Statutory Bonus Under Payment of Bonus Act, 1965
The Payment of Bonus Act, 1965 mandates payment of annual bonus to eligible employees in certain establishments.
Eligibility: Employees with monthly salary/wages up to ₹21,000, who have worked for at least 30 days in that financial year.
Applicability
- Every factory employing 10 or more persons
- Every other establishment (shops, offices, etc.) with 20 or more employees
- Certain establishments exempted (universities, hospitals, etc.)
Minimum and Maximum Bonus
- Minimum Bonus: 8.33% of salary or ₹100 (whichever is higher) - payable even if employer has loss
- Maximum Bonus: 20% of salary
Calculation of Bonus
Bonus = (Salary/Wages) × (Percentage of bonus) for the financial year. Bonus is calculated on basic salary plus dearness allowance.
Time Limit for Payment
Bonus must be paid within 8 months from the close of the accounting year (i.e., by December 31st for April-March financial year).
Disqualifications
- Employee dismissed for fraud, riotous behavior, or moral turpitude
- Employee terminated for violent behavior
Remedy for Non-Payment
File complaint with the Labour Commissioner or approach the appropriate authority under the Payment of Bonus Act.