Payment of Bonus Act 1965
Introduction of Bonus Act
The term “bonus” has not been defined in any legislative enactment. Chamber’s Twentieth Century dictionery defines “bonus” as “a premium beyond the usual interest for loan: an extra dividend to shareholders: a policyholder’s share of profit, an extra payment to workmen or others: a doceur or bribe”. The purpose of payment of bonus is to bridge the gulf between wages paid and ideal of a living wage.
The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers in 1917, under Rule 81A of Defence of India Rules, industrial disputes also included in certain cases the demand for payment of bonus. In 1950, the Full Bench of the Labour Appellate Tribunal evolved a formula for determination of bonus. A plea was made to raise that formula in 1959. At the second and third meetings of the Eighteenth Session of standing Labour Committee (G.O.I.) held in New Delhi in March / April 1960, it was agreed that a Commission be appointed to go into the question of bonus and evolve suitable norms. On 6th December, 1960 the Government appointed a Bonus Commission. The Government of India vide Resolution No. W .B. 20 (3) 64, dated September 2, 1964 accepted the recommendations of the Commission subject to certain modifications. To implement these recommendations the payment of Bonus Ordinance, 1965 was promulgated on May, 1965 which was replaced by Payment of Bonus Act, 1965 assented on September 25, 1965
The Payment of Bonus Bill was passed by the Parliament on 25th September, 1965 and became an Act under short title ‘THE PAYMENT OF BONUS ACT, 1965 (21 of 1965)’.
Payment of Bonus Act
The Act Applies to all Factories and every other establishments, which employs twenty or more workmen. The Payment of Bonus Act, 1965 provides for a minimum bonus of 8.33 percent of wages. The salary limited fixed for eligibility purposes is Rs. 3,500 per month and the payment is subject to the stipulation that the bonus payable to employees drawing wages or salary not exceeded to Rs.10000 per month would be calculated as if their salary or wages is Rs. 3,500 per month. The Central Government is the appropriate authority in respect of the industries /establishments for which it is appropriate Government under the industrial Disputes Act, 1947
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 this Act, provided he has worked in the establishment for not less than thirty working days in that year
Payment of Minimum Bonus
Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a Minimum bonus which shall be 8.33 percent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year:
Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effect in relation to such employee as if for the words “one hundred rupees”, the words “sixty rupees” were substituted.
Payment of Maximum Bonus
(1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a Maximum of Twenty per cent. of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.]
Disqualification for Bonus
Disqualification for bonus.- Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for-
(a) fraud; or
(b) riotous or violent behavior while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment.
Calculation of Bonus with Respect to Certain Employees
Where the salary or wage of an employee exceeds [ two thousand and five hundred rupees] per mensem, the bonus payable to Such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were [two thousand and five hundred rupees] per mensem.
Proportionate, Reduction in Bonus in Certain cases
Where an employee has not worked for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than 8.33 per cent. of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.
Adjustment of customary or interim bonus against bonus payable under the Act.
(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.
Deduction of certain amounts from bonus payable under the Act.
Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any.
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;
Recovery of Bonus Due From an Employer
Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement, the employee himself or any other person authorised by him in writing in this behalf, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government or such authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue:
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