Under Section 26 of the Code on Wages, 2019, what is the

Solution

Section 26(1) of the Code on Wages, 2019 mandates that every employer shall pay to each eligible employee an annual minimum bonus calculated at the rate of 8.33% of the wages earned by the employee during the accounting year, or ₹100, whichever is higher and this obligation applies regardless of whether the employer has any allocable surplus. An employee must have put in at least 30 days of work in an accounting year to be eligible for this minimum bonus. The maximum bonus payable under Section 26(2) is capped at 20% of wages when the allocable surplus exceeds the minimum bonus threshold. For calculating bonus, if an employee's wages exceed the ceiling notified by the appropriate Government, the bonus is calculated as if the wages were the ceiling amount or the minimum wage, whichever is higher. This provision continues the essence of the Payment of Bonus Act, 1965, which the Code on Wages has now subsumed.