Sections 27 and 28 of the Code on Wages, 2019: Proportionate Reduction in Bonus and Computation of Working Days
Sections 27 and 28 explain how the statutory minimum bonus is adjusted when an employee has not worked for all working days in an accounting year, and which periods are nevertheless treated as days worked for that calculation.
Section 27 - Proportionate reduction in bonus in certain cases
Where an employee has not worked for all the working days in an accounting year, the minimum bonus under Section 26(1), if that bonus is higher than eight and one-third per cent of the salary or wage for the days actually worked in that accounting year, is to be proportionately reduced.
What Section 27 means
Section 27 prevents the minimum bonus from being calculated as though an employee had worked every working day where the employee has worked only part of the accounting year. The provision must, however, be read with Section 28 because certain periods of absence are legally counted as days worked.
Section 28 - Computation of number of working days
For the purpose of Section 27, an employee is deemed to have worked in the establishment during an accounting year on specified categories of days even though the employee did not actually perform work on those days.
The deemed working days include days on which the employee:
- was laid off under an agreement, applicable standing orders, or another law applicable to the establishment;
- was on leave with salary or wages;
- was absent because of temporary disablement caused by an accident arising out of and in the course of employment; or
- was on maternity leave with salary or wages during the accounting year.
How Sections 27 and 28 operate together
Section 27 supplies the rule for proportionate reduction of minimum bonus. Section 28 supplies the counting rule. Before reducing bonus on the ground that an employee did not work throughout the accounting year, the employer must include the deemed working days specified in Section 28.
Related provision: Section 26
Section 27 expressly refers to the minimum bonus under Section 26(1). Therefore, eligibility and the statutory basis of minimum bonus should first be examined under Section 26 - Eligibility for bonus, etc., followed by the proportionate-reduction and working-day rules under Sections 27 and 28.
Practical points
- Actual attendance alone is not the complete test for computing working days for Section 27.
- Paid leave, qualifying lay-off, employment-related temporary disablement and paid maternity leave are specifically protected as deemed working days under Section 28.
- The calculation relates to the accounting year and must be read with the other bonus provisions in Chapter IV of the Code.
- For an actual bonus calculation, the applicable wage figure, eligibility under Section 26 and the employee's qualifying working days should all be verified.
Official reference
For the authoritative statutory text and current labour-code material, refer to the Ministry of Labour & Employment - Code on Wages, 2019 and the Ministry of Labour & Employment.
This page is intended as a general legal reference. Statutory notifications, applicable rules and case-specific facts should be checked before acting on a bonus computation.