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Other establishment in
which 20 or more persons The Appropriate Government may
Every Factory are employed on any day
also apply the provisions of this
during an accounting
year. Act with effect from such
An establishment in accounting year as may be notified
which 20 or more in the official Gazette, to any
persons are employed establishment or class of
on any day during an The provision of this Act shall
establishments, including an
accounting year, must also apply to certain public
sector establishments [20(1)]. establishment as defined by Sec
continue to be governed
by this Act, in spite of 2(m) (ii) of the Factories Act, 1948
the fact that the number employing persons less than 20
of persons employed but not less than 10 in number
therein falls below 20 [Proviso to Sec 1(3)].
[1(5)].
Automobile Karamchari Sangh Vs. Industrial Tribunal, (1976)
A part-time employee is also an employee for the purpose of calculating the
number of employees i.e., 20 or more under Sec 1(3)(b).
3.2
Application of the Act to establishments in Public Sector [20]
Only in following 2 conditions Act applies to PSE’s
Competitive Business Income Limit
Establishment in public sector sells any goods The income from such sale or services or both
produced or manufactured by it or renders any is not less than 20% of the gross income of the
services ,in competition with an establishment establishment in public sector for that year.
in private sector in any accounting year, AND
Definitions [Sec 2]
Allocable surplus [2(4)]
Establishments under CG
Establishments under SG
(For e.g. Maharashtra SG)
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Employee [2(13)]
3.3
Employer [2(14)]
(a) A Government company as defined in Sec 617 of the Companies Act, 1956.
(b) a corporation in which not less than 40% of its capital is held (whether
singly or taken together) by:
(i) the Government; or
(ii) the Reserve Bank of India; or
(iii) A corporation owned by the Government or the Reserve Bank of India.
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Free Food Allowance or Free food by his employer in lieu of the whole or the part of
the salary or wages payable shall be deemed to form part of salary and wages.
3.4
Subsistence Allowance is also included in Salary and Wages.
But it excludes the following
The value of any house accommodation or of supply of light, water, medical
attendance or other amenity or of any service or of any concessional supply of
food grains or other articles.
Any other allowance which the employee is for the time being entitled to.
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An Employee in the following cases is not entitled to bonus:
Wheel & RIM Co. vs. Government of T.N (1971)
An apprentice is not entitled to bonus. 3.5
Employees of certain establishments specified in sec 32 are not covered by this
Act. For e.g. Any Government Employee
Disqualification of Bonus (Sec 9)An employee who has been dismissed from service for :
An employee who has been dismissed from service for Fraud
V.G Textiles Private Ltd Vs Assistant Commissioner of Labour, 2010
Riotous or violent behaviour while on the premises of the establishment
Theft, misappropriation or sabotage of any property of the establishment is not
entitled for bonus
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bonus?
What about the
3.6 deficits or excess
profit
He has been absent due to temporary disablement caused by accident arising out
of and in the course of his employment.
The employee has been on maternity leave with salary or wages during the
accounting year.
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3. Fourth Schedule to apply to all cases [15(3)]
The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other
cases not covered by Sub-sec (1) or (2) for the purpose of payment of bonus. 3.7
4. FIFO Basis [15(4)]
Where in any accounting year any amount has been carried forward and set on or set off under
this Sec, then, in calculating bonus for the succeeding accounting year, the amount of set on or
set off carried forward from the earliest accounting year shall first be taken into account.
Summary
Sec 16(1A) Sec 16(1B) Sec 16(1C)
First 5 Accounting Years 6 and 7th Accounting Year
th th
8 Accounting Year
Bonus shall be payable only Sec 15 i.e. Set-on and set-off apply Sec 15, shall apply
if employer derives profit. with modification. as they apply in
Set-on and set-off in 6th Year – Excess relation to any
Sec 15 i.e. Set-on and set-off or deficiencies of 5th and 6th year. other
do not apply. Set-on and set-off in 7th Year – Excess establishment
or deficiencies of 5th, 6th, and 7th year.
Miscellaneous
Adjustment of interim bonus against bonus payable under the Act [17]
If in any accounting year, an employer has paid any puja bonus or other
customary bonus to any employee, and then the former shall be entitled to
deduct the amount of bonus so paid from the amount of bonus payable by him
to the employee under this Act in respect of that accounting year. The employee
shall be entitled to receive only the balance.
The employer can do the same thing even in a case where he has paid a part of
the bonus payable under this Act to an employee before the date on which such
bonus becomes payable
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Register in Form A
Computation of the allocable surplus referred to in Sec 2(4)
3.8 Register in Form B
The set on and set-off of the allocable surplus u/s (15)
Register in Form C
The details of the amount of bonus due to each of the employees
The deductions under Secs 17 and 18
The amount actually disbursed to the employees.
Penalty [28]
Punishment
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