Non Payment of Statutory Bonus

Employer can avoid Payment of statutory bonus to  let-out employees? How resigned employee can clime his statutory bonus from the employer ?

Replies (2)
Quick Summary
In India, employers generally cannot withhold the statutory bonus from employees who have resigned, provided they meet the eligibility criteria. To claim your statutory bonus, you must have worked for at least 30 days in the accounting year and your monthly salary (basic + dearness allowance) should not exceed ₹21,000. This entitlement applies to the proportionate bonus for the period worked. However, if the bonus is performance-based or contractual, your eligibility will depend on the specific terms outlined in your employment contract regarding your employment status at the time of payout.

Under the Payment of Bonus Act, 1965 in India, an employer generally cannot avoid paying the statutory bonus to an employee simply because they have resigned, provided the employee meets the basic eligibility criteria.

Legal Entitlement for Resigned Employees

To be eligible for the statutory bonus under the Act, an employee must meet these two conditions:

  1. Work Requirement: You must have worked in the establishment for at least 30 working days during the accounting year.

  2. Wage Ceiling: Your monthly salary or wage (Basic + Dearness Allowance) must not exceed ₹21,000.

If you meet these criteria, you are legally entitled to a proportionate bonus for the period you served during that accounting year, regardless of your resignation.

Important Distinctions

  • Statutory vs. Contractual Bonus: It is critical to distinguish between the Statutory Bonus (mandated by law) and Contractual/Performance Bonuses (offered at the employer's discretion or via employment contract).

    • Statutory Bonus: The law mandates this. An employer cannot legally withhold this unless you were dismissed for specific types of misconduct (like fraud, theft, or violent behavior).

    • Contractual/Performance Bonus: These are governed by the terms of your appointment letter. Many such contracts include clauses stating that you must be "on the rolls" of the company on the date of payout to receive the bonus. If your contract specifies this, the employer may legally withhold a performance bonus if you have resigned before the payout date.

Recommended Steps for Recovery

  1. Verify your contract: Check if the bonus being denied is the statutory minimum (8.33%) or an additional performance/incentive bonus.

  2. Request in writing: Send a formal email to your HR or management requesting the calculation and payment of your outstanding dues, specifically citing the Payment of Bonus Act, 1965.

  3. Seek documentation: If the employer claims you are ineligible, ask them to provide the specific policy or legal clause in writing.

  4. Escalation: If they refuse to pay the statutory bonus, you can file a complaint with the Labour Commissioner or approach a local labour court.


Summary: You are legally entitled to the mandatory statutory bonus (minimum 8.33%) if you worked at least 30 days in the accounting year and earned under ₹21,000 per month, even after resigning. However, if the bonus in question is an additional performance-based incentive, your eligibility depends entirely on your employment contract's specific terms regarding "active employment" status at the time of payout.

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