. Eligibility for bonus.—Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.
9. Disqualification for bonus.—Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for --
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment.
1[10. Payment of minimum bonus.—Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be per cent 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:
Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effecting relation to such employee as if for the words “one hundred rupees”, the words “sixty rupees” were substituted.]
2[11. Payment of maximum bonus.—(1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting; year bonus which 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 per cent, of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.]
3[12. Calculation of bonus with respect to certain employees.—Where the salary or wage of an employee exceeds 4[two thousand and five hundred rupees] per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were [two thousand and five hundred rupees] per mensem.]
5[13. Proportionate reduction in bonus in certain cases.—Where an employee has not worked for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than per cent, of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.]
From China
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151With reference of your quesry please go through the below lines, where I have mentioned the details as per Payment of Bonus Act, 1965, whereas the nos. are indicating the respected sections and subsections....
8. Eligibility for bonus.—Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.
9. Disqualification for bonus.—Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for --
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment.
1[10. Payment of minimum bonus.—Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be per cent 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:
Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effecting relation to such employee as if for the words “one hundred rupees”, the words “sixty rupees” were substituted.]
2[11. Payment of maximum bonus.—(1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting; year bonus which 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 per cent, of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.]
3[12. Calculation of bonus with respect to certain employees.—Where the salary or wage of an employee exceeds 4[two thousand and five hundred rupees] per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were [two thousand and five hundred rupees] per mensem.]
5[13. Proportionate reduction in bonus in certain cases.—Where an employee has not worked for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than per cent, of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.]
From China
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Dear Friends, It’s very simple, take out 20% of Basic + DA for Bonus, if the company has fixed 20% as Bonus and the same procedure for Gratuity also, just take care of fixed percentage.
From China
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From China
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Hey Deepak,
I got your point, but I want to know if there is any maximum limitation on bonus percentage for the hierarchies like for "Executives" the maximum bonus limit is 30%, for "Managers" it is 20%, etc. Can you help me with this?
Regards,
Chanda
From India, Mumbai
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I got your point, but I want to know if there is any maximum limitation on bonus percentage for the hierarchies like for "Executives" the maximum bonus limit is 30%, for "Managers" it is 20%, etc. Can you help me with this?
Regards,
Chanda
From India, Mumbai
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Ok, agreed, but this is when the company has a fixed bonus. In our case, after our 6-month appraisal, being an HR executive, we got a 25% bonus based on your ratings, whereas our expectation of a bonus was somewhere around 30 to 40% due to the good rating. Now, other employees on the work floor, such as Analyst level-3, received 58% of a bonus following the same procedure.
Now, my question is: Is there any bonus act that states the company cannot pay HR executives more than 25 or 30% of a bonus?
Regards
From India, Mumbai
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Now, my question is: Is there any bonus act that states the company cannot pay HR executives more than 25 or 30% of a bonus?
Regards
From India, Mumbai
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Dear Chanda, It seems you are trying to co-relate the performance bonus with the bonus, or incentive with the bonus....
From China
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From China
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No, yaar. We get a bonus twice a year i.e. for April and October, and both are dependent on our performances. All eligible employees get a bonus depending on their performance ratings. For this time, we (Executive HR) got 25%, and some employees on the work floor got more than 50% of a bonus. Now, I want to know if there is any act that says the company cannot give more than 25% of a bonus to Executive HR. Hope I am clear.
From India, Mumbai
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From India, Mumbai
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Dear Chanda,
As this case appears to be different from others, where the employer pays bonuses based on productivity calculations, possibly as part of a contract or a general understanding between the employer and employees, the bonus percentage can be increased, fixed by agreement. You mentioned an Executive HR being paid 25%, while Managers receive up to 50%. In such cases, you may refer to the below section of the Payment of Bonus Act 1965:
31-A. Special provision with respect to payment of bonus linked with production or productivity - Notwithstanding anything contained in this Act, -
(i) Where an agreement or settlement has been made by employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), or
(ii) Where employees enter into any agreement with their employer after such commencement,
For payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive the bonus due to them under such agreement or settlement, as the case may be:
(Note: Ins. by Act 66 of 1980, (w.e.f. 21st August, 1980)) Provided that any agreement or settlement where employees relinquish their right to receive the minimum bonus under Sec.10 shall be null and void insofar as it purports to deprive them of such right:
(Note: Subs. by ibid) Provided further that such employees shall not be entitled to be paid such a bonus in excess of twenty percent of the salary or wage earned by them during the relevant accounting year.
Please let me know if this matter still seems confusing; we will strive for the best result.
From China
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As this case appears to be different from others, where the employer pays bonuses based on productivity calculations, possibly as part of a contract or a general understanding between the employer and employees, the bonus percentage can be increased, fixed by agreement. You mentioned an Executive HR being paid 25%, while Managers receive up to 50%. In such cases, you may refer to the below section of the Payment of Bonus Act 1965:
31-A. Special provision with respect to payment of bonus linked with production or productivity - Notwithstanding anything contained in this Act, -
(i) Where an agreement or settlement has been made by employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), or
(ii) Where employees enter into any agreement with their employer after such commencement,
For payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive the bonus due to them under such agreement or settlement, as the case may be:
(Note: Ins. by Act 66 of 1980, (w.e.f. 21st August, 1980)) Provided that any agreement or settlement where employees relinquish their right to receive the minimum bonus under Sec.10 shall be null and void insofar as it purports to deprive them of such right:
(Note: Subs. by ibid) Provided further that such employees shall not be entitled to be paid such a bonus in excess of twenty percent of the salary or wage earned by them during the relevant accounting year.
Please let me know if this matter still seems confusing; we will strive for the best result.
From China
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Hi deepak, In our company we have score card for evaluation, depending on % we have scored we get the bonus. would like to hear your comments on this. Rgds, deeps
From India, New Delhi
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From India, New Delhi
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Dear Chanda ji,Please see the attachment for “Payment of Bonus Act check list” it may clarify your doubts.REgard,PBS KUMAR
From India, Kakinada
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From India, Kakinada
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hi chanda its not that you r getting bonus twice its your performance reward. bonus is paid once in a year and its minimum is 8.33% and maximum is 20 5 for all. with regards sikata
From India, Sambalpur
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From India, Sambalpur
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Dear Friends,
I guess it's all a simple matter but still confusing.
Deepak: First of all, thanks a lot for sharing valuable information about the bonus. But still, what I feel is the bonus linked with production is different from what our friend Chanda is mentioning in this post. And according to me, the Bonus Act doesn't speak about different slabs for different people in the organization. Correct me if I am wrong.
Regards,
Amith R.
From India, Bangalore
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I guess it's all a simple matter but still confusing.
Deepak: First of all, thanks a lot for sharing valuable information about the bonus. But still, what I feel is the bonus linked with production is different from what our friend Chanda is mentioning in this post. And according to me, the Bonus Act doesn't speak about different slabs for different people in the organization. Correct me if I am wrong.
Regards,
Amith R.
From India, Bangalore
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Dear Hayram, I have attached one excel file containing calculation of Gratuity, hope it will be of some use for you. Regards Amith R.
From India, Bangalore
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From India, Bangalore
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Dear All, i think Chanda is taking about performance bonus laid down by company having linked with deliverables etc.and not Bonus under Payment of Bonus Act 1965. Regards, ACCHR
From India, Mumbai
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From India, Mumbai
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Dear Amit/Deepali, :-P
Maybe I have given a bit far answer from the right query, but I tried a lot to understand the query first. At a moment, I felt it's something related to performance bonus, but later on, I corrected myself with the reason that it is calculated based on productivity, evaluating the performance, which again clarifies it as a performance bonus. However, it seems the matter is yet to be more elaborated by the thread owner.
Secondly, as Deepali has asked for comments, I would like to clarify one thing: whether a company fixes the percentage of the bonus, or it may depend on various techniques such as scorecards, appraisals, or the performance growth of the company. It never goes beyond the fixed limit of 20%, isn't it??
From China
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Maybe I have given a bit far answer from the right query, but I tried a lot to understand the query first. At a moment, I felt it's something related to performance bonus, but later on, I corrected myself with the reason that it is calculated based on productivity, evaluating the performance, which again clarifies it as a performance bonus. However, it seems the matter is yet to be more elaborated by the thread owner.
Secondly, as Deepali has asked for comments, I would like to clarify one thing: whether a company fixes the percentage of the bonus, or it may depend on various techniques such as scorecards, appraisals, or the performance growth of the company. It never goes beyond the fixed limit of 20%, isn't it??
From China
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Dear Friends, This tabel is ueful for you.Please find the attached file herewith. Thanks & Regards, Dipali Lakhani
From India, Ahmadabad
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From India, Ahmadabad
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Dear All,
Going through all the replies, I want to add that as per the Bonus Act of 1965, a special provision is given for the payment of a bonus linked with performance. However, for this, an agreement should be in place with the union, and for a valid agreement, every agreement should be registered at the Labor Department. In explanation of this special clause, it is clearly mentioned that a performance-based bonus should not be less than 8.33% and not more than 20%.
So it is clear that the bonus given under the Bonus Act, whether linked with performance (under any agreement) or linked with profit, has a minimum limit of 8.33% and a maximum of 20%. This information can be shown in Form C.
Going beyond the Act, any organization is free to give performance-based bonuses to its employees as per its own policy. A performance-based bonus for HR executives may be 25% or any percentage fixed by the management. It depends upon the organization's policy.
Thanks,
From India, Lucknow
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Going through all the replies, I want to add that as per the Bonus Act of 1965, a special provision is given for the payment of a bonus linked with performance. However, for this, an agreement should be in place with the union, and for a valid agreement, every agreement should be registered at the Labor Department. In explanation of this special clause, it is clearly mentioned that a performance-based bonus should not be less than 8.33% and not more than 20%.
So it is clear that the bonus given under the Bonus Act, whether linked with performance (under any agreement) or linked with profit, has a minimum limit of 8.33% and a maximum of 20%. This information can be shown in Form C.
Going beyond the Act, any organization is free to give performance-based bonuses to its employees as per its own policy. A performance-based bonus for HR executives may be 25% or any percentage fixed by the management. It depends upon the organization's policy.
Thanks,
From India, Lucknow
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Hi, Deepak. Can you explain the formula for calculating the bonus? As per my knowledge, (total wage on a particular year)/(total number of days present by employee) * 8.33. Is this correct? I have doubts about it.
Thanks for your information. Bye.
From India, Visakhapatnam
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Thanks for your information. Bye.
From India, Visakhapatnam
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Hello All,
I agree with Deepak's explanation on Bonus. However, I believe Chanda has a different query. Unknowingly or I don't know, Bonus is mixed with Performance Pay. In our organization, we call it Variable Pay (Performance Pay), and we receive it every quarter. The calculation of this pay depends on the team's performance. Sometimes it exceeds 100% or falls below 90%, but this does not mean we receive money beyond our CTC. The standard amount is fixed in the CTC. Each quarter, we receive approximately 4-5K (depending on performance). I am unsure of the basis on which this amount is calculated and how it is distributed within the team. Every organization has its own policies.
Chanda,
If you are receiving a Bonus above 20%, then your organization might have different policies to address it. I can provide you with an example from my experience. In the year 2006, I received a bonus at a rate of 8.33% simply because my basic salary was below 10K monthly. Many employees in our organization did not receive it.
(For your information, I am from the IT industry, and I apologize if the rules/processes/policies differ from those in production/manufacturing.)
Please clarify if I am mistaken.
Thanks,
Kishor
From India, Pune
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I agree with Deepak's explanation on Bonus. However, I believe Chanda has a different query. Unknowingly or I don't know, Bonus is mixed with Performance Pay. In our organization, we call it Variable Pay (Performance Pay), and we receive it every quarter. The calculation of this pay depends on the team's performance. Sometimes it exceeds 100% or falls below 90%, but this does not mean we receive money beyond our CTC. The standard amount is fixed in the CTC. Each quarter, we receive approximately 4-5K (depending on performance). I am unsure of the basis on which this amount is calculated and how it is distributed within the team. Every organization has its own policies.
Chanda,
If you are receiving a Bonus above 20%, then your organization might have different policies to address it. I can provide you with an example from my experience. In the year 2006, I received a bonus at a rate of 8.33% simply because my basic salary was below 10K monthly. Many employees in our organization did not receive it.
(For your information, I am from the IT industry, and I apologize if the rules/processes/policies differ from those in production/manufacturing.)
Please clarify if I am mistaken.
Thanks,
Kishor
From India, Pune
Acknowledge(0)Amend(0)CALCULATION OF BONUS:
The method for calculation of annual bouns is as follow:
- Calculate the gross profit profit in the manner specified in-
- First Schedule, in case of a banking company, or
- Second Schedule, in any other case.
- Calculate the Available Surplus.
Available Surplus = A+B, where A = Gross Profit – Depreciation admissible u/s 32 of the Income tax Act - Development allowance - Direct taxes payable for the accounting year (calculated as per Sec.7) – Sums specified in the Third Schedule.
B = Direct Taxes (calculated as per Sec. 7) in respect of gross profits for the immediately preceding accounting year – Direct Taxes in respect of such gross profits as reduced by the amount of bonus, for the immediately preceding accounting year. - Calculate Allocable Surplus
Allocable Surplus = 60% of Available Surplus, 67% in case of foreign companies. - Make adjustment for ‘Set-on’ and ‘Set-off’. For calculating the amount of bonus in respect of an accounting year, allocable surplus is computed after considering the amount of set on and set offf from the previous years, as illustrated in Fourth Schedule.
- The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages received by them during the relevant accounting year.
From China
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Hi Deepak,
As I said, in my company, it's not restricted to the limit of 20%. It totally depends upon the percentage we score in our scorecard. Please update me if there is any new policy or rule applied, specifically to the scorecard system.
Regards,
Deeps
From India, New Delhi
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As I said, in my company, it's not restricted to the limit of 20%. It totally depends upon the percentage we score in our scorecard. Please update me if there is any new policy or rule applied, specifically to the scorecard system.
Regards,
Deeps
From India, New Delhi
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Hi All ! Is there any exemption from maintaining the regsiters of Allocable Surplus & Set on / Set off, if the establishment is new, or there is Productivity Linked Bonus ? Thanks,
From India, New Delhi
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From India, New Delhi
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Can I have a clarification on Bonus calculcation as per the following : 1. Basic + Da =10000 howmuch? 2. Basic + Da >10000 howmuch? 3. Basic + Da < 10000 howmuch? pl reply regards gopu.s
From India, Pondicherry
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From India, Pondicherry
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Please accept my sincere appreciation for the efforts you make both quantitatively and qualitatively towards helping people out. Your guidance is certainly very superior, thoughtful, and exhaustive. Keep it up.
From India, Bangalore
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From India, Bangalore
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Some companies give PP (profit percentage) in April; it goes up to 25% maximum for every employee. The bonus lower limit starts from 8.33% for blue-collar workers, but for executive ranks, it depends on the company's financial stage. Performance is a key factor in determining the bonus.
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