As per sec.10 minimum bonus 8.33% is mandatory, can this mandatory bonus can be paid on monthly basis?

Dear All,

I have gone through the act but I am unable to find that:
As per sec. 10, a minimum bonus of 8.33% is mandatory. Can this mandatory bonus be paid on a monthly basis?
If yes, can this monthly bonus be deducted from the bonus calculated on allocable surplus?
If yes, should the return be submitted on a monthly basis or on a yearly basis?
The employee who has left the services in the middle of the financial year is entitled to get a bonus more than 8.33% based on allocable surplus.
Seniors are requested to guide on the matter.

Bhanu,

I have never heard of paying a bonus on a monthly basis. What advantages do you get in disbursing monthly?

Regards,

Pon

Dear Bhanu,

I had never heard about monthly statutory bonus payment. There is no hard and fast rule that it cannot be paid. We have to pay a certain amount, which is 8.33% for the financial year. Even if an employee has left, they can still claim for that.

I would like an expert to share their view.

Once the amount of bonus is calculated, it is to be disbursed within eight months of the end of the financial year. That means, the bonus for the financial year 2010-11 should be paid before 30th Nov 2011. Therefore, you can pay it in eight installments provided the employees agree to it.

Regarding Bonus as part of CTC, it is only an adjustment whereby the total remuneration is boosted to attract employees and nothing else. It has no legal sanctity.

Moreover, if you predetermine the bonus and pay it on a monthly basis along with the monthly salary (as it is as per CTC) then it will attract ESI because any payment made other than reimbursements in an interval of not more than two months shall be treated as wages for the purpose of ESI.

Regards,
Madhu.T.K

Dear Madhu,

I have a query about a company that belongs to a group and is registered in India in the year 2009. Our group's head office is located abroad, and the division head office is also abroad but in a different location.

In India, the company is incurring losses, and our head office does not pay bonuses despite making a profit. Is it liable to pay bonuses in India considering that the group is profitable and the company is quite old, spanning more than six decades?

Your views on this matter would be highly appreciated.

Thank you to all for the valuable guidance.

By providing a monthly bonus, employees will receive more take-home pay each month. Please also provide guidance on my other queries related to return submission and bonuses exceeding 8.33% for departing employees.

With Regards,
Bhanu

Monthly Bonus? Wow! Give me your company name. I would surely wish to join. Regards

Branches of a group can be clubbed together for determining bonus liability. However, if each unit has separate registration and each unit prepares separate Financial Statements (P&L A/C and Balance Sheet) and files separate tax returns, then each will be taken separately for bonus payment.

An establishment, once it has paid a bonus, cannot abstain from it due to the reason that it is running at a loss, but it has to pay at least the statutory minimum bonus of 8.33%. If the declared bonus is above 8.33%, then that should be paid to the remaining employees as well. This is because a bonus within the limits of the Payment of Bonus Act is considered as deferred wages.

Regards,
Madhu.T.K

Dear Bhanu,

As per the provisions of the Payment of Bonus Act, bonus payments need to be done after the finalization of the balance sheet of the company. You will agree with me that no company makes a balance sheet on a monthly basis. Hence, the computation of allocable surplus cannot be done as provided in the Act, and accordingly, there is no requirement to provide monthly bonuses.

Regards,
Raj Kumar Rai

I think if the employees give an undertaking that they need the bonus to be paid along with the monthly salary, it can be paid. This trend is very popular in the case of contractual support staff these days.