With the festival of lights just around the corner, many employees look forward to a Diwali bonus from their companies. India’s labour law requires that companies pay an annual bonus to all employees; that is, an additional payment given with the aim of inspiring them.

 

As per the Payment of Bonus Act, this bonus can range from 8.33% to 20% of an employee’s annual basic salary.

 

As the wage limit has increased from Rs. 10,000 to Rs. 21,000, the maximum statutory that can be paid is 20% of Rs. 7,000 and the minimum is 8.33% of Rs. 7,000. The Bonus Act applies all the companies that are more than five years old, have at least 20 employees and have made a profit in that year.

 

For years, this bonus is given around Diwali and hence is popularly known as Diwali bonus. An employer who is working with 20 or more than 20 employees is liable to pay them a bonus, once every year. This can be at any time of the financial year. Only the following institutions are exempted: hospitals, social welfare institutions, chambers of commerce, Indian Red Cross Society, educational institutions.

 

The bonus should be paid within eight months of the year’s completion. Since the financial year ends in March in India, payments need to made by the end of the October of the next fiscal year.

 
“History of #Diwali #Bonus?”
 

Initially there was a concept of salary to be paid on a weekly basis to the workers in India, particularly the textile and flour mill workers in Bombay.

 

So you received 52 salaries in a year.

 

But when British started ruling India they came up with concept of Monthly salary which meant you were getting paid for 48 weeks only.

 

So if we have 4 weeks in a month, 13 salaries should have been distributed but as per a monthly structure they were giving only 12 salaries in a year.

 

When people realized that this was a loss to them in terms of one salary many protest rallies were organised in Maharashtra during 1930-1940.

 

The British then came up with a solution to this problem.

 

After discussion with labour leaders about how to distribute this 13th salary and they decided Diwali being the biggest festival of India, they would distribute this 13th salary durring Diwali.

 

“Today this is called the Diwali Bonus.”

 

This was implemented from 30th June 1940.

 

Many don’t know the history behind the Diwali Bonus.

 

“And today”

 

This 13th salary comes as “DRY FRUITS”