MUST KNOW ABOUT CALCULATION OF BONUS
The method for calculation of annual bonus is as follow:
1. Calculate the gross profit in the manner specified in-
a. First Schedule, in case of a banking company, or
b. Second Schedule, in any other case.
2. Calculate the Available Surplus.
Available Surplus = A+B, where A = Gross Profit – Depreciation admissible u/s 32 of the Income tax Act - Development allowance - Direct taxes payable for the accounting year (calculated as per Sec.7) – Sums specified in the Third Schedule.
B = Direct Taxes (calculated as per Sec. 7) in respect of gross profits for the immediately preceding accounting year – Direct Taxes in respect of such gross profits as reduced by the amount of bonus, for the immediately preceding accounting year.
3. Calculate Allocable Surplus
Allocable Surplus = 60% of Available Surplus, 67% in case of foreign companies.
4. Make adjustment for ‘Set-on’ and ‘Set-off’. For calculating the amount of bonus in respect of an accounting year, allocable surplus is computed after considering the amount of set on and set off from the previous years, as illustrated in Fourth Schedule.
5. The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages received by them during the relevant accounting year.
In case of an employee receiving salary or wages above Rs.2,500 the bonus payable is to be calculated as if the salary or wages were Rs.2,500 p.m. only.
DUTIES OF EMPLOYER
· To calculate and pay the annual bonus as required under the Act
· To submit an annul return of bonus paid to employees during the year, in Form D, to the Inspector, within 30 days of the expiry of the time limit specified for payment of bonus.
· To co-operate with the Inspector, produce before him the registers/records maintained, and they may require such other information as.
· To get his account audited as per the directions of a Labour Court/Tribunal or of any such other authority.
RIGHTS OF EMPLOYER
· Right to forfeit bonus of an employee, who has been dismissed from service for fraud, riotous or violent behavior, or theft, misappropriation or sabotage of any property of the establishment.
· Right to make permissible deductions from the bonus payable to an employee, such as, festival/interim bonus paid and financial loss caused by misconduct of the employee.
· Right to refer any disputes relating to application or interpretation of any provision of the Act, to the Labour Court or Labour Tribunal
RIGHTS OF EMPLOYEES
· Right to claim bonus payable under the Act and to make an application to the Government, for the recovery of bonus due and unpaid, within one year of its becoming due.
· Right to refer any dispute to the Labour Court/Tribunal Employees, to whom the Payment of Bonus Act does not apply, cannot raise a dispute regarding bonus under the Industrial Disputes Act.
· Right to seek clarification and obtain information, on any item in the accounts of the establishment.
RECOVERY OF BONUS DUE
· Where any bonus is due to an employee by way of bonus, employee or any other person authorized by him can make an application to the appropriate government for recovery of the money due.
· If the government is satisfied that money is due to an employee by way of bonus, it shall issue a certificate for that amount to the collector who then recovers the money.
· Such application shall be made within one year from the date on which the money became due to the employee.
· However the application may be entertained after a year if the applicant shows that there was sufficient cause for not making the application within time.
OFFENCES & PENALTIES
For contravention of the provisions of the Act or rules the penalty is imprisonment up to 6 months, or fine up to Rs.1000, or both.
For failure to comply with the directions or requisitions made the penalty is imprisonment up to 6 months, or fine up to Rs.1000, or both.
In case of offences by companies, firms, body corporate or association of individuals, its director, partner or a principal officer responsible for the conduct of its business, as the case may be, shall be deemed to be guilty of that offence and punished accordingly, unless the person concerned proves that the offence was committed without his knowledge or that he exercised all due diligence.
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