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Before the amendment, the minimum that could be paid to employee under the bonus act was Rs. 292 (8.33% of 3,500). However, this amount has been doubled to become Rs. 583( or 8.33% of the minimum wages, whichever is higher) . Since, companies are expected to pay all arrears since 2014, this particular change seems to be causing the highest discomfort for employers. In states where the minimum wage is higher than Rs 7,000, the statutory arrears liability becomes even higher. We came up with 10 questions that would clear all doubts and help you tackle the increase in statutory bonuses head on. Here are the answers to all the questions that you may have: 1. Wage limit increased from Rs. 10,000 to Rs. 21,000

For the purpose of this Act, wages are defined as the total of the Basic salary + DA (Dearness Allowance). Earlier this act only covered employees that were earning up to Rs. 10,000 per month and lower. However, the amendment has raised this ceiling to Rs. 21,000. This has been done with the intention of bringing more employees under the eligibility of the Bonus Act. This also means that employers will have to pay employees that fall between the Rs. 10,000 and Rs. 21,000 the pending Bonus amounts since April 1, 2014. 316, Prabhadevi Industrial Estate, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025 Your liability depends on a number of factors like:

The amendments to the Bonus Act and its retrospective impact puts labour based companies in an unfavourable position. This is why planters in Kerala decided to file a petition with the Kerala High court, challenging the retrospective effect of the act. The High Court, in response, has issued an interim order staying the retrospective implementation of the Bonus Act. In the coming months and weeks, other states may also join Kerala in challenging the amendments of the Bonus Act. Earlier, the maximum statutory bonus that could be paid out was 20% of Rs. 3500. However, this has been changed to 20% of Rs. 7,000 (or minimum wages, whichever is higher). This gives companies a chance to allot a greater portion of employees’ CTCs towards bonuses. Subscribe to our blog! We understand that calculating the liability can be a little tricky and we wanted to simplify this process for you. Hence we’ve created an easy to use calculator that be downloaded by clicking on the link below. The changes in the Bonus Act has left a lot to be done on the calculation front. We know there’s a lot of head scratching that needs to be done in order to accurately estimate the liability for your company. Hence, we’ve added a handy calculator that will automate this process for you. Just put in a few quick details and the tool will do the rest for you.

The purpose of the act was to enable employees to partake in the profits of their respective companies. The bonus, when applicable, also gives employees an opportunity to earn more than the minimum wages. 9) How do I restructure salaries in the future without impacting the total CTC or employee costs? The government has approved amendments that have not only increased the amount paid out but also the number of people who are eligible. Here are the recent changes to the act:

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