CS Executive – Industrial Labour & General Law – Eligibility for Bonus & Its Payment
Eligibility for Bonus & Its Payment
Eligibility for Bonus:
An establishment which has employed 20 or more employees has to pay an annual bonus to its eligible employees* as per Payment of Bonus Act, 1965.
*Eligible employees are the employees who have worked for not less than 30 working days in that year and drawing a salary of Rs. 10,000 or below per month. And as per a decided case law, an apprentice is not eligible for the bonus.
Note: Now, the limit has been changed from Rs. 10,000 to Rs. 21,000 per month.
Disqualification for Bonus
As per Section 9 of the Payment of Bonus Act, 1965, if an employee has been dismissed from service for being involved in
(a) fraud; or
(b) riotous or violent behavior while on the premises or the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment then he shall be disqualified from receiving a bonus as per the Act.
This provision is based on the recommendations of the Bonus Commission which observed” after all bonus can only be shared by those workers who promote the stability and well-being of the industry and not by those who positively display disruptive tendencies. Bonus certainly carries with its obligation of good behavior”.
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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 employee or Rs. 100, whichever is higher.
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 being on paid leaves of maternity. (Section 14)
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