HOW TO CALCULATE BONUS???

Bonus-Its' Meaning & Formula for Calculation

1. HOW TO CALCULATE BONUS Module-7 Dr. Satyabrata Patro Lecturer, P.G. Dept. of I.R.&P.M. Berhampur University

2. Bonus???? Bonus to be paid under Payment of Bonus Act, 1965 is to be calculated as under: 1. It depends upon the percentage on which your company wants to give bonus to its employees. Minimum bonus is 8.33% of basic salary earned during the accounting year and Maximum is 20% under the payment of Bonus Act, 1965. 2. Eligibility: Bonus under Payment of Bonus Act,1965 is required to be to employees whose salary ( Basic) is of less than Rs.3500.00 per month during the accounting year for which bonus is to be paid. 3. Bonus is to be calculated for eligible employees assuming salary (Basic) as Rs.2500.00 per month or less, if, it is less then Rs.2500.00 4. Multiply the yearly sum of salary thus worked out as per above clause 3 with rate of bonus. The figure is bonus payable to employee under the act.

3. Contd... BONUS CALCULATION PARAMETERS CASE 1 BASIC LESS THAN EQUAL TO 3500 = BONUS=ACTUAL BASIC X (BONUS MONTHS) X 20% CASE 2 BASIC MORE THAN 3500 UPTO 8400 = BONUS=Rs. 3500 X (BONUS MONTHS) X 20%, EXGRATIA=0 CASE 3 BASIC MORE THAN 8400 & LESS THAN 10000 = BONUS=Rs. 3500 X (BONUS MONTHS) X 20%, EXGRATIA= BASIC SALARY-8400 CASE 4 BASIC MORE THAN 10000 = BONUS = 0, EXGRATIA= 1 MONTH BASIC SALARY CASE 5 BASIC CHANGES DURING YEAR EX: 2300 to 3500 = BONUS=(2300Xmonths paidX20%) + (3500Xmonths paidX 20%), exgratia =0

4. Contd... EX: 3500 to 5000 = BONUS=(3500Xmonths paidX20%) + (3500Xmonths paidX 20%), exgratia =0 EX: 5000 6 mths to 8900 6 mths = BONUS=(3500*6*20%)+(3500*6*20%)=8400, exgratia = (8900*6/12)-(8400*6/12)=250 EX: 8900 4 months to 12000 8 mths = BONUS=(3500*4*20%)=2800, exgratia = {(8900*4/12)-(8400*4/12)}+{(12000*8/120}