GlossaryPayroll & People
Statutory Bonus
Also called: annual bonus, Diwali bonus
What is Statutory Bonus?
Statutory bonus is an annual payment to eligible employees under the Payment of Bonus Act, subject to a minimum percentage of wages and a wage eligibility ceiling. Many businesses pay it around the festive season.
Why Statutory Bonus matters
Bonus is a legal obligation for covered establishments rather than a discretionary gift, and it is often paid on top of whatever informal festive payments a business already makes.
How Statutory Bonus works in practice
Budget for it through the year rather than absorbing it in one month, and keep the statutory bonus distinct from discretionary incentives in both records and communication.
Frequently asked questions
Employees earning up to the prescribed wage ceiling who have worked the minimum number of days in the year.