New Delhi: As Diwali approaches, many employees look forward to receiving an additional payment from their employers. Companies may celebrate the festival by offering cash bonuses, gifts, sweets or other benefits. But an important question arises every year: Is an employer legally required to pay a bonus during Diwali?
The answer depends on the type of bonus involved. A special Diwali bonus is generally governed by company policy, employment terms or an established practice. A statutory annual bonus, however, is governed by labour law and must be paid to employees who meet the applicable eligibility conditions.
India’s Code on Wages, 2019 came into force for its relevant provisions on November 21, 2025, bringing bonus provisions under Sections 26 to 41. The government subsequently issued notifications in August 2026 specifying the eligibility wage ceiling and the basis for calculating statutory bonuses.
Here is what employees should know about Diwali bonus rules, statutory bonus eligibility and the steps to take if an employer does not pay an amount legally due.
Is a Diwali Bonus Mandatory for Every Employee?
No, a separate Diwali bonus is not automatically compulsory for every employer.
Many companies provide festive bonuses as a gesture of appreciation or as part of their annual employee benefits. Whether an employee receives an additional Diwali payment may depend on:
- The company’s bonus policy.
- The employee’s appointment letter or employment contract.
- Applicable collective agreements or settlements.
- An established bonus practice that may create an enforceable entitlement.
- Any applicable statutory obligations.
For example, a company may choose to distribute sweets or gift vouchers during Diwali without being legally required to provide an additional cash payment specifically for the festival.
However, an employer cannot avoid a statutory bonus obligation simply by arguing that a festive bonus is discretionary. If an employee qualifies for a statutory annual bonus, the employer must comply with the applicable legal requirements.
Diwali Bonus vs Statutory Annual Bonus: What Is the Difference?
The two payments are often confused, but they serve different purposes.
Festive bonus: This is an additional benefit offered around Diwali or another festival. Its availability and amount generally depend on the applicable company policy, employment terms or established practice.
Statutory annual bonus: This is a payment required by law for eligible employees covered by the relevant provisions. Under Section 26 of the Code on Wages, 2019, the minimum annual bonus is calculated at 8.33% of the employee’s wages earned during the accounting year or ₹100, whichever is higher. The maximum statutory bonus under the prescribed calculation framework is 20% of wages earned.
The statutory annual bonus is not necessarily paid specifically on Diwali. Its payment timing is governed by the applicable law and rules.
Who Is Eligible for a Statutory Bonus in 2026?
The Code on Wages establishes eligibility conditions for statutory bonus payments.
Under Section 26, an employee must generally meet the prescribed wage ceiling and have worked for at least 30 days in the accounting year to qualify, subject to the other applicable provisions.
The Central Government issued a notification on August 25, 2026, specifying that employees drawing wages of up to ₹21,000 per month are eligible under Section 26(1), subject to the law’s other conditions. The notification is deemed effective from November 21, 2025.
The bonus provisions also generally apply to establishments employing 20 or more persons, subject to the Code’s applicability rules and relevant exceptions.
Employees should check whether their establishment and employment category fall within the law’s scope rather than assuming that the salary figure alone determines eligibility.
How Is the Statutory Bonus Calculated?
Under Section 26 of the Code on Wages, the minimum bonus is 8.33% of eligible wages earned during the accounting year or ₹100, whichever is higher. Where the allocable surplus permits a higher payment, the bonus may increase up to the statutory maximum of 20% of wages earned.
Importantly, the percentage is not necessarily calculated on an employee’s entire annual salary.
The calculation may use a prescribed wage ceiling rather than the employee’s full wages. In an August 25, 2026 notification, the Central Government specified that, for eligible employees whose monthly wages exceed ₹7,000, the bonus calculation should use ₹7,000 per month or the applicable minimum wage fixed by the Central Government, whichever is higher.
This means the amount can vary according to the employee’s qualifying wages, period of eligible service, applicable minimum wage and the statutory calculation rules.
Does everyone receive 8.33% of their annual salary?
No. The minimum rate does not mean every eligible employee receives 8.33% of their full annual salary.
For illustration, where the applicable calculation base is ₹7,000 per month for a full 12-month accounting year, the annual calculation base would be ₹84,000. At 8.33%, the indicative minimum calculation would be approximately ₹6,997.
This is only an illustration, not a guaranteed payment amount. The actual calculation can differ depending on the applicable minimum wage, eligible service period, wage definition and other statutory provisions.
What If Your Company Does Not Pay a Bonus?
If you believe your employer has withheld a statutory bonus you are entitled to receive, you can take several steps.
1. Check your appointment letter and salary records
Review your appointment letter, salary slips, employment contract and any documents explaining the company’s bonus policy. These can help you distinguish a discretionary festive benefit from a statutory entitlement.
2. Ask the HR department for clarification
Contact HR or the payroll team in writing. Ask whether the company has calculated your annual statutory bonus and, if not, request the reason for the decision.
Keep copies of emails, salary records and relevant company communications.
3. Check your eligibility under the law
Confirm your qualifying wages, period of service, the establishment’s coverage and the applicable accounting year. A statutory bonus claim depends on the relevant legal conditions, not simply on whether the company has distributed a Diwali gift.
4. Approach the appropriate Labour Department
If you believe a statutory amount remains unpaid and the issue is not resolved internally, you can contact the appropriate labour authority for guidance on the complaint or claim procedure.
The correct authority and process can depend on the establishment, the applicable government and the nature of the dispute.
Can an Employer Refuse a Statutory Bonus by Calling It a Diwali Gift?
A festive gift and a statutory bonus are not automatically interchangeable.
An employer’s legal obligations depend on the applicable statutory provisions and the circumstances of the payment. Employees should ask for a clear breakdown of any amount described as a bonus and check whether the employer has fulfilled the statutory annual bonus obligation.
Similarly, the absence of an additional Diwali payment does not, by itself, establish that the employer has violated the law. A separate festive bonus may not be compulsory unless an applicable policy, contract, established practice or legal obligation requires it.
What Employees Should Remember This Diwali
Diwali is a time of celebration, but employees should also understand the difference between festive benefits and legally mandated payments.
The key points are straightforward:
- A separate Diwali bonus is not automatically mandatory for every employee.
- Statutory annual bonus rules apply to eligible employees and covered establishments.
- The minimum statutory bonus is generally 8.33% of eligible wages, subject to the prescribed calculation rules.
- The notified eligibility wage ceiling is ₹21,000 per month under the August 2026 notification.
- The calculation base may be capped at ₹7,000 per month or the applicable Central Government minimum wage, whichever is higher.
- Employees who believe a statutory bonus has been withheld can seek written clarification and approach the appropriate labour authority.
The bottom line: Whether you receive a separate Diwali bonus depends on the applicable employment terms and policies. However, where statutory annual bonus provisions apply, employers must meet their legal obligations. Reviewing your employment documents and understanding the current bonus rules can help you protect your workplace rights.
