BONUS (The Payment of Bonus Act, 1965)
The Payment of Bonus Act, 1965 is the principal act for the payment of bonus to the employees which was formed with an objective for rewarding employees for their good work for the organization. It is a step forward to share the prosperity of the establishment reflected by the profits earned by the contributions made by capital, management and labour with the employees.
| Details of Payment of Bonus Act, 1965 | |
|---|---|
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Objective |
To reward the employee of the organization by sharing the profits earned and is linked to productivity |
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Applicable To |
Any establishment with 20 or more employees |
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Eligibility |
Employees getting Rs. 21,000 per month or less (basis + DA, excluding other allowances) and have completed 30 working days in that financial year |
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Components of Bonus |
Salary / Wages only include basic and DA for bonus payment and the rest of allowances (eg, HRA, overtime, etc.) are excluded |
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Min / Max and time limits on bonus payments |
Should be paid at the minimum rate of 8.33% and maximum rate of 20%. It needs to be paid within 8 months from the close of the accounting year |