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Payment Of Bonus (Statutory Bonus) Can Be Added As A Pay Head In Salary. Is It Legal?

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  • Payment Of Bonus (Statutory Bonus) Can Be Added As A Pay Head In Salary. Is It Legal?

    Hi! Everyone.
    Greetings.
    I work as a statutory compliance officer (fresher). I have a doubt regarding Payment of bonus (statutory Bonus) can be added as a pay head in salary. Is it legal? or its an addition to the salary of any employee? And can we do two different practices in one financial year, like for a few months we were considering statutory bonus additional to gross salary, later we consider it as a part of gross salary by changing the salary structure. is it feasible? Urgent, please reply asap along with supportive documents or link if any.

  • #2
    Statutory Bonus is based on the amount of salary or remuneration which includes the components of basic and dearness allowance only as defined u/s 2(21) of the Payment of Bonus Act,1965. The bonus contemplated under the Act is relatable to the performance of the establishment in any given accounting year. The performance of the establishment is assessed only at the close of the accounting year. Moreover sec.2(vi) of the PW Act,1936 excludes statutory bonus from the definition of wages. Therefore, it cannot be merged with the gross monthly salary as a component by tentatively fixing it at a rate according to one's convenience. The employer is precluded from effecting any unilateral change in wages as and when according to his whims and fancies under section 9-A r.w Schedule IV of the ID Act,1947. read more at: https://www.citehr.com/624019-paymen...added-pay.html

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    • #3
      When you pay bonus along with monthly salary, the problem is that you will be deferring bonus payment beyond 8 months of closing the financial year. That is legally not correct.

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