Statutory bonus: the Act's arithmetic
Bonus under the Payment of Bonus Act — eligibility at ₹21,000, calculation on the ₹7,000-or-minimum-wage ceiling, 8.33% to 20%, computed the way the Act actually computes it.
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The statutory bonus
Anchors as re-verified July 2026: ₹21,000 eligibility, ₹7,000-or-minimum-wage calculation ceiling, 8.33%–20% band, 30 working days' minimum service, payment within 8 months of the accounting year. Whether your establishment owes above 8.33% depends on its allocable surplus, a computed question for its accounts. Act text via labour.gov.in.
The two ceilings everyone conflates
The Act runs on two different numbers. The eligibility ceiling (₹21,000 of basic+DA a month) decides who is entitled to statutory bonus at all. The calculation ceiling, ₹7,000 a month or the state's scheduled-employment minimum wage if that is higher, decides what wage the percentage applies to. So an employee earning ₹15,000 basic+DA is eligible (under ₹21,000) but their bonus computes on ₹7,000 (or the higher minimum wage), not on ₹15,000. The percentage itself runs 8.33% (the non-negotiable minimum, effectively a thirteenth month's pay on the ceiling wage) to 20%, with the actual rate above the minimum determined by the establishment's allocable surplus under the Act's set-on/set-off machinery.
Establishments with 20 or more employees are covered (10 in some states' factories framework), employees need 30 working days in the year, and the bonus pays within eight months of the accounting year's close: 30 November for an April–March year. The wage definitions beneath all of this are moving onto the labour codes' 50% framework; context is in the Code on Wages guide.
A worked example
A machine operator on ₹15,000 basic+DA, full year, minimum bonus: eligible (under ₹21,000), computed on ₹7,000: 8.33% × ₹7,000 × 12 = ₹6,997 for the year. If the state's notified minimum wage for the employment is ₹9,500, the calculation floor rises: 8.33% × ₹9,500 × 12 = ₹9,496. A supervisor on ₹22,500 basic+DA is outside the Act entirely — any bonus they get is contractual, not statutory. And in a profitable year where the surplus supports 20%: the operator's bonus becomes ₹16,800 on the ₹7,000 base: the band, not the wage, is where the upside lives.
Illustrative; your state's minimum wage and your establishment's surplus computation decide the real figure.
Frequently asked questions
Who is eligible for statutory bonus?
Employees with basic + DA up to ₹21,000 a month who worked at least 30 days in the accounting year, in covered establishments (20+ employees; 10+ in some factory contexts). Above ₹21,000, any bonus is contractual, not statutory.
Why does my bonus compute on ₹7,000 when I earn more?
Because the Act uses two ceilings: ₹21,000 tests eligibility, but the calculation caps at ₹7,000, or your state's scheduled-employment minimum wage where that is higher. Eligibility and computation by design use different numbers.
What decides whether we get more than 8.33%?
The establishment's allocable surplus under the Act's set-on/set-off machinery — profitable years can push the rate toward the 20% maximum. The 8.33% minimum is owed regardless of profit.
When must the bonus be paid?
Within eight months of the accounting year's close — 30 November for an April–March year. Many establishments pay it with Diwali; the Act cares about the deadline, not the festival.
Do new joiners and leavers get bonus?
Anyone with 30 working days in the year accrues proportionately, a leaver's earned bonus belongs in their full and final settlement, and a joiner's part-year months count. The calculator's months field handles both.
Statutory bonus, computed per the Act.
Eligibility, ceilings and registers handled in PeopleDeck — per employee, per month.
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