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.

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.