The Payment of Bonus Act is applicable to every establishment or a factory where 20 or more people are employed at any time during one accounting year and once an establishment is covered under this act, the applicability would not cease to operate even if the number of employed people falls below 20 afterwards. The Payment of Bonus Ac event applies to part-time employees.

However, this Act doesn’t apply to non-profit organizations, social welfare institutions, central bank, financial institutions, establishments like LIC (insurer doing a business of insurance, hospitals, university/educational institutes employers employing seamen and dock workers.


Any skilled/unskilled/managerial/supervisory employee who has worked for at least 30 days in one year and is drawing a salary of less than INR 21000/- is eligible to receive a bonus for that year.

Quantum of Benefits:

The minimum bonus payable to an eligible employee is at the rate of 8.33 percent of the salary of the wage earned by the employee during the accounting year or one hundred rupees, whichever is higher whereas the maximum bonus payable to an eligible employee must not be more than 20 percent of the salary or wage earned by the employee during the accounting year.

Illustration: If an employee draws a monthly salary of INR 10000/-, the minimum bonus which can be received would be INR 9,996/- and the max would be INR 24,000/-


The bonus must be disbursed within a period of 8 months from the closure of the accounting year if the bonus is undisputed and if there’s a dispute between the parties, the same would be payable within a month from the date on which the award becomes enforceable (by the competent authority) or the settlement comes into operation.