Central Government specifies bonus eligibility and manner of calculation under Code on Wages 2019

The Central Government has specified the threshold for paying statutory bonus as well as manner of calculation of statutory bonus under Code on Wages 2019 (“Wage Code”). It is effective retrospectively from 21^st November 2025.

Key specifications:

1) The eligibility criteria for payment of bonus has been determined. Now all employees earning wages not exceeding Rs. 21,000 per month and having worked at least 30 days in an accounting year, will be paid an annual minimum bonus calculated at the rate of eight and one-third per cent of the wages earned by the employee or Rs.100, whichever is higher, irrespective of whether the employer has any allocable surplus during the previous accounting year.

2) While calculating statutory bonus, the employees who are eligible for bonus under section 26(1)*, and if their wages exceed Rs.7000 per month, the bonus payable to those employees will be calculated as if the wage was Rs.7000 per month or the minimum wage fixed by the Central Government, whichever is higher.

Source: Ministry of Labor and Employment