Dear All,
My company want to pay a bonus to their workers on a monthly basis. However, as per the Bonus Act, less than 30 days of attendance in FY is not eligibility for the same.
Please help.
reg
Jagat
From India, Mumbai
My company want to pay a bonus to their workers on a monthly basis. However, as per the Bonus Act, less than 30 days of attendance in FY is not eligibility for the same.
Please help.
reg
Jagat
From India, Mumbai
The question invloves two issues. First is that whether you can pay bonus in monthly payments? the answer is No. Bonus is actually a deferred payment of the last financial year. That is, the bonus paid in this year (2024-25) pertains to last financial year, 2023-24. The same should be pai within 8 months of closing the financial year. That means you can not stretch it beyond November 2024. You can pay the bonus of preceding year in installments but the last of the said installments should not be after 8 months of closing the books of accounts.
Second question/ rather apprehension is about the eligibility. 30 days attendance/ working in a finacial year is the eligibility for getting bonus. Any employee whether currently working or not shall be paid bonus only if he had worked at least for 30 days in the preceding financial year. You need to pay bonus only to those who qualifies to get it.
From India, Kannur
4293Second question/ rather apprehension is about the eligibility. 30 days attendance/ working in a finacial year is the eligibility for getting bonus. Any employee whether currently working or not shall be paid bonus only if he had worked at least for 30 days in the preceding financial year. You need to pay bonus only to those who qualifies to get it.
From India, Kannur
Dear Friend, Your company can pay the bonus to their workers on a monthly basis, but can’t be considered the payment as bonus as per the Bonus Act. Therefore, do not pay during the FY.
From India, Mumbai
From India, Mumbai
Friends,
When I was browsing looking for settled case laws relevant to this query I came across a land mark judgment reg.payment of Bonus, passed by the SC (MUMBAI KAMGAR SABHA, BOMBAY Vs.RESPONDENT:M/S ABDULBHAI FAIZULLABHAI & ORS.- DATE OF JUDGMENT10/03/1976) considered to be the first of PIL in India passed by the legendary Hon'ble Justice Shri.V.Krishna Iyer & Justice Untwala.NL.This I wish to share with learned friends for refreshing the contents though this I think will not answer the query in its entirety.
From India, Bangalore
When I was browsing looking for settled case laws relevant to this query I came across a land mark judgment reg.payment of Bonus, passed by the SC (MUMBAI KAMGAR SABHA, BOMBAY Vs.RESPONDENT:M/S ABDULBHAI FAIZULLABHAI & ORS.- DATE OF JUDGMENT10/03/1976) considered to be the first of PIL in India passed by the legendary Hon'ble Justice Shri.V.Krishna Iyer & Justice Untwala.NL.This I wish to share with learned friends for refreshing the contents though this I think will not answer the query in its entirety.
From India, Bangalore
Dear Friends,
As per current Bonus Amendment Act, every employee who is drawing upto Rs.21000 per mensem is eligible for Bonus.
Wef 1.7.2023, in Maharashtra state minimum wages of certain category contract workers wages reached Rs.21026 (808.73 x 26 = 21026). Hence not eligible for bonus.
But PE is insisting to pay bonus to them considering their wages as 21000. I stand on my position of not eligible as per Act.
Can Regional Labour Commissioner or ALC (Central) play a role in this, or Will they entertain the submission of PE, OR whether RLC/ALC can overlook Bonus Act and insist to pay bonus.
Kindly share your expert views.
Thanks
PL Kanthan
From India, Thane
As per current Bonus Amendment Act, every employee who is drawing upto Rs.21000 per mensem is eligible for Bonus.
Wef 1.7.2023, in Maharashtra state minimum wages of certain category contract workers wages reached Rs.21026 (808.73 x 26 = 21026). Hence not eligible for bonus.
But PE is insisting to pay bonus to them considering their wages as 21000. I stand on my position of not eligible as per Act.
Can Regional Labour Commissioner or ALC (Central) play a role in this, or Will they entertain the submission of PE, OR whether RLC/ALC can overlook Bonus Act and insist to pay bonus.
Kindly share your expert views.
Thanks
PL Kanthan
From India, Thane
Minimum bonus payable is 8.33% and maximum is 20%. Bonus is payable annually within 8 months from close of accounting year. Bonus is payable to all employees whose salary or wages do not exceed Rs.21000/-p.m. -
And
" (21) "salary or wage" means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-
(i)any other allowance which the employee is for the time being entitled to;
(ii)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;
(iii)any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the being in force;
(vi)any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation.-Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee;
(22) words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.
(i) Employees of State Boards are entitled to bonus. [Orissa State Housing Board v. D.Nayak & Ors., (1989) 2 L.L.N. 241 (Ori.)].
(ii)A co-operative bank is a banking company. [Vellore Central Co-op. Bank Ud. v. Industrial Tribunal, (1989) 58 F.L.R. 924 (Mad.)].
(iii)Lay-off compensation is included in the terin of "salary" or "wages". [Mohan Kumar v. Deputy Labour Commissioner, (1991) 62F.L.R. 903 (Ker.)].
(iv)When wages are revised, the management has to pay bonus on arrears. [Mumbai Kamgar Union v. Indian Tool Mfrs. Ltd. & Ors., (1981) 1 L.L.N. 391 (Born.)].
(v) Dearness allowance and city compensatory allowance are included in the definition of "salary" or "wages" under section 2 (21) of the Act. [S. Krishnamurthy v. Presiding Officer, Labour Court. (1986) 55 F.L.R. 535].
Food allowance and value of uniforms etc. cannot be said to be remuneration. [ibid.].
(vi)Dearness allowance is a part and parcel of wages. [Scindia Navigation Co. Ltd. & Anr. v. Scindia Employees Union & Anr., (1983) 2 L.L.N. 63].
(vii)Allowance like family allowance, house rent allowance, ad-hoc and tiffin allowances are not in the nature of dearness allowance. [ibid.].
(viii)Overtime allowance does not form part of "wages". [Associated Cement Co. Ltd. v. Their Workmen, A.I.R.1959 S.C. 925].
(ix)Retaining allowance comes within the purview of section 2 (21). [Chalthan Vidyut Sekhari Udyog v. Government Labour Officer, A.I.R. 1981 S.C. 905]. The retainer is entitled to bonus [ibid.].
(x)Remuneration in case of overtime work and commission payable to employees are excluded from the definition of "salary" or "wages". [All India Voltas & Volpart Employee's Federation v; Voltas Ltd., 1973 Lab. I. C. 645]."
Unquote: Going by above definition, you have to ensure whether the salary/wages paid fulfill all above concept of 'salary' for computation of bonus payable.
Secondly, bonus is payable within 8 months from the closure of financial accounts ie.31.3.2024.and therefore 30th November. If this possible, then you have to enter into a bi-lateral agreement which should contain a clause enabling payment of bonus in monthly (instalment) but should be completely paid before end of November. This arrangement is possible under the following clause of the Act.
Quote:
" 17. Adjustment of customary or interim bonus against bonus payable under the Act. Where in any accounting year-
(a) an employer has paid any puja bonus or other customary bonus to an employee; or
(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable,
then, the employer 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 and the employee shall be entitled to receive only the balance.
COMMENTS
(i)Payment of any customary bonus, such as attendance bonus, festival bonus, or the like, does not absolve the management from their liability to pay statutory bonus. [Baidyanath Bhawan Mazdoor Union v. Baidyanath Ayurvedic Bhawan Pvt. Ltd. & Anr., 1984 Lab. I.C. 148].
(ii)Customary bonus is adjustable against the statutory bonus. [ibid.]
(iii)The employee is bound to refund the excess amount of bonus. [Landra Engineering & Foundary Works v. State of Punjab & Ors., (1970) 38 F.J.R. 538 (P &H) ].
xxxx
19. Time-limit for payment of bonus.-1[All amounts] payable to an employee by way of bonus under this Act shall be paid in cash by his employer-
(a) where there is a dispute regarding payment of bonus pending before any authority under section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;
1. Subs. by Act No.23 of 1976, s. 13, for "(1) Subject to the provisions of this section all amounts" (w.e.f. 25-9-1975).
(b) in any other case, within a period of eight months from the close of the accounting year :
Provided that the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of eight months to such further period or periods as it thinks fit; so, however, that the total period so extended shall not in any case exceed two years.
1* * * * *
2* * * * *
COMMENTS
The amount of bonus is payable in cash within 8 months, with an exception, from the close of the accounting year.
Unquote:
In case of any hitches you may use the provision as per Sec.19 1(a) as above.
---------------
However you may obtain proper guidelines from the authorities concerned so that any violation arising in future can be managed amicably supported by 'an agreement with employees' union envisaging adequacy of legal provisions'
From India, Bangalore
And
" (21) "salary or wage" means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-
(i)any other allowance which the employee is for the time being entitled to;
(ii)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;
(iii)any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the being in force;
(vi)any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation.-Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee;
(22) words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.
(i) Employees of State Boards are entitled to bonus. [Orissa State Housing Board v. D.Nayak & Ors., (1989) 2 L.L.N. 241 (Ori.)].
(ii)A co-operative bank is a banking company. [Vellore Central Co-op. Bank Ud. v. Industrial Tribunal, (1989) 58 F.L.R. 924 (Mad.)].
(iii)Lay-off compensation is included in the terin of "salary" or "wages". [Mohan Kumar v. Deputy Labour Commissioner, (1991) 62F.L.R. 903 (Ker.)].
(iv)When wages are revised, the management has to pay bonus on arrears. [Mumbai Kamgar Union v. Indian Tool Mfrs. Ltd. & Ors., (1981) 1 L.L.N. 391 (Born.)].
(v) Dearness allowance and city compensatory allowance are included in the definition of "salary" or "wages" under section 2 (21) of the Act. [S. Krishnamurthy v. Presiding Officer, Labour Court. (1986) 55 F.L.R. 535].
Food allowance and value of uniforms etc. cannot be said to be remuneration. [ibid.].
(vi)Dearness allowance is a part and parcel of wages. [Scindia Navigation Co. Ltd. & Anr. v. Scindia Employees Union & Anr., (1983) 2 L.L.N. 63].
(vii)Allowance like family allowance, house rent allowance, ad-hoc and tiffin allowances are not in the nature of dearness allowance. [ibid.].
(viii)Overtime allowance does not form part of "wages". [Associated Cement Co. Ltd. v. Their Workmen, A.I.R.1959 S.C. 925].
(ix)Retaining allowance comes within the purview of section 2 (21). [Chalthan Vidyut Sekhari Udyog v. Government Labour Officer, A.I.R. 1981 S.C. 905]. The retainer is entitled to bonus [ibid.].
(x)Remuneration in case of overtime work and commission payable to employees are excluded from the definition of "salary" or "wages". [All India Voltas & Volpart Employee's Federation v; Voltas Ltd., 1973 Lab. I. C. 645]."
Unquote: Going by above definition, you have to ensure whether the salary/wages paid fulfill all above concept of 'salary' for computation of bonus payable.
Secondly, bonus is payable within 8 months from the closure of financial accounts ie.31.3.2024.and therefore 30th November. If this possible, then you have to enter into a bi-lateral agreement which should contain a clause enabling payment of bonus in monthly (instalment) but should be completely paid before end of November. This arrangement is possible under the following clause of the Act.
Quote:
" 17. Adjustment of customary or interim bonus against bonus payable under the Act. Where in any accounting year-
(a) an employer has paid any puja bonus or other customary bonus to an employee; or
(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable,
then, the employer 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 and the employee shall be entitled to receive only the balance.
COMMENTS
(i)Payment of any customary bonus, such as attendance bonus, festival bonus, or the like, does not absolve the management from their liability to pay statutory bonus. [Baidyanath Bhawan Mazdoor Union v. Baidyanath Ayurvedic Bhawan Pvt. Ltd. & Anr., 1984 Lab. I.C. 148].
(ii)Customary bonus is adjustable against the statutory bonus. [ibid.]
(iii)The employee is bound to refund the excess amount of bonus. [Landra Engineering & Foundary Works v. State of Punjab & Ors., (1970) 38 F.J.R. 538 (P &H) ].
xxxx
19. Time-limit for payment of bonus.-1[All amounts] payable to an employee by way of bonus under this Act shall be paid in cash by his employer-
(a) where there is a dispute regarding payment of bonus pending before any authority under section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;
1. Subs. by Act No.23 of 1976, s. 13, for "(1) Subject to the provisions of this section all amounts" (w.e.f. 25-9-1975).
(b) in any other case, within a period of eight months from the close of the accounting year :
Provided that the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of eight months to such further period or periods as it thinks fit; so, however, that the total period so extended shall not in any case exceed two years.
1* * * * *
2* * * * *
COMMENTS
The amount of bonus is payable in cash within 8 months, with an exception, from the close of the accounting year.
Unquote:
In case of any hitches you may use the provision as per Sec.19 1(a) as above.
---------------
However you may obtain proper guidelines from the authorities concerned so that any violation arising in future can be managed amicably supported by 'an agreement with employees' union envisaging adequacy of legal provisions'
From India, Bangalore
Dear friends,
Thank you for your valuable inputs on my query abt eligibility & payment of Bonus.
But my query was specific and I need guidance on this - i.e.
1. "whether contract worker drawing minimum wage ( wage + DA) alone crossed Rs.21,000 w.e.f . 01.07.2023 is eligible for bonus as per Payment of Bonus Act, 1956 (Revised)". (Other allowances are not included in this wage amount). As on date as per bonus act, rs.21000/- wages is ceiling for eligibility.
2." Whether Regional Labour Commissioner(Central) will over-look Bonus Act and instruct the contractor to pay bonus to workers drawing wages alone more than 21000 per mensem (as insisted by Principal Employer)". The principal employer is a Central govt. undertaking.
Kindly share your views
Thanks
PL Kanthan
From India, Thane
Thank you for your valuable inputs on my query abt eligibility & payment of Bonus.
But my query was specific and I need guidance on this - i.e.
1. "whether contract worker drawing minimum wage ( wage + DA) alone crossed Rs.21,000 w.e.f . 01.07.2023 is eligible for bonus as per Payment of Bonus Act, 1956 (Revised)". (Other allowances are not included in this wage amount). As on date as per bonus act, rs.21000/- wages is ceiling for eligibility.
2." Whether Regional Labour Commissioner(Central) will over-look Bonus Act and instruct the contractor to pay bonus to workers drawing wages alone more than 21000 per mensem (as insisted by Principal Employer)". The principal employer is a Central govt. undertaking.
Kindly share your views
Thanks
PL Kanthan
From India, Thane
Sec. 17(b) Of payment of bonus Act permits employer to pay interim/advance bonus before the due date. which means bonus can be paid in advance on monthly basis. There is no such prohibition. Provision says that the employee is entitled to receive the balance only on due date.
Regds
anil kaushik
From India, Delhi
Regds
anil kaushik
From India, Delhi
As per the notification on this stipulates salary/wages drawn upto Rs.21,000/-p.m. only are eligible to receive bonus. And contract workers also eligible subject to this limit.
The Act is applicable to
(a) any factory employing 10 or more persons where any processing is carried out with aid of power.
(b) Other establishments (established for purpose of profit) employing 20 or more persons.
Minimum bonus payable is 8.33% and maximum is 20%. Bonus is payable annually within 8 months from close of accounting year. Bonus is payable to all employees whose salary or wages do not exceed Rs. 21,000 per month (the limit was Rs. 10,000 upto 1-4-2014) provided they have worked for at least 30 days in the accounting year. However, for calculation of bonus, maximum salary of Rs. 7,000 or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher (the limit was Rs. 3,500 upto 1-4-2014) is considered.
The Payment of Bonus Act applies to—
(a) every factory; and
(b) every other establishment in which twenty or more persons are employed on any day during an accounting year [section 1(3)].
1.3 Summary of employees eligible/not eligible
Following is the summary of employees eligible/not eligible for bonus under Payment of Bonus Act.
Following employees have been held as eligible –
(a) Temporary workmen
(b) Retrenched employee
(c) Part time employee
(d) Probationer
(e) Piece rated workman
(f) employee is seasonal factory is entitled, though on proportionate basis
(g) Retrenched employee
(h) Employee who has caused financial loss to employer is eligible, but the loss can be recovered from bonus only of the current year – section 13 (i) Employees of Public Sector Units which sell goods or renders services in competition with others.
Following are not eligible –
(a) Apprentice – section 2(13) – definition of employee
" (b) In case of employees employed through contractors, Principal Employer is not liable, as bonus is not ‘wages’, though contractor may be liable"
Here what is noted is ,"if the Contractor fails to pay bonus to their workmen, the Principal Employer has assume liability to pay to the contract employees and recover from the Contractor.
For your second query- The State govt. Labour Inspectors/Labour Officer/ALC under whose jurisdiction the place of work is situated has to oversee the implementation of labour laws, including Bonus Act. In case of certain Govt.of India Utg. CLC may have jurisdiction which has to be checked with them w.r.t. notification issued by the respective State govts.
For proper understanding of applicability, exemptions & jurisdiction you have to read (Sec.27 & 32) and take note of relevant provisions of the Acts & Rules (copies attached).
From India, Bangalore
The Act is applicable to
(a) any factory employing 10 or more persons where any processing is carried out with aid of power.
(b) Other establishments (established for purpose of profit) employing 20 or more persons.
Minimum bonus payable is 8.33% and maximum is 20%. Bonus is payable annually within 8 months from close of accounting year. Bonus is payable to all employees whose salary or wages do not exceed Rs. 21,000 per month (the limit was Rs. 10,000 upto 1-4-2014) provided they have worked for at least 30 days in the accounting year. However, for calculation of bonus, maximum salary of Rs. 7,000 or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher (the limit was Rs. 3,500 upto 1-4-2014) is considered.
The Payment of Bonus Act applies to—
(a) every factory; and
(b) every other establishment in which twenty or more persons are employed on any day during an accounting year [section 1(3)].
1.3 Summary of employees eligible/not eligible
Following is the summary of employees eligible/not eligible for bonus under Payment of Bonus Act.
Following employees have been held as eligible –
(a) Temporary workmen
(b) Retrenched employee
(c) Part time employee
(d) Probationer
(e) Piece rated workman
(f) employee is seasonal factory is entitled, though on proportionate basis
(g) Retrenched employee
(h) Employee who has caused financial loss to employer is eligible, but the loss can be recovered from bonus only of the current year – section 13 (i) Employees of Public Sector Units which sell goods or renders services in competition with others.
Following are not eligible –
(a) Apprentice – section 2(13) – definition of employee
" (b) In case of employees employed through contractors, Principal Employer is not liable, as bonus is not ‘wages’, though contractor may be liable"
Here what is noted is ,"if the Contractor fails to pay bonus to their workmen, the Principal Employer has assume liability to pay to the contract employees and recover from the Contractor.
For your second query- The State govt. Labour Inspectors/Labour Officer/ALC under whose jurisdiction the place of work is situated has to oversee the implementation of labour laws, including Bonus Act. In case of certain Govt.of India Utg. CLC may have jurisdiction which has to be checked with them w.r.t. notification issued by the respective State govts.
For proper understanding of applicability, exemptions & jurisdiction you have to read (Sec.27 & 32) and take note of relevant provisions of the Acts & Rules (copies attached).
From India, Bangalore
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