Industrial Labor & Common Law Bonus & The Payment Eligibility

Eligibility for Bonus & Its Payment

Eligibility for Bonus:

 In compliance with the Payment of Bonus Act, 1965, an institution that has hired 20 or more workers shall pay an annual bonus to its qualifying employees*.

 Employees who have worked for no less than 30 working days in that year and earn a salary of Rs. 10,000 or less per month are qualified employees. And an apprentice is not eligible for the bonus, as per a decided case law.

 Note: Now, from Rs. 10,000 to Rs. 21,000 per month, the cap has been adjusted.

 Bonus disqualification

 If an employee has been terminated from service for being involved in the Payment of Bonus Act, 1965, pursuant to Section 9,

 (a) fraud; or, (a) fraud; or

 (b) riotous or violent activity while on-site or in the establishment; or (b) riotous or violent behavior while on-site or in the establishment;

 (c) fraud, misappropriation or sabotage of any property belonging to the establishment, and then prohibited from earning a bonus in compliance with the Act.

 This rule is based on the recommendations of the Bonus Commission, which noted that, after all, only those workers who support the stability and well-being of the sector and not those who demonstrate constructive destructive tendencies should share the bonus. The bonus definitely carries with its responsibility of good conduct.

 Payment of Minimum Bonus (Section 10)

Every employer shall pay a minimum bonus payment which shall be 8.33% of the salary or wage earned by the employee or Rs. 100, whichever is higher.

 Maximum Bonus

 Where in an accounting year, the allocable surplus exceeds the amount of minimum bonus as specified under Section 10 of the act, the employer should pay bonus subject to a maximum of 20% of such salary or wages in proportion to the salary or wages earned by the employee in that accounting year.

 Proportionate reduction in bonus in certain cases

 The bonus to be paid to the eligible employees shall be proportionately reduced if an employee has not worked for all the working days in an accounting year. The minimum bonus of Rs. 100 or, as the case may be, of Rs. 60, if such bonus is higher than 8.33 percent of his salary or wage of the days he has worked in that accounting year, shall be proportionately reduced.

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 Computation of number of working days

 For the purposes of Section 13, an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which:

 (a) laying off of an employee under an agreement or as permitted by standing orders under the applicable laws;

 (b) an employee given paid leave;

 (c) temporary disablement of employee arises due to the accident and in the course of his employment; and

 (d) the employee is on paid leaves of maternity. (Section 14)

 

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