India is no longer a developing nation; therefore, salary and bonus in India need restructuring. As per the Bonus Act of 1965, the minimum bonus is at 8.33% and the maximum is 20%, and this calculation has increased of premium ceiling from Rs 3,500 to Rs 7,000. The Bonus Act is applicable to every factory and establishment that has 20 or more employees.
India is growing like other countries; all the global companies were entering or setting up offices in India. There is a huge potential for growth; we are still ceiling the minimum and maximum wage and bonus very low. When compared to the USA, Europe, and Australia, India is a developed nation; therefore, employee standard of living should improve.
Below is the eligibility to receive the statutory bonus
- Eligibility for statutory bonus has been broadened to include employees earning up to Rs. 21,000 per month.
- Only employees who have worked in an establishment for a period of not less than thirty days in that year shall be eligible to receive a bonus.
- An employee is deemed to have worked in an establishment in any accounting year also on the days on which he/she has been laid off or on leave (with salary) or he/she has been absent due to temporary disablement caused by an accident arising out of and in the course of his employment or availing maternity leave.
In India the wage rate stands low when compared to other Western and European countries. Labor law needs reformation considering the cost of living for middle-class people and those who are daily wage employees. There is still a way forward.
Also, bonus is not applicable for a few sectors in India.
- The employees of the life insurance company.
- Seamen defined under clause 42 of the Merchant Shipping Act 1958.
- Employees who registered or listed under the Dock Workers Act 1948 and employed by the registered or listed employers.
- The employees of any industry controlled by the Central or State Government.
- Employees from the Indian Red Cross Society or education institutions that are not-for-profit.
- Employees employed by the contractor on building operations.
- Reserve Bank Of India (RBI) employees.
- Employees of any financial corporation under Section 3 or Section 3a of the State Financial Corporation Act (SFC) 1951.
- Employees of IFCI, Deposit Insurance Corporation, and Agriculture Refinance Corporation.
- Any financial institution is an establishment in the public sector that the Central Government notifies.
- The employees of Inland Water Transport Establishment.
Bonus Payment in the following ways
- Advance payment through salary: To pay advance statutory bonus through salary, the employer will have to include this as a head in the salary structure. Once it is included in the salary structure, it gets paid automatically through payroll.
- Advance payment as an ad hoc head: If the employer has not added a statutory bonus to an employee's salary structure, they can still make the payment through the ad hoc payment process.
- Advance payment in bulk: If the employer wishes to pay the employee in advance during the year but also based on a percentage of wages, then the employer can use this option, i.e., advance payment in bulk.
- Arrear payment in bulk: While the employer can pay advance Statutory Bonus any number of times and with varying percentages, the arrear payment can be done only once for an employee and only after his March payroll for the year has been confirmed.
India needs a more robust bonus policy for the modern economy; the minimum rate should move from 8.33% to 10.5%, and the maximum from 20% to 35%. Unlike in early days, offices never sleep; they are working 24/7. Therefore, based on the modern business operations, the efforts of the employees should also be recognized. Therefore, higher bonus rates are needed, keeping the employee or labor efforts in mind as per the modern roles, and making it applicable for all sectors.
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