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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