Statutory Bonus Rules are important for employees earning monthly wages of up to ₹21,000. Eligible employees who have worked for at least 30 days in the relevant accounting year may receive an annual bonus, subject to the required conditions.
The bonus rate can range from a minimum of 8.33% to a maximum of 20%. However, the bonus is not necessarily calculated on an employee’s entire monthly wage.
Statutory Bonus Rules for Employees
Employees earning up to ₹21,000 per month may qualify for statutory bonus if they have worked for at least 30 days during the relevant accounting year and fulfil the other applicable conditions.
Employees earning more than ₹21,000 per month do not have a mandatory entitlement to statutory bonus under these provisions.
The minimum bonus rate is 8.33%, while the maximum can go up to 20%. The actual rate can depend on factors including the available surplus and applicable provisions.
How Is the Bonus Calculated?
For bonus calculation, ₹7,000 per month or the applicable minimum wage, whichever is higher, is used as the calculation base under Section 26 of the Code on Wages, 2019.
This means an employee’s actual monthly wage may not always be the amount used to calculate the statutory bonus.
For example, suppose an eligible employee earns ₹15,000 per month and the applicable minimum wage for the employee’s category is ₹10,000. In this case, the bonus calculation would use ₹10,000 as the monthly base.
At the minimum bonus rate of 8.33%, the annual bonus in this example would be approximately ₹9,996.
Similarly, if an employee earns ₹20,000 per month but the applicable minimum wage is ₹9,000, the bonus calculation would be based on ₹9,000 rather than the full ₹20,000 monthly wage.
Therefore, being eligible for a bonus of up to 20% does not mean an employee will automatically receive 20% of their entire salary.
When Must Employers Pay the Bonus?
The Code on Wages also provides a timeframe for paying the bonus. The amount is generally required to be credited to the eligible employee’s bank account within eight months from the end of the accounting year.
In exceptional circumstances, the payment period can be extended for valid reasons, subject to the applicable provisions.
If there is a dispute over the bonus amount, the undisputed portion of the bonus must still be paid within the prescribed period.
What Is a Statutory Bonus?
A statutory bonus is a bonus that eligible employees are legally entitled to receive when the applicable conditions are met. It is different from a purely discretionary bonus that an employer may choose to offer.
The Statutory Bonus Rules also provide a mechanism for employees to raise a claim if an eligible bonus is not paid.
A claim can be made before the relevant authority. Such claims may be filed by the employee, a registered trade union or the Inspector-cum-Facilitator, while joint claims can also be made on behalf of multiple employees.
Claims are generally required to be filed within three years. The authority can order payment of the amount due and, depending on the circumstances and applicable provisions, may also award compensation.
For employees earning up to ₹21,000 per month, understanding both eligibility and the calculation method is important.
The salary threshold determines who may qualify, while the statutory calculation base determines the amount on which the bonus percentage is applied.
