Diwali Bonus Culture


Giving Diwali bonus is more prevalent in the manufacturing segment but the concept is progressively getting replaced by performance incentives in other sectors. However, many feel, this year, even the blue collared workers will be given a small bonus cheque due to inflation.
However, it is a compulsion to pay bonus to the unionized workforce, a minimum of 8.33% and maximum 20% on the basic salary. Giving Diwali bonus is more prevalent in the manufacturing segment but the concept is progressively getting replaced by performance incentives in other sectors.
Some give bonus during the year instead of Diwali
Bonus is required to be paid as per the law every year, which is related to the salaries. The rule states that companies have to declare bonus, which is a minimum of 8.33% to maximum 20% on the basic salary as well as Dearness Allowance (DA). What people call Diwali payments is also called extra or additional payment. Some companies don’t give this additional payment during Diwali period but during the year.
These companies also opt for giving advances for Diwali, which is deducted from the next month’s salary. The compulsion to pay bonus is for the unionized workforce wherein under the prevailing laws, the companies have to declare bonus, which is different and above the annual salary packages.
It is better not to give incentives during festivities
The Diwali bonus practice is not applicable to the multinational companies (MNCs). Whatever incentives are given is performance-based. As few companies want to maintain secularism within our company, the incentives are given mostly two months before the appraisals are done rather than giving them during any festivals. Though they  have done away with festive bonus, they definitely give it in the form of sweets and chocolate packets. The salaries and bonus are anyway based on the revenues and returns. To maintain a secular atmosphere at the workplace, it is better not to give incentives during festivities.
The percentage of bonus declared every year differs
In the manufacturing sector, the yearly festive (Diwali) bonus legacy continues to be strongly followed as per the government rules. The festive bonus not only acts as an incentive for the workforce, it also signifies employee’s confidence as owners. Unlike the IT sector, the manufacturing sector still strongly believes in the bonus culture.
The percentage of bonus declared every year differs from 8-20% as it is performance-linked. We have to show the bonus figure in the company’s balance sheet. In the manufacturing sector, there is no other option as it is a set practice to declare Diwali bonus.
For unionized workforce, bonus concept still exists
For the executive workforce, many companies have done away with the Diwali bonus culture as they have a fixed or variable salary linked to performance.
They don’t give bonus but have incentives which are declared during the year. Even in IT sector, the incentives are declared half-yearly or quarterly. The concept of bonus is progressively replaced by performance incentives, which is paid on a quarterly basis.
As for the unionized workforce, the law of the land applies and the bonus concept still exists.
The unionized workforce is governed by separate code of conduct and they still get the Diwali bonus every year as per the guidelines. The executive cadre do not come under the unionized workforce. Till few years ago, there was a practice of giving bonus to those at managerial-level, but now many companies have done away with the bonus culture.
IT companies pay employees based on performance
Many IT companies that too in the human resources department and as of now, not come across any Diwali bonus culture. The practice of giving Diwali bonus has been done away by the IT companies.
As the IT firms work in a global environment, they do not believe in the concept of paying bonuses on a particular occasion or festivities. Though there is no Diwali bonus, they do have incentives that are called recognition or performance bonus. This is given during the year to recognize and acknowledge the efforts of an individual or to retain employees.
Yes, during festivities like Diwali they follow the practice of giving gifts, however, not in cash but kind. Nowadays, especially the IT companies focus more on paying according to the performance. Companies have quarterly or half-yearly reviews after which they declare incentives, which differ from employee to employee.

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