The Ministry of Labor and Employment of the central government has issued two new notifications. The main provision of these notifications is that all employees earning up to 21 thousand rupees per month will be eligible for a bonus if certain conditions are met. Employers are obliged to provide this bonus.
However, for employees whose income exceeds 21 thousand rupees per month, providing a bonus is not mandatory. This means that companies are not required to pay a bonus to those who earn more than 21 thousand rupees. The bonus is only available to those whose salary is up to 21,000 rupees.
According to the notification on the new departmental commission composition, in accordance with Article 26(1) of the Labor Code of 2019, an employee earning less than 21,000 rupees monthly has the right to a bonus provided they have worked for at least 30 days in the year.
The annual bonus for eligible employees will be no less than 8.33 percent and no more than 20 percent of the minimum wage. The calculation of this bonus is based on 7,000 rupees per month or the established minimum wage, whichever amount is higher.
For example, if a person earns 15,000 rupees per month but works in a region where the minimum wage for the job performed is set at 10,000 rupees, then according to the new labor legislation, the bonus calculation will be based on 10,000 rupees.
Subsequently, using this base, the bonus is calculated using the formula: Annual Bonus - (Minimum Wage or 7,000 Rupees) × 8.33% × 12 (for one year). Let's consider an example to understand what bonus will be received.
Suppose an employee's minimum wage is 12,000 rupees, which is higher than the base price of 7,000 rupees. In this case, the employee's annual bonus will be calculated as follows: 12000 × 8.33% × 12 = 11,995 rupees. This means that the annual bonus for employees with a minimum wage of 12,000 rupees will be no less than 11,995 rupees.
According to Article 39(1) of the 'Wage Code of 2019', the entire amount paid to the employee as a bonus must be credited to the employee's bank account within eight months after the end of the accounting year. If the employer submits an application with sufficient reasons for extension, this period may be increased to two years. Previously, according to Article 19 of the 'Bonus Payment Law of 1965', a period of 8 months after the end of the accounting year was also established.