The month of Ashoj is here! So, what does it mean? For the majority of Nepalis, it is the month when the national festivals of Dashain followed by Tihar usually fall. Well, sometimes, it may fall in the month of Kartik too! Definitely a month for a lot of celebrations, happiness and of course holidays.
But, we are not here to talk about the festivals today but something that comes with these festivals. Yes, you guessed it right! We will be discussing the extra bit of money that most of us get from our jobs. Generally, we call it the “Dashain Bonus”!
But did you know that it is not actually a “bonus”? What? Isn’t that what most of us or even our employers call it? Yeah but what difference does it make if we call it “Dashain Bonus” or something else. It is after all an additional sum we get from our employers for celebrating Dashain. How generous and kind of them! Let’s set the record straight first. The right term for such additional payments for celebrating festivals is known as “festival allowance” and yes, it is mandatory for all the employers to pay “festival allowance”. If your employer does not pay it, then maybe it's time you talk to them!
Yes, the Labour Act requires every employer to pay their employees a certain amount (we will discuss how much later) to celebrate any festivals of their choice based on their religion, culture and tradition. And it is your legal right to receive such payments. So, do not consider it the generosity of your employer (well they may choose to pay more than what is mandated under the law to be called so!). Now we will discuss the various practical aspects related to the “Festival Allowance”.
So, if it is mandated by the law, what if your employer does not pay you the “festival allowance”?
You may make a request in writing to your employer once during a financial year on the occasion of a major festival that you celebrate as per your religion, culture and tradition.
Is it required to be paid at Dashain only?
No, as already specified above, the employee can make a request once in a financial year on the occasion of his/her major festival. But, if there is no such request then the employer will have to pay the festival allowance in Dashain. So, if you are a Christian, you may make a request for festival allowance to be paid before Christmas and if your are a Muslim, you may request your employer to pay the festival bonus before Eid.
How much is the amount?
You will receive one month’s basic salary as the festival allowance if you have completed one year of service with your employer at the date of payment of festival bonus. If you have worked for less than one year period, then your festival allowance will be proportionately adjusted. For example, you have joined your new company in the month of Baisakh and if your employer pays festival bonus in Ashoj, then you will receive the festival bonus only for the 6 months i.e. your basic salary/12*6
where,
your basic salary= your latest basic salary
12= total number of months in 1 years
6= total number of months you have worked with the employer
So, does that mean you lose 6 months’ festival allowance due to your job switch? No, you would have received that portion of your festival allowance from your ex-employer. So, when you leave a company in between then you are entitled to the festival allowance for the number of months you have worked after you received your earlier festival bonus.
Here is another example: You were working for ABC & Co. for years and you received your festival allowance in Ashoj 2078. In Jestha 2079, you switched your job and joined MNS & CO. So, when you left your job at ABC & Co., they should have paid the festival allowance for the 7 months you worked with them as a part of your full and final settlement with them. Do check the full & final settlement and make sure that the festival allowance is included in the calculation. And accordingly from Jestha onwards till Ashoj, you will receive your festival allowance from MNS & Co.
What is this basic salary? Is this the total monthly salary I receive as my monthly salary?
No. The basic salary is not the total monthly salary you receive or even your gross salary. So if you check your salary payment structure in your employment agreement (we hope you have one), your salary is generally broken down as follows:
A. Basic Salary XXXX
B. Dearness Allowance XXXX
C. Employer’s SSF Contribution XXXX
Gross Salary (A+B+C) XXXX
As you can see from above, your basic salary is a portion of your total salary. So how much is it? The law requires it to be at least 60% of your gross salary. Let’s say your gross salary is Rs. 1,00,000 per month then your basic salary should be at least Rs. 60,000. And “basic salary” is a very important concept and something you should be aware of because most of the benefits like your social security contribution, gratuity, leave encashment, festival allowance are determined on the basis of the basic salary. Also please note you will receive 1 month’s basic salary as your festival allowance which is 60% of your gross salary. Please note that it is 60% of your gross salary and not the take home or in hand salary i.e. the salary which you actually receive in cash or in your bank account.
So here is another example for you to understand these concepts. If your gross salary is Rs. 1,00,000 per month, then the breakdown will look like this:
A. Basic Salary 60,000
B. Dearness Allowance 28,000
C. Employer’s SSF Contribution (20% of Basic Salary) 12,000
Gross Salary (A+B+C) 1,00,000
LESS:
D. Employee’s SSF Contribution (11% of Basic Salary) 6600
E. Taxes (Lumpsum) 15,000
Net Salary Payable (A+B+C-D-E-C) 66,400
In this working, while your gross salary is Rs. 1 lakh per month, your take home or inhand salary is Rs. 66,400. Out of the remaining portion, C & D will be deposited to your Social Security Fund account and you will get these amounts back in the form of pension payments or lump sum payments once you retire subject to the SSF terms & conditions. E will be deposited to the Government’s account and will be utilized by the Government to fund its administration as well as the development projects.
So, why cannot the festival allowance be called a bonus or a festival bonus instead of dashain bonus? Since it is paid for a festival celebration, wouldn’t it make more sense to call it a festival bonus?
Well, bonus has a different meaning as per the law and hence we cannot call festival allowance a bonus because bonus is paid out of the profit that your employer makes. So, if your employer does not make a profit i.e. if it incurs loss, then it is not required to pay the bonus. So, would you still want to call your festival allowance a bonus and give your employer an excuse to not pay you the same? Well, be careful what you wish for. We will discuss more about bonus later. Please remember: Festival allowance is your legal right and your employer's legal obligation.
That’s all for now. We wish you all a very happy festive season ahead and hope you have received your Dashain Bonus errr Festival Allowance by now. If you have any questions or any other concerns, do reach out to us at support@lexstartup.com or use our contact form. Happy Bada Dashain and Shubha Tihar! Yes, and also Happy Chhat and many other festivals that follow!
