# Statutory Bonus Guide

### Statutory Bonus – Step-by-Step User Guide

Statutory Bonus is a mandatory benefit under the [Payment of Bonus Act, 1965](https://clc.gov.in/clc/acts-rules/payment-bonus-act-0#19.%20Time-limit%20for%20payment%20of%20bonus) for eligible employees. Pocket HRMS automates this through a 0-click auto bonus workflow—once configured, the system calculates monthly bonus accruals, stores them for the full Calculation Period, and pays them automatically in the chosen payout month or during Full & Final Settlement.

How Monthly Bonus Works

* Monthly accrual uses the default statutory formula: (Earned Basic + Earned DA) × 8.33%
* This formula is configurable based on company policy.
* Accruals are stored every month until payout.
* If an employee leaves before the payout month, the system uses the stored accruals to automatically pay the applicable bonus in Full & Final Settlement.

One-Time Setup Steps (At a Glance)

1. Enable Statutory Bonus – Activate the feature.
2. Select Accrual Component – Used for monthly bonus calculation.
3. Define Calculation Period – Months during which bonus accrues.
4. Select Payout Component – Used to pay the total bonus.
5. Choose Payout Month – Month in which bonus will be released.

<figure><img src="/files/5aB2r1TYBZfBO279RuVA" alt=""><figcaption></figcaption></figure>

### How to Configure and Manage Statutory Bonus?

Follow the steps below to configure statutory bonus:

Step 1: Statutory Bonus Setup To configure the bonus settings, you must complete the following actions:

* Enable Statutory Bonus Calculation to activate the feature.
* Select the Accrual Component to determine how the bonus is accumulated.
* Define the Calculation Period to establish the specific timeframe for the bonus cycle.
* Select the Payout Component to designate the salary head for the payment.
* Select the Payout Month to schedule when the bonus will be disbursed.

Step 2: Accrual in Monthly Salary

Step 3: Bonus in the Payout Month

Step 4: Statutory Bonus in Full & Final Settlement

**Explanations:**

### Step 1: Statutory Bonus Setup

&#x20;Path: [Cloud → Settings → Payroll → Pay Settings → Statutory Bonus](https://cloud.pockethrms.com/Settings/Employee/Index?module=payroll\&submodule=StatutoryBonus)

Here you will find the configuration panel used to define how the Statutory Bonus will be accrued and paid.

<figure><img src="/files/KUuaoT01zvCv2XhxHiFD" alt=""><figcaption></figcaption></figure>

**Enable Statutory Bonus Calculation:**

·         Turn ON the toggle “Apply Statutory Bonus” to begin configuration.

·         This enables the system to start calculating monthly bonus accruals based on your settings.

·        Please note that the effect will take place from the next payroll after enabling the setting.

<figure><img src="/files/RPb9Fanh5toydtKz4Oub" alt=""><figcaption></figcaption></figure>

**Select the Accrual Component:**&#x20;

Choose the component that will be used to accrue monthly Statutory Bonus values.

<figure><img src="/files/y0GYZ9GQ4mAC3810ifm7" alt=""><figcaption></figcaption></figure>

Important Notes

* This component must be created in:\
  Path: [Cloud → Settings → Payroll → Payroll Components → Earnings](https://cloud.pockethrms.com/Settings/Employee/Index?module=payroll\&submodule=salarycomponent)
* It must have NO default behaviours enabled, since it is only meant to accrue the amount and not pay it.

&#x20;

<figure><img src="/files/B6jOg6g2iagrnaaeiWAO" alt=""><figcaption></figcaption></figure>

**Accrual Formula Configuration**

·  Standard Statutory Bonus formula used in this guide: **(Earned Basic + Earned DA) × 8.33%**

·         This is **configurable** as per your organization’s policy.

·  Example configuration: **(EARNEDBASIC + EARNEDDA) \* 0.0833**

·  Configure the formula at:\
Path: [Cloud → Settings → Payroll → Salary Structure → Earning Formula](https://cloud.pockethrms.com/Settings/Employee/Index?module=payroll\&submodule=SalaryStructure)

·  Apply it to **all relevant categories** so the system can:

·         Compute the bonus **monthly**

·         **Store it as accrual** (not included in Gross)

·        **Pay it only in the payout month**.

<figure><img src="/files/4FBGUrByO3IJJQyyL4w1" alt=""><figcaption></figcaption></figure>

**Define the Calculation Period**

·         Select the months for which bonus will accrue.

·         Example: *Nov (Previous Year) to Oct (Current Year)* → *Nov 2024 to Oct 2025*.

·         The system will auto-calculate monthly bonus for all payrolls processed within this period.

<figure><img src="/files/GE1vGYgb8w3qEIjOqRr7" alt=""><figcaption></figcaption></figure>

**Select the Payout Component:**

This component is responsible for paying out the statutory bonus by summing all accrued values during the set calculation period (refer example period).

<figure><img src="/files/AlqlmWw7xsYTaz6w2QZ3" alt=""><figcaption></figcaption></figure>

**Required Behaviours for the Payout Component**

Enable the following ONLY:

* Include Gross Pay
* Tax
* Include for ETDS

&#x20;

<figure><img src="/files/MSRxxLojwdEYn4HvCmGz" alt=""><figcaption></figcaption></figure>

**Payout Component Calculation Settings** (for all the relevant categories)

* Type: Direct
* Rounding: 1 Rupee

This ensures accurate summation during the payout month.

<figure><img src="/files/yUDlbTlGmT5ijGFLda6Y" alt=""><figcaption></figcaption></figure>

**Select the Payout Month**

·         Choose the month in which the total bonus accrued will be paid.

·         Example: If bonus accrues from Nov (Previous Year) to Oct (Current Year), it will be paid in Nov of the Current Year.

·         As per [The Payment of Bonus Act, 1965](https://clc.gov.in/clc/acts-rules/payment-bonus-act-0#19.%20Time-limit%20for%20payment%20of%20bonus), bonus is payable within eight months from the close of the accounting year.

·         After selecting all fields, click Save to finalize the configuration.

<figure><img src="/files/GICcAtxCRdzheP6Usa8J" alt=""><figcaption></figcaption></figure>

### Step 2: Accrual in Monthly Salary

To verify monthly auto-accrual of the bonus, open the employee salary page:\
Path: [Employee Profile → Payroll → Salary Details](https://cloud.pockethrms.com/Employee/employee/Profile?employeeID=7731\&module=profile\&empstatus=1)

You will see the **Accrual Component** showing the monthly computed bonus amount (as seen in the example below).\
\
Please note:

·         It is **NOT added to Gross**

·         It is **NOT paid monthly**

·         It is **ONLY stored as an accrual**

This continues automatically for every month in the Calculation Period.

<figure><img src="/files/KrC3PTfLvY9yhPhGvLH7" alt=""><figcaption></figcaption></figure>

### Step 3: Bonus in the Payout Month

In the selected pay-out month, the system automatically:

·         Displays the **Payout Component** (e.g., Statutory Bonus, as seen in the example below)

·         Shows the **total accumulated bonus amount** for the entire period

·         Adds the amount to:

o    **Gross Pay**

o    **Net Salary (paid to employee)**

o    **Taxable Income & ETDS**

No manual action is required.

<figure><img src="/files/Yy2vP2loqMpFYlxSkmwo" alt=""><figcaption></figcaption></figure>

### Step 4: Statutory Bonus in Full & Final Settlement

If an employee resigns before the payout month, Pocket HRMS will still pay them the bonus for the months they have completed in the accrual cycle.

**Example:**\
Employee resigns in June → completed 8 months → system auto-calculates bonus for those 8 months and displays it as **FnF Bonus** on the Full & Final Settlement screen.

Automatic FnF Bonus Calculation

* System sums all accrued bonus months up to the exit date.
* Shows the total as FnF Bonus during FnF processing (as seen in the example below).

<figure><img src="/files/T3AQrKjs7gj5RTfFYWgk" alt=""><figcaption></figcaption></figure>

**FnF Bonus Component Requirements**

Create a new component with:

·         **Field Name:** `FNFBNS`

·         **Label Name:** **FnF Bonus** (label can be renamed later, but field name must remain `FNFBNS`)

Enable these behaviours:

·         Monthly Input

·         Full and Final Settlement

·         Tax

·         Include Gross Pay

·        Include for ETDS

&#x20;

<figure><img src="/files/lckGnBaG84Rrw3iR5buu" alt=""><figcaption></figcaption></figure>

Calculation Settings (for all the relevant categories):

* Type: Direct
* Rounding: 1 Rupee

<figure><img src="/files/P5LPBfigF7AzhFY7KCs4" alt=""><figcaption></figcaption></figure>

**Scenario 1: Employee is Active in the Payout Month**

**Bonus Calculation Period:** November 2024 → October 2025**Accrual Formula:** (Earned Basic + Earned DA) × 8.33%**Bonus Payout Month:** November 2025

**What is happening here?**

* Every month, the system calculates bonus based on that month’s Earned Basic + Earned DA.
* The monthly bonus amount is **stored as accrual** and **not paid** during the year.
* In the payout month (Nov 2025), the system **adds up all accrued months** and pays the full amount in salary.
* Since the employee is active, the bonus is paid through **regular monthly salary**.

| **Month** | **Earned Basic** | **Earned DA** | **Accrued Bonus** | **Paid Out Bonus** |
| --------- | ---------------- | ------------- | ----------------- | ------------------ |
| Nov-24    | 50000            | 25000         | **6248**          |                    |
| Dec-24    | 50000            | 25000         | **6248**          |                    |
| Jan-25    | 50000            | 25000         | **6248**          |                    |
| Feb-25    | 50000            | 25000         | **6248**          |                    |
| Mar-25    | 50000            | 25000         | **6248**          |                    |
| Apr-25    | 50000            | 25000         | **6248**          |                    |
| May-25    | 50000            | 25000         | **6248**          |                    |
| Jun-25    | 55000            | 27500         | **6872**          |                    |
| Jul-25    | 55000            | 27500         | **6872**          |                    |
| Aug-25    | 55000            | 27500         | **6872**          |                    |
| Sep-25    | 55000            | 27500         | **6872**          |                    |
| Oct-25    | 55000            | 27500         | **6872**          |                    |
| Nov-25    | 55000            | 27500         | 6872              | **78096**          |

**Scenario 2: Employee Exits in June 2025 (FnF Scenario)**

**Bonus Calculation Period:** November 2024 → October 2025**Accrual Formula:** (Earned Basic + Earned DA) × 8.33%**Bonus Payout Month:** November 2025

**What is happening here?**

* Employee exits before the payout month.
* As per Bonus Act, the employee must still receive bonus for the months worked.
* System automatically **totals accruals from Nov 2024 to June 2025** only.
* The amount appears as **FnF Bonus** during Full & Final Settlement.
* No values beyond June are considered because the employee has not worked in later months.

| **Month** | **Earned Basic** | **Earned DA** | **Accrued Bonus** | **Paid Out Bonus** |
| --------- | ---------------- | ------------- | ----------------- | ------------------ |
| Nov-24    | 50000            | 25000         | **6248**          |                    |
| Dec-24    | 50000            | 25000         | **6248**          |                    |
| Jan-25    | 50000            | 25000         | **6248**          |                    |
| Feb-25    | 50000            | 25000         | **6248**          |                    |
| Mar-25    | 50000            | 25000         | **6248**          |                    |
| Apr-25    | 50000            | 25000         | **6248**          |                    |
| May-25    | 50000            | 25000         | **6248**          |                    |
| Jun-25    | 55000            | 27500         | **6872**          | **50608**          |

For any queries, contact <support@pockethrms.com>


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