🔹Statutory Bonus Guide
Statutory Bonus – Step-by-Step User Guide
Statutory Bonus is a mandatory benefit under the Payment of Bonus Act, 1965 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)
Enable Statutory Bonus – Activate the feature.
Select Accrual Component – Used for monthly bonus calculation.
Define Calculation Period – Months during which bonus accrues.
Select Payout Component – Used to pay the total bonus.
Choose Payout Month – Month in which bonus will be released.
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
Path: Cloud → Settings → Payroll → Pay Settings → Statutory Bonus
Here you will find the configuration panel used to define how the Statutory Bonus will be accrued and paid.
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.
Select the Accrual Component:
Choose the component that will be used to accrue monthly Statutory Bonus values.
Important Notes
This component must be created in: Path: Cloud → Settings → Payroll → Payroll Components → Earnings
It must have NO default behaviours enabled, since it is only meant to accrue the amount and not pay it.
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
· 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.
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.
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).
Required Behaviours for the Payout Component
Enable the following ONLY:
Include Gross Pay
Tax
Include for ETDS
Payout Component Calculation Settings (for all the relevant categories)
Type: Direct
Rounding: 1 Rupee
This ensures accurate summation during the payout month.
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, bonus is payable within eight months from the close of the accounting year.
· After selecting all fields, click Save to finalize the configuration.
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
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.
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.
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).
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
Calculation Settings (for all the relevant categories):
Type: Direct
Rounding: 1 Rupee
Scenario 1: Employee is Active in the Payout Month
Bonus Calculation Period: November 2024 → October 2025Accrual 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 2025Accrual 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 [email protected]
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