The correct answer is option 'C', which states that the minimum bonus an employer must pay to an employee under the Payment of Bonus Act is 8.33% of the employee's salary.

Explanation:
The Payment of Bonus Act, 1965 is an Indian legislation that provides for the payment of bonus to employees in certain establishments. It applies to every factory and establishment in which 20 or more persons are employed on any day during an accounting year.

Under the Act, employers are required to pay a minimum bonus of 8.33% of the employee's salary. Let's break down the key points:

1. Applicability:
- The Act applies to factories and establishments employing 20 or more persons.
- It is important to note that the Act does not apply to certain categories of employees, such as those employed by the central or state government, public sector undertakings, and educational institutions.

2. Calculation of bonus:
- The bonus payable to an employee is calculated based on the employee's salary.
- The Act defines the term "salary" to include basic wages, dearness allowance, and other allowances such as house rent allowance or city compensatory allowance.

3. Minimum bonus:
- The Act specifies that employers must pay a minimum bonus of 8.33% of the employee's salary.
- This means that at least 8.33% of the employee's salary must be paid as a bonus, even if the employer's allocable surplus (available surplus for distribution as bonus) is less than that amount.

4. Maximum bonus:
- The Act also provides for a maximum bonus limit of 20% of the employee's salary.
- If the allocable surplus exceeds the amount required to pay a minimum bonus of 8.33%, the excess amount can be distributed as a higher bonus, up to a maximum of 20% of the employee's salary.

It is important for employers to comply with the provisions of the Payment of Bonus Act and ensure that eligible employees receive the minimum bonus as prescribed by the Act. Non-compliance can lead to penalties and legal consequences.