Objectives
It is an Act to provide for the payment of the bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith.
Scope and Coverage
The Act extends to the whole of India and applicable to every factory as defined under the Factories Act and to every other establishments in which twenty or more persons are employed on any day during an accounting year. It covers all workers including supervisors, managers and administrators, technical and clerical staff employed on a salary or wages not exceeding Rs. 3,500 per month w.e.f. 1.4.93.
The Act, however, is not applicable to apprentice and employees u l an establishment/industry carried on or under the authority of any depbrtment of the Central Government or State Government or Local Authority. Once an establishment is covered under the Act, it shall continue to be covered under the provisions of the Act even ~f the number of employees employed therein falls less than twenty. Where an establishment is newly set up, whether before or after the commencement of this Act, the employees of such establishment shall not be entitled for the first five years or shall be entitled for bonus from tlle year in which the establishment makes profit whichever is earlier.
Administration
The Act is administered by the Central Government in respect of "those establishments for which Central Government is the appropriate government under the Industrial Disputes Act, 1947 and for rest of the establishments. the State Government is the appropriate government.
Main Provisions of the Act
Allocable Surplus
From the gross profit for the accounting year, the available surplus is to be computed by deducting depreciation, development rebate or investment allowance,direct taxes payable by the employer on the income, profit and gains during the accounting year, sums as specified under the third schedule of the Act. The allocable surplus is 67% of available surplus in case of foreign companies and 60% in case of other companies, for the payment of bonus to the employees covered under the Act.
Eligibility for Bonus
Every employee shall be entitled to be paid by his employer in an accounting year,bonus, in accordance with the provisions of the Act, provided he has worked in the establishment for not less than thirty working days in any accounting year. For computation of number of working days, an employee will be considered to have worked in an establishment in the days on which he is laid-off, or he is on leave with pay, or he is absent due to any disability resulting from accident arising out of employment and the days on which a woman employee is on maternity leave.
Disqualification for Bonus
An employee shall be disqualified for receiving bonus under the Act if his services are dismissed for indulging in fraud or righteous and violent behaviour or theft or misappropriation or sabotage of any property of the establishment.
Payment of Minimum Bonus
Every employer has to pay a minimum bonus of 8.33% of the salary or wages or Rs. 100 whichever is higher to every employee irrespective of tlie fact whethei there is any allocable surplus during that accounting year or not.
Payment of Maximum Bonus
Where the allocable surplus exceeds the amount of minimum bonus including the amount of set on or set off payable'to the employees, the employer shall pay to every employee bonus equivalent to an amount in proportion to tlie salary or wages earned by the employee during the accounting year subject to a inaxiinum of 20% of such salary and wages.
Calculation of Bonus with respect to Certain Employees
In case of employees drawing a salary of more than Rs. 2,500, Qey will be paid only.bonus as if the salary was Rs. 2,500 p e month Procedure for Set On and Set Off. If the allocable surplus exceeds the amount of maximum bonus payable to the employees, the excess' amount subject to a maximum limit of 20% of the total salary of the employees employed in ,an establishment in that accounting year shall be carried forward for being set on in the succeeding accounting years upto and inclusive of fourth accounting year for the purpose of payment of bonus. When there is no allocable surplus or the allocable surplus in respect of that accounting - year falls short of amount of minimum bonus and tb'ere is no amount or sufficient amount carried forward in set on which could be utilised for paymentof alinimumbonus, then such minimum amount or the deficiency as the case may be, shall be carried forward for being set off in succeeding accounting year upto and inclusive of fourth accounting year.While calculating the bonus for any particular accounting year, the amount of set on or set off from the earlier accounting year shall be first taken into account.
Deduction of Certain Amount from Bonus
An employer is entitled to deduct'the amount of any financial loss caused to him by any employee who has been found guilty of this misconduct, from the bonus payable to him and pay the balance amount, if any, to the employee.
Time Limit for Payment of Bonus
All amount payable to an employee by way of bonus under the Act, shall be paid in cash by his employer within a period of eight months from the close of the accounting year and in case of any dispute regarding payment of bonus, witliin a month from the date when the award or settlement becomes enforceable.
Obligations of the Employer
It is obligatory for a11 employer to fulfil the following :
(a) to calculate and pay bonus to the employees within the prescribed time as per the provisions of the Act;
(b) to maintain records and register in the prescribed form as per the provisions of the Act; and
(c) to allow inspection of records to trade union in case of settlement 'and to the illspector as and when he visits the establishinent or desires inforination.
Rights of Employees
Every employee is entitled to the following rights under the Act :
(a) to get bonus as per the provisions of the Act;
(b) to file the application for recovery of bonus payable to him in case of non-payment by the employer; m d
(c) to obtain clarification about the qu,mtum of bonus paid to him and to seek any infonnation on the basis of which it has been calculated.
Offences and Penalties
For violating any of the provisions of the Act or committing any offence thereof, an einployer shall be prosecuted and punished with imprisonment for a term which may extend to six months or with fine which may extend to Rs. 1,000 or both.
It is an Act to provide for the payment of the bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith.
Scope and Coverage
The Act extends to the whole of India and applicable to every factory as defined under the Factories Act and to every other establishments in which twenty or more persons are employed on any day during an accounting year. It covers all workers including supervisors, managers and administrators, technical and clerical staff employed on a salary or wages not exceeding Rs. 3,500 per month w.e.f. 1.4.93.
The Act, however, is not applicable to apprentice and employees u l an establishment/industry carried on or under the authority of any depbrtment of the Central Government or State Government or Local Authority. Once an establishment is covered under the Act, it shall continue to be covered under the provisions of the Act even ~f the number of employees employed therein falls less than twenty. Where an establishment is newly set up, whether before or after the commencement of this Act, the employees of such establishment shall not be entitled for the first five years or shall be entitled for bonus from tlle year in which the establishment makes profit whichever is earlier.
Administration
The Act is administered by the Central Government in respect of "those establishments for which Central Government is the appropriate government under the Industrial Disputes Act, 1947 and for rest of the establishments. the State Government is the appropriate government.
Main Provisions of the Act
Allocable Surplus
From the gross profit for the accounting year, the available surplus is to be computed by deducting depreciation, development rebate or investment allowance,direct taxes payable by the employer on the income, profit and gains during the accounting year, sums as specified under the third schedule of the Act. The allocable surplus is 67% of available surplus in case of foreign companies and 60% in case of other companies, for the payment of bonus to the employees covered under the Act.
Eligibility for Bonus
Every employee shall be entitled to be paid by his employer in an accounting year,bonus, in accordance with the provisions of the Act, provided he has worked in the establishment for not less than thirty working days in any accounting year. For computation of number of working days, an employee will be considered to have worked in an establishment in the days on which he is laid-off, or he is on leave with pay, or he is absent due to any disability resulting from accident arising out of employment and the days on which a woman employee is on maternity leave.
Disqualification for Bonus
An employee shall be disqualified for receiving bonus under the Act if his services are dismissed for indulging in fraud or righteous and violent behaviour or theft or misappropriation or sabotage of any property of the establishment.
Payment of Minimum Bonus
Every employer has to pay a minimum bonus of 8.33% of the salary or wages or Rs. 100 whichever is higher to every employee irrespective of tlie fact whethei there is any allocable surplus during that accounting year or not.
Payment of Maximum Bonus
Where the allocable surplus exceeds the amount of minimum bonus including the amount of set on or set off payable'to the employees, the employer shall pay to every employee bonus equivalent to an amount in proportion to tlie salary or wages earned by the employee during the accounting year subject to a inaxiinum of 20% of such salary and wages.
Calculation of Bonus with respect to Certain Employees
In case of employees drawing a salary of more than Rs. 2,500, Qey will be paid only.bonus as if the salary was Rs. 2,500 p e month Procedure for Set On and Set Off. If the allocable surplus exceeds the amount of maximum bonus payable to the employees, the excess' amount subject to a maximum limit of 20% of the total salary of the employees employed in ,an establishment in that accounting year shall be carried forward for being set on in the succeeding accounting years upto and inclusive of fourth accounting year for the purpose of payment of bonus. When there is no allocable surplus or the allocable surplus in respect of that accounting - year falls short of amount of minimum bonus and tb'ere is no amount or sufficient amount carried forward in set on which could be utilised for paymentof alinimumbonus, then such minimum amount or the deficiency as the case may be, shall be carried forward for being set off in succeeding accounting year upto and inclusive of fourth accounting year.While calculating the bonus for any particular accounting year, the amount of set on or set off from the earlier accounting year shall be first taken into account.
Deduction of Certain Amount from Bonus
An employer is entitled to deduct'the amount of any financial loss caused to him by any employee who has been found guilty of this misconduct, from the bonus payable to him and pay the balance amount, if any, to the employee.
Time Limit for Payment of Bonus
All amount payable to an employee by way of bonus under the Act, shall be paid in cash by his employer within a period of eight months from the close of the accounting year and in case of any dispute regarding payment of bonus, witliin a month from the date when the award or settlement becomes enforceable.
Obligations of the Employer
It is obligatory for a11 employer to fulfil the following :
(a) to calculate and pay bonus to the employees within the prescribed time as per the provisions of the Act;
(b) to maintain records and register in the prescribed form as per the provisions of the Act; and
(c) to allow inspection of records to trade union in case of settlement 'and to the illspector as and when he visits the establishinent or desires inforination.
Rights of Employees
Every employee is entitled to the following rights under the Act :
(a) to get bonus as per the provisions of the Act;
(b) to file the application for recovery of bonus payable to him in case of non-payment by the employer; m d
(c) to obtain clarification about the qu,mtum of bonus paid to him and to seek any infonnation on the basis of which it has been calculated.
Offences and Penalties
For violating any of the provisions of the Act or committing any offence thereof, an einployer shall be prosecuted and punished with imprisonment for a term which may extend to six months or with fine which may extend to Rs. 1,000 or both.
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