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Bonus Act Notification

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Bonus Act Notification

The Union government has notified the Payment of Bonus (Amendment) Act, 2015, allowing lakhs of workers to become eligible to bonus retrospectively from the last financial year, the Labour Ministry said in a statement on Friday.

While the decision has enthused workers, industry is unhappy. It has written to the government suggesting ways to simplify bonus distribution. It has said the new Act will lead to financial stress, especially on small and medium enterprises, and as the account books for the previous financial year would have been closed, difficulties are bound to crop up in bonus distribution.

Under the law, all employees earning Rs. 21,000 a month will be entitled to bonus, against the earlier limit of Rs. 10,000. Also, the ceiling for bonus calculation has been doubled from Rs. 3,500 to Rs. 7,500 a month. This will retrospectively come into effect from April 1, 2014. This means an employee earning up to Rs. 7,000 per month will be eligible to a bonus on his or her entire salary. However, if the salary is between Rs.7,000 and Rs. 21,000, the bonus will be calculated on the salary of Rs.7,000 a month. According to the law, an employer is mandated to give a minimum bonus of 8.33 per cent of a worker’s salary. However, companies with adequate surplus distribute more than the minimum.

The notification was published on January 1. The amendments were passed by both Houses of Parliament in the winter session.

The Confederation of Indian Industry (CII) wrote to the Labour Ministry on Friday, seeking a clarification on certain aspects of the amendments. The CII suggested that a clarification be given to allow industries to give bonus in instalments over the next two financial years to ease off the burden. It also demanded that the excess bonus received by employees, besides the minimum bonus, be adjusted in the next two financial years so as to “accommodate the newer workforce using the same or reduced allocable surplus.”

The CII said many organisations had already paid ex-gratia payments or discretionary bonuses to workers earning more than Rs. 10,000 and demanded an adjustment of the amount already paid against the bonus.

2 Comments
  • Ganesh BH
    Posted at 7:09 pm, January 27, 2016

    In section 12 of the principal Act,—
    (i) for the words ‘‘three thousand and five hundred rupees’’ at both the places where they occur, the words ‘‘seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher’’ shall respectively be substituted;

    Expanding eligibility & entitlement retrospective effect and its linkage with minimum wages will create multiple and complicated problems

    Retrospective effect – Justification of
    The amendment has been over due and even the employers have been asking for such steps in this direction. However, we fail to understand as to why it has been made applicable from retrospective effecti.e. from April 2014. The Union Labour Minister Mr. Bandaru Dattatreya has tried to justify the application of the amendment with retrospective effect by saying that it could not be passed earlier because the legislature could not take up this important business for various reasons, therefore, workers should not be allowed to suffer for the inability of the legislature in carrying out the amendment.

    The governments are supposed to provide solutions and make the implantation of any law simpler and easier but here it is the other way round, which must be objected to by the affected parties. Now the present financial year is coming to start in next 1­2 months, which should have been taken note of by the Labour Ministry. For the amendment in the Bonus Act almost all major trade unions of the country had observed All­India strike on 2.12.2015. The Labour Minister also informed both houses of Parliament before coming to the decision, of the amendment in the Act. The Ministry has held 21 tripartite meetings consisting of the Government representatives, the representatives of the industry and Central Trade
    Unions. In those meetings the issue of the cut­off date of implementation should have been sorted out.

    The accounts for the year 2014-­15 have already been closed. The bonus payable in accordance with the provisions on the Payment of Bonus Act as it stood on 1.4.2015 had also been paid after determining the profits and calculating the allocable surplus for payment of bonus. The retrospective amendment would only reopen the issue and thus pave way to unsettle and settled issue and the employer­ employees relations are very likely to be embittered. The establishments which are required to publish their balance sheets and submit to the statutory authorities prescribed under Companies Act, SEBI Guide lines., etc. They have already declared dividend and paid to the shareholders which, in many cases. Income Tax payments have already been made on the basis of the profit and loss account for the year 2014­-15.

    Also the Profit and Loss Account shall have to be recalculated having regard to the quantum of additional bonus payable to the employees. The tax liability would also vary on account of the additional payment made to the employees. The dividend declared may also be affected resulting in re ­opening of several issues by creating multiple problems and inconvenience to establishments.

    Hence, the retrospective implementation of the amendment will put an additional burden on the industry, which was neither planned nor budgeted.

    Reagards,
    Ganesh BH

  • Posted at 5:45 pm, February 21, 2016

    The government should clarify the date of payment of amended bonus applicable from 2014-15 when it has constituted the bonus act.
    Since many years traders and manufacturers are earning huge profits and buying new costly cars and frequently go on foreign tour in the name of business and live luxury life on companies cost and manipulates the actual profits of the company and the worker’s has to suffer. If they desire to buy expensive car they will never hesitate to spent crores of rupees in a moment but when it comes to pay for the workers what they deserve their budget gets unbalanced. Shame on the government if they are still letting the poor suffer and set free the riches to become more rich the country will never prosper and gap between rich and poor will be huge.
    Hence the government should immediately declare the payment date for bonus for the f.y 2014-15