The Payment of Bonus Act 1965 has been formulated to facilitate the payment of Bonus to employees(persons) employed in specified establishments, on the basis of profits or on the basis of production or productivity in that organisation.
The Bonus Act applies to every Factory. The Act applies to every establishment in which 20 or more persons are employed on any day of the Assessment Year.
Employee under Bonus Act:
‘Employee’ means any person (other than an apprentice), employed on a salary or wage not exceeding Rs.21,000 per month, in any industry, to do any skilled or unskilled work.
Salary or Wage:
Salary shall mean the remuneration and will include Dearness allowance, Food allowance given in lieu of salary.
What does not include salary: Other Allowances, Commission, Bonus, Travelling Concession,Overtime remuneration or any other addition, what so ever.
Eligibility for bonus:
In case of normal establishments and also seasonal establishments: If the employee has worked for at least 30 working days in an Accounting Year.
Disqualification for Bonus [Sec.9]: An employee shall be disqualified from bonus, if employee has been dismissed from theservice for Fraud, Riotous behaviour, theft or misappropriation.
If employee is aged greater than or equal to 15: Higher of, 8.33% 0f Salary or Rs.100
If employee is aged less than 15: Higher of, 8.33% 0f Salary or Rs.60
Time limit for payment of bonus:
Bonus shall be paid within 8 months from the end of AY
If in an AY, allocable surplus exceeds the amount of minimum bonus, the employer shall pay to every employee, in lieu of minimum bonus, such amount not exceeding 20% of such salary or wage.
If in an AY, allocable surplus is less than the minimum bonus, then such deficiency shall be carried forward to 4 succeeding years.
Such amounts carried forward to next year will be adjusted to allocable surplus ofrespective year.
Non-Applicability of the Bonus Act [Sec 32]:
-Employees employed by LIC and General Insurance companies.
-Employees registered under any scheme made under the Dock Workers Act, 1948
-Employees employed by Non-profit organizations.
-Employees employed by SFC, NABARD, IDBI, UTI
-Employees employed by Inland Water Transport Establishments operating onroutes passing through any other country.