Section 26 of COW : Section 26: Eligibility For Bonus, Etc

Explanation using Example

Imagine that Rita is an employee at a garment manufacturing company, earning a monthly wage of ₹15,000. The appropriate government has determined that employees earning up to ₹20,000 per month are eligible for an annual minimum bonus. Rita has worked for the entire accounting year, which in this case is from April 1st to March 31st. According to Section 26(1) of The Code on Wages, 2019, Rita is entitled to a minimum bonus of 8.33% of her earned wages or ₹100, whichever is higher.

Since Rita's annual earnings are ₹180,000 (₹15,000 x 12 months), her minimum bonus at 8.33% would be ₹14,994. However, if the company did not have allocable surplus profits, she would still be guaranteed a bonus of ₹100 as per the law.

If the company had a profitable year and the allocable surplus exceeded the amount required for the minimum bonus, under Section 26(3), Rita might receive a higher bonus, up to 20% of her earned wages, depending on the surplus and the company's policies.