Bonus Policy Insights for IT Companies in India: Understanding Labor Laws and Performance Bonuses

Hello Team,

I am Mohana, working as an HR professional in a startup company. I need to introduce a bonus policy in my company, and I am new to labor laws. It would be great if anyone could shed some light on the different bonus policies followed by IT software development and services companies in India (specifically Kerala).

Hi Mohana,

As per the latest bonus act, the company has to pay a minimum bonus of 7000/- or the minimum wages pertaining to your region, whichever is higher.

Hello Jeevarathnam,

Thanks for the information. Are you talking about the yearly bonus? I want to know if we are planning to give a performance bonus, is it compulsory to give a yearly bonus?

No. Other than the statutory bonus, there is no performance bonus related to the statutory. It is left to the company's discretion and company policy.

Many companies offer a performance bonus to motivate employees to improve productivity.

If you need any assistance, you can reach me.

The Bonus Act is applicable to any factory or establishment where 20 or more workers are employed. In a startup company, even if profits are present, they must pay bonuses from the first year of establishment. Introducing a new Bonus Policy is not necessary; you can proceed as per the Act.