Why is it so important for you, me and everyone else?
Diwali, or 'Deepawali', is the biggest festival in India and celebrated with great pomp and show by the Indian Diaspora around the world. One of the major festivals of Hinduism and recognized as a public holiday in over 10 countries, it signifies the victory of light over darkness and good over evil as Lord Rama had returned to his empire after killing Ravana down south.
During this five-day festival, which is one of the most anticipated ones throughout the year, Goddess Lakshmi is revered in the households across the country. The goddess of prosperity blesses its followers with money & prosperity is a general belief.
It indeed does, we will tell you how, as the organizations pay 'Diwali' bonus to their employees on this occasion.
A bonus is an additional sum of money given to an employee above his/her normal salary. This amount is considered as a reward for accomplishing specific goals set by the company and also a token of appreciation for employees' dedication to the company.
Diwali bonus is not just seen as any other perk, it has a deep-rooted emotional connect with the Indians, who expect it to arrive in their bank account before the auspicious festival. This amount motivates and boosts them to perform better further and also help them bring home happiness.
As the Indian law suggests: it is a compulsion to pay bonus to the unionised workforce, a minimum of 8.33% and maximum 20% in the basic salary. Most companies choose Diwali as an occasion for the same. However, the concept is progressively getting replaced by performance incentives in other sectors.
The Payment of Bonus Act 1965, provides for the payment of bonus to persons employed in certain establishments, employing 20 or more persons, on the basis of profits or on the basis of production or productivity and matters connected there with.
The minimum bonus of 8.33% is payable by every industry and establishment under section 10 of the Act. The maximum bonus including productivity linked bonus that can be paid in any accounting year shall not exceed 20% of the salary of an employee under the section 31A of the act.
Earlier the maximum amount of bonus payable was 20% of INR 3500 per month. The minimum bonus paid was also capped at 8.33% of Rs. 3500. The calculation of upper limit of INR 3500 has been doubled now to Rs. 7000 per month or the minimum wage for the scheduled employment, as fixed by the appropriate Government" (whichever is higher). So, the cost associated with bonus payments could double (or be greater still, depending on applicable minimum wages) based on how an organization performs.