Bonus calculation

Question BankCategory: OthersBonus calculation
Kollipara sundaraiah asked 9 months ago

Sir,
Employee working during the year 285 days .how to calculate bonus basic salary *12 months or earned salary during the year.

1 Answers
Rabindra answered 9 months ago

As per Section 2(21) of The Payment of Bonus Act, 1965,

“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 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.

Hence

  • salary of the employee excluding above 7 points but including DA is taken as salary for calculation of bonus.
  • minimum bonus payable is 8.33%…
  • minimum working period for bonus if 30 days..
  • if an employee is getting salary above Rs. 21000 then he is not entitled for bonus..

if above conditions are met….you can calculate minimum bonus as 8.33% of salary earned (as per above explained meaning of salary)
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