Bonus ceiling to go up before festive season

New Delhi, Aug 20 (UNI) The coming festival season, marked by Dussehra on October 2 and Diwali on October 21, has in store more colour and greater joy for salaried employees, with the government set to hike soon the bonus ceiling after eleven years.

The current ceiling of Rs 3,500, fixed in April 1995, is expected to go up substantially in view of the booming economy and record profits posted by several companies, besides the substantial revenue for the central government, whose employees are also covered under the ceiling.

The ceiling, prescribed under the Payment of Bonus Act, also restricts the bonus payment between a minimum rate of 8.33 per cent of the total salary and a maximum of 20 per cent, subject to a ceiling of Rs 6,000.

This means that the government or the private sector can pay its employees a minimum bonus of Rs 3,500 and a maximum of Rs 6,000, though the actual 20 per cent would be slightly more than Rs 8,400.

However, private companies are at liberty to pay higher amounts without any limit, depending on their profits and willingness to keep their employees happy, but in the form of ex-gratia.

Various central ministries also follow a productivity-linked bonus and announce the number of days that would be taken into account for calculation of bonus.

The assurance on an early hike in the ceiling of bonus has been given by none other than Prime Minister Manmohan Singh.

''There has been discussion on the ceiling for bonus. I agree that the current ceilings were set more than a decade ago. We will soon consider this in the Cabinet and will take a favourable decision,'' he told a delegation of trade union leaders late last evening.

The bonus ceiling had been fixed at Rs 1,600 in 1965, which was raised to Rs 2,500 in 1985 and to Rs 3,500 ten years later by amending Section 2(13) of the Payment of Bonus Act.

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