Glossary · HR, Payroll & Labour Law
Bonus
A statutory payment made by employers to employees under the Payment of Bonus Act, 1965, calculated as a percentage of salary or profit.
The Payment of Bonus Act applies to establishments with 20+ employees and to all employees earning up to ₹21,000/month (eligibility salary limit). The bonus is calculated on basic + DA and ranges between 8.33% and 20% of the salary, with a minimum ₹100 and maximum ₹7,000 per month. Factories and establishments with 10+ employees can pay a minimum bonus of 8.33% even in loss years. The Act does not apply to seasonal factories, ships, or employees of registered cooperative societies.
Examples
A factory worker earning ₹15,000/month (basic ₹8,000) gets 8.33% × ₹8,000 = ₹666 or 20% × ₹8,000 = ₹1,600 (whichever is higher) as annual bonus in Diwali.