03-10-2012, 03:34 PM
The Payment of Bonus Act, 1965
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The Act was enacted to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or productivity and for the matters connected therewith.
The Act applies to:-
(i) every factory as defined under the Factories Act, 1948; and
(ii) every other establishment in which twenty or more persons are employed on any day during an accounting year.
The key provisions of the Act
Eligibility to avail He/she has worked for not less than 30 working days of that year and draws a salary of rs.3500/ month
An employer shall pay minimum bonus at the rate of 8.33% of the salary or wages earned by an employee in an year
Here it is not required that the employer has any allocable surplus in the accounting year.
In any accounting year, if the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer be bound to pay bonus (maximum bonus) equivalent to the amount which shall not exceed 20% of the salary or wages earned by employees.
If, in any accounting year, the allocable surplus exceeds the amount of maximum bonus payable, then the excess surplus is carried forward in the succeeding accounting year and so on up to and inclusive of the fourth accounting year for the purpose of payment of bonus;
Where in any accounting year, any amount carried forward from the earliest accounting year shall first be taken into account.All amounts payable to an employee by way of bonus under this Act shall be paid in cash by his employer within a period of eight months from the close of the accounting year.
An employee shall be disqualified from receiving bonus if he/ she is dismissed from service for:- (i) fraud; or (ii) riotous or violent behaviour while on the premises of the establishment; or (iii) theft, misappropriation or sabotage of any property of the establishment.
Payment of Bonus Act Amendment, 2010
Substitution of new section for section 10
A minimum bonus which shall be 11 per cent. of the salary or wage earned by the employee during the accounting year
Amendment of section 12.
Bonus eligibility Salary limit raised from "three thousand and five hundred rupees", to "five thousand rupees"