With the festive season here, many founders and HR teams are asking the same question: who must get a statutory bonus this year, and how much?
On 25 August 2026, the Central Government issued two notifications under the Code on Wages, 2019 that settle the key numbers. Both are deemed to apply from 21 November 2025.
The two numbers you need
| What | Limit | Notification |
|---|---|---|
| Eligibility: who must get a bonus | Wages up to ₹21,000 a month | S.O. 4711(E) |
| Calculation: the wage bonus is worked out on | ₹7,000 a month, or the Central minimum wage, whichever is higher | S.O. 4710(E) |
So an employee earning ₹18,000 a month is eligible, but their bonus is calculated as if they earned ₹7,000 a month, or the applicable minimum wage if that is higher.
How much bonus?
- Minimum: 8.33% of the wage for the year, or ₹100, whichever is higher. This is payable whether or not the company made a profit.
- Maximum: 20% of the wage for the year, where the company's allocable surplus allows.
- Eligibility: the employee must have worked for at least 30 days in the accounting year.
A worked example
Take an employee earning ₹18,000 a month who worked all 12 months, and assume the calculation wage is ₹7,000 a month:
- Wage for bonus: ₹7,000 × 12 = ₹84,000
- Minimum bonus at 8.33%: about ₹7,000
- Maximum bonus at 20%: ₹16,800
If the applicable minimum wage is higher than ₹7,000, use that figure instead. In most states and industries it is, so check the current minimum wage for your employee's category.
Common mistakes to avoid
- Treating bonus as optional because the company made a loss. The minimum bonus is still payable.
- Using CTC or gross salary to decide eligibility. Use wages as defined in the Code.
- Calling it "ex-gratia" to avoid the statutory obligation. The label does not change the legal position.
- Forgetting part-year employees who worked 30 days or more. They are entitled to a proportionate bonus.
- Paying late. Statutory bonus has traditionally been due within eight months of the end of the accounting year. Check the current rules for your state, and pay before the festival where you can.
What to do this month
- List every employee whose monthly wages are ₹21,000 or less.
- Confirm the calculation wage for each: ₹7,000, or the minimum wage if higher.
- Decide the bonus percentage, between 8.33% and 20%.
- Pay, record and keep the calculation sheet.
- Make sure your offer and appointment letters describe bonus terms clearly for new hires.
A festive bonus paid correctly and on time is good for morale, and it keeps your compliance clean.
This article is for general information and is not legal advice. Check the notified text, your state's rules and current minimum wages, and take professional advice for your situation.
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