Bonus Query - If Basic + Da Is Less Than 7000? - JPG Download

Dear Srihari,
Dear Srihari,
In continuation to the discussions, I would like to once again bring to your notice the Calculation of bonus in the light of amendment:
The Act provides that the bonus payable to an employee will be in proportion to his or her salary or wage. However, earlier if an employee’s salary is more than Rs 3,500 per month, for the purposes of calculation of bonus, it was assumed to be Rs 3,500 per month. The amendment raised this calculation ceiling to Rs 7,000 per month or the minimum wage notified for the employment under the Minimum Wages Act, 1948 whichever is higher.
I could not understand how you interpreted " if the bonus is less than the 7000 take the basic what ever the basic is ie ex. 6500 take it as the basic + DA . 15th October 2016 From India, Hyderabad D.srihari Manager-HR- cell-08686193637 Bulk Drug APIs.Hyderabad"
I may be corrected if my submissions are wrong.
P K Sharma

Dear all,
Rs. 7000/- is not a maximum ceiling limit but it is the minimum limit. So If an employee is drawing salary less than Rs. 7000/- then he should be paid min Rs. 7000/- if his salary is more than Rs. 7000/- then he should be paid at the rate of min wages fixed for that category in the state. Hope it is now clear to all.

Mr AL Gupta had very rightly interepreted the new bonus act It is very clear and how many colleagues get confused
1 If min wages is less than 7000, then for bonus calculation it should be considered as 7000/-
2 If min wages is more than 7000 & below 21000, then whatever the min wages earned on that 8.33% is bonus
3 Max. ceiling of bonus is @ 20% of min.wages earned i.e. workers cannot demand more than 20% as bonus.
Hope it is very clear & understandable.
P L Kanthan

When (basic+da)>7000 then it 7000 when(basic+da)<7000 then it actual earning
And the % may be 8.33 to 20 % of (basic+da) Max up to 20% with union agreement for workers

I think it is important for members to read the bonus act and understand it properly, so as not to pass wrong information the the readers on this forum.

Sec 10 defines minimum bonus :

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 8.33 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.

so, its 8.33% of salary or wages.

Sec 12 talks of bonus for certain employees :

Calculation of bonus with respect to certain employees.- Where the salary or wage of an employee exceeds 3*[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 3*[two thousand and five hundred rupees] per mensem.]

This limit of Rs. 2,500 was increased to Rs. 2,500 and now increased to "Rs. 7,000 or minimum wages, whichever higher"

so, an employee gets bonus (min bonus) at 8.33% of his actual wages (which is defined as basic + DA) and if his salary or wages is more than Rs. 7,000 then the bonus will be computed as if his salary is Rs. 7,500.

If the company has made more profit and money is available in allocable surplus account (working provided in Sec 5), then the bonus will be higher, subject to a maximum of 20% of salary or wages. And again, if someone's salary or wages is more then Rs. 7,000 then he gets 20% of the ceiling (20% of Rs. 7,000 X 12 months)

Rs. 7,000 is not the minimum bonus, it is not necessary for the company to pay Rs. 7,000 as bonus to someone whose basic and da is less than Rs. 7,000 per month.

Hi Members,
There has been frequent quries/doubts/misinterpretations about the latest Amendment in Bonus Act. The amendment is : -
" Where the salary/wage of the employee

Sorry friends, my PC misbehaved.
Pls find attached scanned copy of Bonus Act Amendment 2016.
Kindly read the sentence 3.(i) " three thousand and five hundred rupees" at both places where they occur, the words "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government," "whichever is higher " shall respectively be substituted;
This clearly says that even if the min wage is < 7000, min 7000 to be paid as bonus. i.e. every one is assured of min 7000 as Bonus; not that if anybody's wage is <7000, calculation shall be on that low wage.

Dear Priyabrat
In reference to your query, you are advised to refer to Section-13 of the Payment of Bonus Act, 1965, which says that if an employee has not worked for all the working days in an accounting year, his bonus amount will be proportionally reduced.
BS Kalsi,
Member since August, 2011

I agree with the contention of Sh Saswata Banerjee that the limit of Rs 7000/- has been fixed for the employees, who are drawing salary more than Rs 7000/- and up to Rs.21000/-per month. The employees who are getting less than Rs 7000/- shall be eligible to get the bonus calculated based on their basic plus DA drawn by them in that accounting year. Section 11 clearly provides that employee shall be eligible to get an amount in proportion to the SALARY OR WAGE EARNED BY HIM DURING THE ACCOUNTING YEAR where allocable surplus exceeds the amount of minimum bonus.
BS Kalsi,
Member since August, 2011

Dear All Members,

I would like to know in which sec of

Bonus act. It is written that if basic plus

DA is less then 7000 then bonus would be

calculate on actual basic drawn by employee and if basic plus DA is exceed

7000 then bonus is to be calculate on 7000 or minimum state wages fixed by appropriate govt for scheduled employment.

Also i would like to ask the basic question to all members what was the object of govt for inserting this act. Weather to provide benefit to employee or anything else? Why the govt has extend the threshold limit from 10000 to 21000 weather to bring more employees within the purview of bonus act. Or anything else? What was object of govt to extend the ceiling limit from 3500 to 7000 weather to provide higher amount as bonus to employees or to provide the benefit to employer,

Now let me tell you all few month back

I met with my range labour commissioner the same question i had asked to him if basic plus DA is less then 7000 then on what amount bonus is to be calculated he said this act was inserted to provide benefit to employees & drafting salary structure is depends on companies policy an employer may devide the salary also into allowances just to avoid the bonus also therefore even if basic plus DA is less then 7000 even then bonus would be calculate on 7000 or if employees are falls under scheduled category and state minimum wages is higher then 7000 then state minimum wages will be taken.

Thanks,