The Union Government has issued new notifications under the Labour Codes, making bonus payments mandatory for employees earning up to ₹21,000 per month.
- Employees with a monthly salary up to ₹21,000 are now eligible for mandatory bonuses.
- A minimum of 30 working days in a year is required to qualify for the bonus.
- Annual bonus ranges from a minimum of 8.33% to a maximum of 20% of the salary.
- Payments must be credited to bank accounts within 8 months of the financial year-end.
The Ministry of Labour and Employment of the Central Government has released two pivotal notifications that significantly impact the payroll structure for millions of workers across India. Under the provisions of the new Labour Codes (specifically the Code on Wages, 2019), it is now mandatory for employers to provide a bonus to employees whose monthly salary does not exceed ₹21,000.
Crucially, the notification clarifies that for employees earning more than ₹21,000 per month, the payment of a bonus is not a legal requirement. This creates a clear distinction in statutory obligations for employers based on the salary bracket of their workforce. To be eligible, an employee must have worked for at least 30 days during the accounting year.
Understanding the Bonus Calculation
The calculation of the bonus is designed to ensure a fair floor for the lowest earners. The annual bonus will be between 8.33% and 20% of the employee's salary. The calculation base is either ₹7,000 per month or the applicable minimum wage—whichever is higher.
| Criteria | Rule/Limit |
|---|---|
| Salary Eligibility Cap | Up to ₹21,000 per month |
| Minimum Tenure | 30 days per year |
| Minimum Bonus Rate | 8.33% |
| Maximum Bonus Rate | 20% |
Why This Matters
BozokMedia analysis shows that this regulatory shift is aimed at enhancing the disposable income of the lower-income workforce, thereby stimulating domestic consumption. By consolidating multiple archaic laws into the Code on Wages 2019, the government is attempting to reduce litigation and provide a standardized framework for employer-employee relations.
"Linking the bonus to the higher of the minimum wage or a fixed base ensures that the most vulnerable workers are not left behind during inflationary periods."
Regarding the timeline for disbursement, Section 39 (1) of the 'Code on Wages, 2019' mandates that all bonus amounts must be deposited into the employee's bank account within eight months of the close of the accounting year. Employers may apply for an extension of this period up to two years if they can provide sufficient justification.
Frequently Asked Questions
Q1: Will I receive a bonus if my salary is ₹22,000?
A: No, the mandatory bonus requirement only applies to those earning up to ₹21,000. For salaries above this, bonuses are discretionary and depend on your company's internal policy.
A: The bonus is calculated based on either ₹7,000 per month or the minimum wage set by the state government, whichever is higher.
