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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.

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