In one of our previous blogs, we have seen that a bill was proposed to bring changes in the Bonus Act to raise the ceiling from the current existing Rs. 10,000.
This has now been implemented, according to a recent notification from the Ministry of Labour.
According to this notification, the bonus ceiling is now raised to Rs. 21,000. Accordingly, the calculation ceiling has also been raised from Rs. 3,500 to Rs. 7,000.
This means all employees whose salary is less than Rs. 21,000 per month fall under the criteria of bonus. If the salary of an employee exceeds Rs. 7,000, then bonus should be calculated on Rs. 7,000 only. If the salary of an employee is less than Rs. 7,000, then the bonus is to be calculated on the actual amount.
The bonus calculation is Rs. 7,000 or the minimum wages as specified by the government, whichever is higher.
This will be applicable from 1st of April, 2014.
Part-time employees can also be considered for calculation of bonus
This Bonus Act is applicable to every establishment which has over 20 employees on any given day, in an accounting year.
The conditions which are to be satisfied for the payment of Bonus are:
- An employee has to have worked for at least 30 days in that company.
- According to the Bonus Act, a minimum of 8.33% up to 20% of his basic (earned) wages is to be paid to the employee.
Note: Bonus is to be paid within 8 months of closing the book of accounts.