The Payment of Bonus Act ,1965
Q. . What is Bonus ? What is the time limit for the payment of Bonus?
OR
What is the time limit for the
payment of bonus under the Payment of Bonus Act? Explain.
Ans.
"Bonus"-"It is a boon or gift over and above what is normally
due as remuneration by the receiver and which is, therefore, something wholly
to the good." It is explained in the Oxford Dictionary as "something
to the good into the bargain e.g., gratuity to the workmen beyond their
wages".
Bonus
and wages should not be understood as one and intermixed.
Employers pay bonus as an instrument to
motivate their employees to work to the best of their capabilities. The Payment
of Bonus Act, 1965 provides for the payment of a Statutory Bonus, which is
often confused with the incentive bonus paid by employers. Unlike incentive
bonus, which is an ex gratia payment, Statutory bonus is a compulsory payment
by law. Payment of statutory bonus under the Payment of Bonus Act is not a
matter of choice of the employer but rather a matter of right of the
employee.
In Associated Cement Companies v.
Workmen(1959 I LLJ 644 SC), the Supreme Court observed that
"if the Legislature feels that the claims for social and economic justice
made by labour should be redefined on a clearer basis, it can step in
legislature in that behalf. It may also be possible to have the question
comprehensively considered by a high powered Commission which may be asked to
examine the pros and cons of the problem in all its aspects by taking evidence
from all industries and bodies of workmen." Due to the influence of this
observation of the Supreme Court and the consistent demand of workmen for
social justice to render due share in the profits of the industry in which they
have a major hand side by side the enterprise and the capital employed by the
industrialists, the Parliament had to bring and pass the Payment of Bonus Act,
1965 for the following objectives :
(i) to impose statutory liability upon the
employer of every establishment covered by the Act to pay bonus to employees in
the establishment;
(ii)
to define the principle of payment of bonus according to the prescribed
formula; and
(iii)
to provide for payment of minimum and maximum bonus and linking it with the
scheme of set off and set on.
The
justification for payment of bonus is based on this ground also that the
workmen should have a share in the prosperity of the concern for which they
have their contribution. Besides, bonus itself is a payment made by an employer
to maintain industrial harmony and to give a phillip to the employees to exert
their utmost to keep up the industry active and aloft. It may be clearly noted
that the concept of payment of bonus is not the product of any generosity of
the employer but it is one paid in the interest of industrial peace and to make
available to every employee a living wage which is generally more than the
actual wages.
It
is also noteworthy that to make profits in an industry is possible by contribution
of both the labour and the capital. On this ideology, labour has a right to
share in the increased profits among the workers. Wages must be fixed on the
basis of normal conditions.
Payment
of Bonus Act, nowhere explains the term bonus. However it indicates the
participation of the labourers in the profits earned in the factory or industry
they work in. This is a kind of profit for the low income earning workers.
Bonus is an increase in their earnings. Thus it helps to fill up the thin gap
between actual wage and need based wage where living wages are low, such bonus
is paid. It means the distribution of profit among those who have put in their
labour in the establishment concerned.
Applicability of the Act
The provisions under the Payment of Bonus Act, 1965 are
applicable to every factory and establishment which employs 20 or more persons.
‘Establishments’ has the same meaning as under the Shops and Establishments Act
of various states and includes departments, undertakings, branches etc.
Once the establishments begin fall under the Act they
should continue to pay the bonus even if the number of employees falls below 20
subsequently.
Employee’s eligibility to receive
bonus
Only employees who have worked in an establishment for a
period of not less than thirty (30) days in that year shall be eligible to
receive bonus. An employee is deemed to have worked in an establishment in any
accounting year also on the days on which he/she has been laid off or on leave
(with salary) or he/she has been absent due to temporary disablement caused by
accident arising out of and in the course of his employment or availing
maternity leave.
If the services of an employee are dismissed on account
of fraud, riotous or violent behaviour in the premises of the establishment or
due to an act of theft, misappropriation or sabotage of the property of the
establishment then, under such circumstances such an employee may be
disqualified from receiving bonus from his employer.
Any agreements between the employee and employee regarding
the nonpayment of bonus are not valid.
Deductions from the amount of bonus
payable
If during an accounting year an employee is found guilty
of misconduct which has resulted in a financial loss to the employer then in
such case the employer may deduct the amount of loss suffered from the amount
of bonus payable to the employee in respect of that accounting year only and
balance if any after such deductions shall be remitted to the employee.
Calculation of bonus.-Where
the salary or wage of an employee exceeds seven thousand rupees on the minimum
wage for the Scheduled employment as fixed by the appropriated Government
whichever is higher. per mensem, the bonus payable to such employee under
Section 10 on as the case may be under Section 11 shall be calculated as if his
salary or wages were seven thousand rupees per mensem. [Substituted by Payment
of Bonus (Amendment) Act. 2015).
Calculation for Bonus Payable
If the gross earning of your employees is below Rs.
21,000 employers are liable to pay bonus. Calculation of bonus will be as
follows:
- If Salary is equal to or less than
Rs. 7000/- then the bonus is calculated on the actual amount by using the
formula: Bonus = Salary x 8.33/100
- If Salary is more than Rs. 7,000/-
then the bonus is calculated on Rs. 7,000/- by using the formula: Bonus
= 7,000 x 8.33/100
Note: Salary means Basic Salary + Dearness Allowance
Example 1: If Bella’s Salary is Rs. 6000/- than bonus payable to
Bella shall be = 6000 x 8.33/100 = 500 per month (Rs. 6000/- per
year).
Example 2: If Brandon’s Salary is Rs. 7000/- than bonus payable to
Brandon =583 per month (Rs. 6996/- per year).
Example 3: If Bipasha’s Salary is Rs. 15000 than bonus payable
to Bipasha shall be = 7000 x 8.33/100 = 583 per month (Rs. 6996/- per
year).
Time limit for payment.
The amount payable as bonus to the workman, shall be paid within 8 months after
the expiry of the accounting year. But where the claim of payment of bonus is
pending before an Authority, it shall be paid within one month time from the
date when award is given and becomes in operation. A provision to this effect
is made under Section 19 of the Act. It is provided that the appropriate
Government or the Authority, as specified by the Government for this purpose,
may extend the time of 8 months to any further period, as it thinks fit. But
the period extended shall in no case exceed two years time in all.
It
may be noted that policy making is the work of executive and not that of
judiciary. What would be ground of bonus-i.e.. basic payment is to be decided
by the appropriate Government. Section 2 (13) of the Act is not
unconstitutional. See UCO Bank Employees' Association, Madras v. Union of India
and others, [2003 I LL.J. 20 (Mad.)]. No distinction is drawn between the bonus
to be paid either before the order or after thereof.
Penalty when Bonus is not paid or Act
is contravened in any manner
If any person acts in any manner derogatory to the
provisions of this Act he/she shall be penalised with imprisonment for a term
which may extend to six (06) months or with a fine of Rs. 1000 or with
both.
Extension of the liability of
employers
The
obligation to pay the salary of the employees is co-extensive with the
obligation to settle the dues of those employees who leave, retire or resign and
so long as a liability is outstanding against the publication, it will have to
be discharged by the management regardless of the point of time when it assumed
office. The aspect of giving notice to the employees is irrelevant and of no
consequence because a statutory liability as one to pay taxes or to pay bonus
under the Payment of Bonus Act is legal duty from which one cannot be absolved
merely by giving notice. The High Court will not take any cognizance of any
such notices(Management of Sanyuktha Karnataka (Loka Shikshana Trust) v. T.S.
Rangana & Ors. 1996 III LLJ 1023).
References:-
https://www.legawise.com/all-you-need-to-know-about-the-payment-of-statutory-bonus
https://www.srdlawnotes.com/2017/10/bonus-meaning-definition-and-kinds-of.html
https://authorzilla.com/oeYAK/labour-laws-department-of-higher-education.html
https://www.vskills.in/certification/tutorial/bonus/
Comments
Post a Comment