DEFINITION:An Act to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected.
CONCEPT OF BONUS: “Bonus” is a reward for good work or share of profit of the unit where the employee is working. The practice of Bonus in India appears to have originated during 1st World War when certain textile mills granted 10% of wages as War Bonus to their workers in 1917.
APPLICABILITY: To any Factory employing 10 or more persons where work is carried out with Power & also to Other Establishments (established for purpose of profit) employing 20 or More persons. This Act extends to the whole of India, wef-1965.
ELIGIBILITY: Every employee of wages upto Rs. 21000/-, shall be entitled for Bonus if the employee has worked for not less than thirty working days in that year.
PAYMENT PERIOD: Bonus should be paid within a period of eight months of closing of the accounting year:
DISQUALIFICATION FOR BONUS: An Employee can be disqualified from receiving the Bonus under this Act, if he is Dismissed from service for “Fraud, Riotous or Violent Behavior” while on the Premises of the Establishment, or Theft, Misappropriation or Sabotage of any Property of the Establishment.
CALCULATION: Thought in general ‘Bonus’ is calculated @ 8.33% of the annual earned wages. But minimum Bonus should be paid Rs. Seven Thousand or the Minimum Wage for the employment, as fixed by the Govt, whichever is higher. However, the company can pay higher Bonus as per company policy.
POWER OF EXEMPTION : If the appropriate Govt, having regard to the financial position and other relevant circumstances of any establishment, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act, it may, by notification in the Official Gazette, exempt for a specified period (subject to such conditions as it may think fit), such establishment from all or any of the provisions of this Act.
THE PAYMENT OF BONUS ACT, 1965
Employee: Any person (other than an apprentice) employed on a monthly salary or wage to do any skilled or unskilled manual, supervisory, managerial, technical or clerical, administrative work for hire or reward.
Working days:- In addition to regular working days it includes the days for which the employee: –
has been laid off under an agreement or by standing orders.
on leave with salary or wage.
absent due to temporary disablement (arising out of and during job).
on maternity leave with salary or wage during the accounting year.
Salary or Wage:-All remuneration (other than OT), of being expressed in terms of money, be payable in r/o employment & includes D.A., but does not include –
any other allowance which the employee is for the time being entitled to.
the value of any house accommodation or supply of light, water, medical.
amenity or of any service or of any concessional supply of foodgrains.
any travelling concession, any bonus, contribution to pension fund or PF.
any retrenchment compensation, gratuity, other retirement benefits.
any commission payable to the employee.
Recent Important Amendment under Bonus Act:-
The Bonus Wage Ceiling increased from Rs. 10,000.00 to Rs. 21,000.00.
The minimum Bonus amount increased from Rs. 3,500.00 to Rs.7,000.00. The employer is bound to pay bonus @ 8.33% (Basic+DA) or Rs. 7000.00 whichever is higher.