Bonus Act - Applicability

Manager - HR


As per payment of bonus act, if an employee's salary is below or equal Rs.10000/- then he is eligible to receive bonus under the act.

My Question: How is the wages/salary calculated / what all components should be considered while calculating employee salary/wages?



Legal Advisor


I can;t understand your question, please make clear query




The wage is calculated taking Basic+Dearness Allowance put together.







As per Payment of Bonus Act Salary is defined as follows:

(21) "salary or wage" means all remuneration (other than remuneration in respect of overtime work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include

(i) any other allowance which the employee is for the time being entitled to;

(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles ;

(iii) any travelling concession ;

(iv) any bonus (including incentive, production and attendance bonus);

(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force ;

(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him ;

(vii) any commission payable to the employee.

Explanation Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee;


Basic+VDA component (i.e., VDA+FDA) to be considered for Bonus calculation.

In other words the components which you take for coverage of PF/Bonus to be considered as wages for computing bonus.

Assistant Labour commissioner

Wages has been defined by shri VBSS Prasad. The person whose wages are upto 10000 is eligible for bonus. But amount of bonus is payable on Rs. 3500 only. For example

(1) If the wages (Basic +DA) is below 3500 suppose 2500 the bonus is calculated on 2500

(2) If the wages (Basic+DA) is 3500, the bonus shall be calculated on 3500

(3) If the wages (Basic+DA) is more than 3500, suppose 3600, the bonus shall be calculated on 3500 only.

Total likes : 2 times


Dear Sharma ji,

If the employees whos wages / salries are above Rs. 10,000/- will be treated as exgratia amount is it correct ? For example if the employees salary is for example 15000/- is he eligible for Bonus ?  and who is drawaing 25000/- is he eligible for Bonus ? Why I am asking is one of the management is refuse to give the Bonus whos salaries and crossing the Rs.10,000/-. If so in which section it will be. ( The management is blently refusing the Bonus so I am urgenly need the clarification form you sir>)




Assistant Labour commissioner

The employee getting salary more than then thousand per month is not eligible for bonus. The Employer can pay ex gratia to any employee on his own will


Dear Mr. Sharma sir,

When we say exgratia, I had a doubt. 

The employer indicated that the bonus is a part of the CTC (Cost to company) in the appointment letter/ salary revision letter effectively meaning that it will be paid annually not withstanding the performance of the company.  In the similar tone the letter also mentions performance incentive separately.  In this case one month's gross salary is mentioned as "bonus" in the salary revision/ appointment letter.  This has not been paid for the last two years.

In that case how is the payment of bonus applicable.  Please clarify.


Assistant Labour commissioner

The amount which is mentioned as terms of service can be recovered under payment of wages act or 33(c)(2) of Industrial disputes act, whether it is named as bonus or otherwise.




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