Comprehensive Guide to Bonus Calculation and Ex-gratia with Minimum Salary Consideration

Dear Seniors,

Regarding Bonus calculation:

It has been said that a minimum of 8.33% to a maximum of 20% can be paid as a bonus. I have a doubt regarding this ₹3500/-. Say, if an employee's basic salary is ₹6000/-, considering full attendance: 6000*12*8.33% - his bonus amount will be ₹5998/-. How should it be separated as a bonus and ex-gratia?

Regards,

G.G. Deepa

Calculation is as follows:

Case 1:
Maximum wage ceiling for bonus calculation is Rs 3500 per month.
Minimum bonus: Rs 3500 x 12 x 8.33% = Rs 3500
Minimum bonus: Rs 3500 x 12 x 20% = Rs 8400

Case 2:
If wage is less than Rs 3500, for example: Rs 3000 per month.
Minimum bonus: Rs 3000 x 12 x 8.33% = Rs 3000
Minimum bonus: Rs 3000 x 12 x 20% = Rs 7200

Thanks & Regards,
MV Babu

Calculation is as follows:

Case 1:
Maximum wage ceiling for bonus calculation is Rs 3500/- per month.
Minimum bonus: Rs 3500 x 12 x 8.33% = Rs 3500/-
Max bonus: Rs 3500 x 12 x 20% = Rs 8400/-

Case 2:
If the wage is less than Rs 3500/-, for example: Rs 3000/- per month.
Minimum bonus: Rs 3000 x 12 x 8.33% = Rs 3000/-
Max bonus: Rs 3000 x 12 x 20% = Rs 7200/-

Thanks & Regards

Dear GG.Deepa and Vinay.M,

Thank you for the questions and replies by GGD.

In addition, the maximum basic limit for bonus calculation is Rs. 10,000 per month. This means employees drawing more than Rs. 10,000 as basic salary are not eligible for a bonus. However, most organizations are giving bonuses to employees whose basic salary is over Rs. 10,000, but they are treating it as ex-gratia.

Thanks

Hi Vinay,

What if the minimum wages are more than 10,000/- or 9,000/-? Please help calculate the bonus in both of the above cases.

Regards,
Monika

Dear Monika,

If your basic salary is more than 10000/-, then you are not eligible to receive a bonus. For a basic salary of 9000/-, you can calculate as mentioned above.

Dear Monika,

As per the rules, if the Bonus Basic is above 3500, then the bonus is not mandatory to give to employees. Instead, it will be considered as Ex Gratia bonus, which is up to your discretion. In my company, we provide Ex-Gratia bonus to employees. The bonus amount should not be included in the Basic salary per month. For example, if my basic salary is 7200 per month, and my Ex-bonus is 500 per month, then the annual bonus would be 6000.

Thank you.

Hi Deepa,

Please see the below calculation for your reference:

Bonus: Rs. 3,500
Ex-gratia: Rs. 2,498
Total: Rs. 5,998

Regards,
Vinay M.