Chapter IV of the Code on Wages (ss. 26–41) replaced the Payment of Bonus Act.
- Who is covered: employees whose wages do not exceed the limit notified by the appropriate government (₹21,000 a month under the earlier law; check the current notification), who have worked at least 30 working days in the accounting year.
- Minimum bonus: 8.33% of wages, or ₹100, whichever is higher. This is payable whether or not there is an allocable surplus.
- Maximum: 20% of wages, depending on the allocable surplus (60% of the available surplus; 67% for some banking companies).
- Calculation ceiling: where wages are above ₹7,000 or the minimum wage, whichever is higher, bonus is calculated on that ceiling (or as notified).
- Payment: within 8 months of the close of the accounting year (s. 39).
- Disqualification: dismissal for fraud, riotous or violent behaviour, theft or sabotage.
- Set-on and set-off: surplus beyond 20%, or a shortfall, is carried forward for up to four years.
The HR desk prepares the bonus working and the bonus register from issued payrolls.
Last reviewed 17-10-2026. General information, not legal advice for a specific case. Check the latest Act, Rules and notifications of the appropriate government before acting.