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The Payment of Bonus Act, 1965 is a central legislation in India that mandates the payment of bonuses to employees in eligible establishments.
✔ It applies to establishments with 20 or more employees, requiring bonuses to be paid from profits or on a pro-rata basis if the establishment is not profitable.
✔ The Act ensures a minimum bonus of 8.33% of an employee’s wages.
✔ For employees earning up to ₹10,000 per month, the bonus is calculated based on a salary cap of ₹3,500 per month, which is also the eligibility threshold under the Act
Employers falling under the scope of the Bonus Act must register their establishment with the designated authority. This involves submitting key details such as the establishment’s name, address, business type, and employee count.
Employers are required to accurately calculate and disburse bonuses to eligible employees within the prescribed time limits. They must also maintain proper records of bonus payments and make them available for review by authorities when needed.
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