WAGES / SALARIES & OTHER DETAILS UNDER THE PAYMENT OF BONUS ACT, 1965?

Question?
1) What is to be included in and excluded from a salary or wage for the purpose of calculating bonus?

Answer:
For the purpose of calculation of bonus a salary or wage includes a basic salary or wage and dearness allowance but does not include other allowances, overtime salary or wage, house rent allowance, traveling concessions, bonus, employer’s contribution to provident fund, retrenchment compensation, gratuity or commission. {Section 2(21)}.

Question:
2) Is an employee entitled to get bonus on the basis of his entire salary or wage?

Answer:
If an employee is drawing a salary or wage not exceeding Rs. 7000/- per month, he is entitled to get bonus on his entire salary or wage.

If an employee is getting a salary or wage exceeding Rs. 7000/- per month, but not exceeding 21000/- per month, the bonus payable to him is to be calculated as if his salary or wage were Rs.7000/- per month or the minimum wages whichever is higher.

An employee getting a salary or wage exceeding Rs. 21000/- per month is not entitled to get bonus. {Section 12}.

Question
3) Minimum how many days eligible employee should work in preceding accounting year to get Bonus under the Act?

Answer
30 days.

Question
4) Can any amount be adjusted or recovered from the Bonus amount payable to the employee?

Answer
Yes, an advance amount of Bonus paid to the employee, amount of misappropriation or embezzlement made by an employee can be adjusted against Bonus amount payable to theployee.

Question
5) After how many years from the commencement of the business Company is supposed to pay Bonus under the Act?

Answer
1st 5 years is an jnfancy period during which Company is not required to pay Bonus provided Company has not incurred a profit. Thus, during 1st Five years, the year in which Company incurs a profit, for that year payment of Bonus is mandatory. However after 5 years, even if Company incurs losses payment of Bonus is must.

Question
6) What is the % of minimum and maximum Bonus?

Answer
Minimum Bonus payable is 8.33% and maximum Bonus payable is 20%

Question
7) How % of Bonus is derived from the Financial Statements of the Company?

Answer
%of Bonus from 8.33 to 20% is to be derived from allowable surplus and available surplus and set on and set off amount.

Question
8) Applicability of Payment of Bonus Act?

Answer
Factory having 10 or more employees and Establishment having 20 or more employees, the Payment of Bonus Act is applicable.