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TABLE OF CONTENTS
INTRODUCTION
HISTORY
SCOPE AND OBJECT OF THE ACT
APPLICABILITY OF THE ACT
ELIGIBILITY OF THE ACT
DISQUALIFICATION OF THE ACT
MINIMUM AND MAXIMUM BONUS PAYABLE
TIME LIMIT FOR PAYMENT
CALCULATION OF BONUS
RIGHTS AND DUTIES OF EMPLOYER
RIGHTS OF EMPLOYEES
OFFENCES AND PENALTIES
AMENDMENTS TO THE PRINCIPLE ACT
FEATURES OF AMENDED ACT OF 2015
INTRODUCTION
The Payment of Bonus Act, 1965 is the main act for payment of reward to the representatives
which was shaped with a target for compensating workers for their great work for the
association. It is a stage forward to share the flourishing of the foundation reflected by the
benefits earned by the commitments made by capital, the executives and work with the workers.
This is an Act expected to accommodate the payment of reward to people utilized in specific
foundations based on benefits or based on creation or efficiency and for issues associated
therewith. It came into power from September 25, 1965. The Payment of Bonus Act, 1965 has
experienced a few changes. This Act reaches out to the entire of India The Act is intended to: (I)
force a statutory commitment on a business of each foundation secured by the Act to pay
reward to workers in the foundation; (ii) set down rule and equation for computation of reward;
(iii) accommodate installment of least and most extreme reward and connecting the installment
of reward with the plan of set-on and set-off; and (iv) give apparatus to authorization of risk for
payment of reward.
HISTORY
The act of paying reward in India seems to have begun during First World War when
certain material plants allowed 10% of wages as war reward to their laborers in 1917. In
specific instances of mechanical debates interest for installment of extra was
additionally included. In 1950, the Full Bench of the Labor Appellate developed an
equation for assurance of reward. A request was made to bring that equation up in
1959. At the second and third gatherings of the Eighteenth Session of Standing Labor
Committee (G. O.I.) held in New Delhi in March/April 1960, it was concurred that a
Commission be named to go into the topic of reward and advance reasonable
standards. A Tripartite Commission was set up by the Government of India to consider
in a far reaching way, the topic of installment of reward dependent on benefits to
workers utilized in foundations and to make suggestions to the Government. The
Government of India acknowledged the suggestions of the Commission subject to
specific alterations. To execute these suggestions the Payment of Bonus Ordinance,
1965 was proclaimed on 29th May, 1965. To supplant the said Ordinance the Payment
of Bonus Bill was presented in the Parliament.
• The number of workers who might be profited by the corrections has gone up by virtue of
raising as far as possible from pay of Rs.10,000/ - every month to Rs.21,000/ - every month. Hence the
change would stretch out the advantage to the generous number of workers who were out of the
inclusion of the Payment of Bonus Act.
• Section 12 of the Payment of Bonus Act which contains the arrangement as to count of Bonus in
regard of specific representatives has been revised and the changed Section gives that compensation or
pay of a worker where it surpasses Rs. 7,000/ - (Rupees Seven Thousand) per mensem or the lowest pay
permitted by law for the Scheduled work as fixed by the Appropriate Government whichever is higher,
the Bonus payable to such representatives under Section 10 or as the case may under Section 11 will be
determined as though his pay or pay were Rs.7,000/ - (Rupees Seven Thousand) per mensem. The
clarification annexed to the corrected area gives that to the reason for the segment, the articulation
planned business will have a similar significance as alloted to which in Clause (e) of Section 2 of the
Minimum Wages Act, 1948.
4. Arising out of the Amendments, there are a few issues which would influence the
Establishments and required to be tended to right away. A portion of the issues of concern are recorded
underneath:-
• The Amendments have been given review impact from 1.4.2014. At the end of the day, the
Bonus will must be paid to the representatives as per the corrected arrangements for the money related
year 2014-15. Every one of the Establishments have just paid the Bonus for the year 2014-15. Now and
again, the issue of Bonus has been settled after long exchanges and might be after sure strain in the
mechanical relations. The Amended Act would revive the settled issues and plausibility of further strain
in the modern relations in a portion of the Establishments can't be precluded.
• The Hon.ble Supreme Court on account of Remington Rand of India versus Laborers AIR 1970 SC
1421 has held that the Payment of Bonus can't have review tasks. In the said case, the laborers had
requested Bonus for the Year 1963-64, yet the Court held that it would not make a difference from the
review impact.
• There is no consistency in the base wages fixed by the various States. In certain States, the base
wages fixed is more than Rs.7,000/ - . Further, the meaning of .compensation. which has not been
revised rejects stipends like HRA, and so on. In certain States, the base wages fixed incorporates
remittances like HRA, and so forth. In this manner there would be a genuine irregularity in deciding the
wages with the end goal of installment of Bonus. The base wages fixed for various planned work likewise
contrast inside the States. Further, the base wages are fixed in certain States based on Zones. Therefore
a few representatives would get higher quantum of Bonus by virtue of their being posted during the
Zones where higher least wages is payable.
• The corrected segment 12 as to the computation of Bonus payable to the representatives who
are drawing compensation/compensation above Rs. 7,000/ - every month stipulates that the Bonus
payable to such workers either the base or the most extreme measure of Bonus will be determined
either on Rs.7,000/ - every month or on the base compensation for the Scheduled business whichever is
higher. This stipulation would prompt a genuine complaints among the representatives.
• The above issues may make more issues at the businesses and may influence the mechanical
relations.
5. The Labor Law specialists feel that the Amended Act can be tested on the review impact and
incorporation of the word Minimum Wage in Section 12 on the above grounds. The Association is
likewise inspecting the issues in totality. The Association welcomes the perspectives on the individuals
with respect to the above concerns and therapeutic measures to be taken for this sake
Any worker getting compensation or wages up to RS.21,000 every month and occupied
with any work whether talented, untalented, administrative, supervisory and so on is
qualified for the reward for consistently if the representatives have worked for at least 30
working days around the same time.
Case law: Retrenched Employee:- He is qualified to get reward gave he has attempted
to least qualifying time of 30 days in the bookkeeping year and who has drawn a pay of
not exactly ' 10,000 every month in the year. (East Asiatic Co. (P) Ltd. Versus Industrial
Tribunal)
DISQUALIFICATION FOR BONUS
MINIMUM BONUS
MAXIMUM BONUS
In the event that in a bookkeeping year, the allocable overflow, determined in the wake
of considering the sum 'set on' or the sum 'set of' surpasses the base reward, the
business should pay reward in relation to the compensation or wages earned by the
representative in that bookkeeping year subject to a limit of 20% of such pay or wages .
The bonus ought to be paid in real money inside 8 months from the end of the
bookkeeping year or inside one month from the date of implementation of the honor or
coming into activity of a repayment following a mechanical contest with respect to
payment of bonus.However if there is adequate reason expansion might be applied for.
CALCULATION OF BONUS
B = Direct Taxes (determined according to Sec. 7) in regard of gross benefits for the
quickly going before bookkeeping year – Direct Taxes in regard of such gross benefits
as decreased by the measure of reward, for the promptly going before bookkeeping
year.
Allocable Surplus = 60% of Available Surplus, 67% if there should arise an occurrence
of remote organizations.
1. Make alteration for 'Set-on' and 'Set-off'. For figuring the measure of reward in regard
of a bookkeeping year, allocable surplus is registered subsequent to thinking about the
measure of set on and set off from the earlier years, as outlined in Fourth Schedule.
2. The allocable surplus so processed is appropriated among the workers with respect
to compensation or wages got by them during the pertinent bookkeeping year.
If there should arise an occurrence of a worker getting pay or wages above Rs. 2,500
the reward payable is to be determined as though the compensation or wages were Rs.
2,500 p.m. as it were.
Duties
1. To compute and pay the yearly reward as required under the Act
Privileges OF EMPLOYEES
3. Right to look for explanation and get data, on any thing in the records of
the foundation.
For failure to comply with the directions or requisitions made the penalty
is imprisonment upto 6 months, or fine up to Rs.1000, or both.
Further, in Section 12 of the Principal Act, for the words "3,000 and 500 rupees" at both the spots where
they happen, the words "7,000 rupees or the lowest pay permitted by law for the planned work, as fixed
by the suitable Government, whichever is higher" has been substituted. The accompanying Explanation
was embedded toward the end, in particular For the motivations behind this area, the articulation
"booked business" will have a similar importance as doled out to it in proviso (g) of segment 2 of the
Minimum Wages Act, 1948 (11 of 1948).'
Payment of Bonus (Amendment) Bill, 2015 to improve the month to month reward estimation roof to Rs
7,000 every month from existing Rs. 3,500 was endorsed by Union Cabinet here," a source said after the
Cabinet meeting. The change bill will be made powerful from April 1, 2015. Presently the bill will be
postponed in Parliament for endorsement.
The bill likewise looks to upgrade as far as possible for installment of reward from the compensation or
pay of a worker from Rs. 10,000 every month to Rs. 21,000. The Payment of Bonus Act 1965 is relevant
to each production line and other foundation in which at least 20 people are utilized on any day during a
bookkeeping year. The bill additionally accommodates another stipulation in Section 12 which enables
the focal government to change the premise of figuring reward. At present, under Section 12, where the
pay or compensation of a representative surpasses Rs. 3,500 every month, the base or most extreme
reward payable to workers are determined as though his compensation or pay were Rs. 3,500 every
month. The last alteration to both as far as possible and the estimation roofs under the said Act was
done in 2007 and was made successful from April 1, 2006. This correction in the Act to build wage roof
and reward estimation roof was one of confirmations given by the Center after 10 focal worker's
organizations went on one-day strike on September 2.
The administration had indicated meeting laborers' goals on nine out of 12 requests put together by the
associations.
Conclusion: