Central Government Notifies Revised Bonus Eligibility & Calculation Thresholds
Effective from 21 November 2025 | Notified on 25 August 2026
The Ministry of Labour & Employment, Government of India, has notified revised wage thresholds for statutory bonus under Section 26 of the Code on Wages, 2019, bringing welcome clarity for employers and employees alike on who qualifies for a bonus and how it will be calculated.
What Has Changed
Two separate ceilings govern the statutory bonus framework:
1. Eligibility Ceiling — ₹21,000 per month
Every employee drawing wages not exceeding ₹21,000 per month is now entitled to a statutory bonus. This threshold determines who qualifies for the bonus in the first place.
2. Calculation Ceiling — ₹7,000 per month
Where an eligible employee's wages exceed ₹7,000 per month, the bonus must be calculated as if the wages were ₹7,000, or the minimum wage fixed by the Central Government — whichever is higher. This threshold determines how much bonus is actually paid out.
Key Dates
| Milestone | Date |
|---|---|
| Notification issued | 25 August 2026 |
| Deemed effective from | 21 November 2025 |
The retrospective effective date means the revised ceilings apply from November 2025 onward, even though the formal notification came later.
Why This Matters
This notification is part of the broader rollout of India's four consolidated labour codes — which merge 29 existing labour laws — and follows the Code on Wages' push to standardize wage-related definitions and thresholds across industries. For HR and payroll teams, it means bonus eligibility and payout calculations for FY 2025–26 may need to be revisited in light of the ₹21,000 and ₹7,000 thresholds.
What Employers Should Do Now
- Review employee wage records to identify who falls within the new ₹21,000 eligibility ceiling.
- Recalculate bonus payouts for employees earning above ₹7,000, using the ₹7,000 (or applicable minimum wage, if higher) calculation base.
- Adjust payroll systems and bonus policies to reflect the retrospective effective date of 21 November 2025.
- Retain the official notification for compliance and audit records.
