Festival Season has geared up and everyone is excited for the upcoming Diwali bonus from companies. And, at this moment most of the companies are all set to take corporate gifting services so that they can appreciate the hard work of their employees.
But have you ever thought about why it is MUST for a company to give a BONUS? Or How this Idea Came into Spotlight? No idea?
Well, it is because the Payment of Bonus Act says that. Perplexed what is it? Let’s move ahead to know everything related to it.
India’s labor law states that each company having more than 20 employees, have to pay an annual bonus to all the employees. This is an additional payment that is needed to be given by company owners to inspire employees for their hard work and efforts.
What Payment of Bonus Act Depicts?
According to the payment bonus act, the bonus can range from 8.33% to 20% depending upon the basic salary of your employee. The earlier wage limit was Rs.10000 but now it has been increased to Rs.21000. Thus, the maximum statutory that can be paid is about 20% of Rs.7000 and a minimum of 8.33% of Rs.7000. However, one thing to be noticed at this point is – Payment bonus act applies to those companies who are 5 years old, having at least 20 employees and earned profits in the year.
The reason behind Calling It Diwali Bonus!
Just because this bonus is given at the auspicious occasion of Diwali, hence it also named as DIWALI BONUS. It is essential for a company to pay a bonus once a year which is having at least 20 employees and this time can happen at any time of the financial year. But there are some institutions which are exempted from this bonus including the chamber of commerce, hospitals, social welfare institutions, Education departments, etc.
When Bonus Must Be Paid?
Now, the question arises when is to pay a bonus? Most of us ask this question. Isn’t it? The accurate answer is- BONUS must be paid within the 8 months only of the completion of the year. Yes! March is the end of the financial year; hence payment must be made by the end of October of the next fiscal year.
How the percentage of the bonus is decided?
Who is the right candidate for a bonus? Or how the Bonus percentage is decided? These are some of the troublesome questions that always come in our mind.
- Well, the very first thing you have to remember is – every employee who has completed thirty days in the financial year is eligible for getting a bonus. No matter, whether you are in probation time period or permanent Manager; you can approach for your bonus without any fear. However, if any employee is involved in frauds, theft, damaging property, or maintaining violet behavior then he/she will not be a part of the bonus of that year as per the wish of an employee!
- Payment of Bonus Act, 1965 stated that if your employee has given you a bonus amount in advance, then he has the right to cut it down from the annual bonus.
- Last but not least, the bonus percentage is the same for all the employees irrespective of job designation. Yes, you heard it right your company owner can’t give a different bonus to his employees. If he does so, you can claim for your right!
In A Nutshell!
Now you are all cleared with every aspect of the Payment Bonus Act.
If you are an employee fight for you Diwali Bonus or else claim it.
And, if you are an employer it’s time to go for corporate gifting services so that your employees feel special in this festive Season. At Collars Connect, you can avail of top-class services at budget-friendly costs. In bulk order, you can also get exclusive discounts. So, why to delay? Grab the best Festive Deals without making any further delay. Also, for more interesting blogs, stay tuned with us!