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Evet (Manager - HR)     30 March 2010

Bonus Act - Applicability

HI,

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?


Regards,

Evet



Learning

 26 Replies

Arihant AC (Legal Advisor)     30 March 2010

Hello

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

KADURU SRINIVASA RAO (MANAGER)     31 March 2010

Hi,

 

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

 

Regards,

 

Srinivas

V B S S PRASAD (COMPANY SECRETARY)     01 April 2010

 

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;

radha krishna (vp-hr)     01 April 2010

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.

Sarjooram Sharma (Assistant Labour commissioner)     01 April 2010

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.

2 Like

PBS KUMAR (HR - PROFESSIONAL)     14 July 2010

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>)

Regards,

PBS KUMAR

 

Sarjooram Sharma (Assistant Labour commissioner)     14 July 2010

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

SS (VP)     19 July 2010

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.

Regards

Sarjooram Sharma (Assistant Labour commissioner)     20 July 2010

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.

P. Selvam (Manager - HR)     23 July 2010

Sarjooram Sharma,

Can you please explain the category of seasonal employment?

Sarjooram Sharma (Assistant Labour commissioner)     24 July 2010

Seasonal employement is not concerned with Bonus Act. The person who has worked at least 30 days in financial year is entitled for bonus.

Pratik Vaidya (Principal Consultant | Director)     08 October 2010

Dear Sharma Sir,

 

I went through the definition of Salary/ Wage as per Sec2(21) of Payment of Bonus Act, 1965. Nowhere it is mentioned that it Basic+ DA only. Even term "Basic" salary is not written or mentioned. PF and Gratuity is calculated on Basic + DA. Some organisations do consider Wages under Payment of Bonus Act, 1965 as Basic + Da only. However, there is a mixed interpretation and opinion from various labour officers, lawyers on the "wages" to be taken. Some say it should be Gross Salary with all allowances mentioned, where some say it should be "Basic" + DA wages.

Clarification on the same would br highly beneficial for many organisations and officers as well in their interpretation 

Sarjooram Sharma (Assistant Labour commissioner)     08 October 2010

"salary or wage" means all remuneration (other than remuneration in respect of over-time 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 food grains 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 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;

PBS KUMAR (HR - PROFESSIONAL)     24 October 2010

Dear Sharma ji,

Some one need your clarification even I Explained. Regarding :-

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

"If the wage is Rs.9500/- how much he will eligible for bonus.?

URGENT PLEASE

Regards,

PBS KUMAR

 


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