Top News

Under the new labor code, employees stand to receive a substantial bonus—up to 20 percent. This will directly benefit employees earning a monthly salary of ₹21,000.

There is good news for employees: under the new labor code, they may receive a bonus of up to approximately 20 percent. This bonus will directly benefit employees with a monthly salary of up to ₹21,000. This is a statutory bonus to which employees are entitled; however, they must meet certain terms and conditions to qualify.

Eligible Employees to Receive Bonus

The Ministry of Labour and Employment recently issued a notification regarding this matter. The Ministry stated that employees earning a monthly salary of up to ₹21,000 are entitled to a bonus under the new labor code and statutory regulations. According to the notification, eligible employees who have worked for at least 30 days can receive a bonus ranging from a minimum of 8.33% to a maximum of 20%, provided they meet the eligibility criteria.

Understanding the Bonus Calculation

If a company or employer grants the maximum 20 percent bonus to its employees, the calculation is based on a monthly figure of ₹7,000. Here is an explanation of how the bonus is calculated based on these rates.

For instance, if an individual's monthly salary is ₹7,000, their annual salary would be ₹84,000. Based on this salary, the maximum bonus (at 20 percent) would amount to ₹16,800.

Conversely, if calculated at the rate of 8.33 percent, the minimum bonus would be ₹6,997.

What is a Statutory Bonus?

A statutory bonus is a mandatory bonus paid to eligible employees under the Payment of Bonus Act, 1965. This is a mandatory statutory bonus that companies are required to provide to employees every year.