Bonus - Bonus Rules [Thread 76853]

What are the latest rules for paying bonus/bonus act? Who are all exempted from this payment.?

hi
the new bonus act has increased the qualifying level to 10000 pm. so you have to give 8.33% if the company has a profit in the preceding year. any worker as defined by the act is eligible.

Thanks for the revert.
What Iunderstood from the circular is that, even if the compnay does not make profit, this minimum bonus is payable to all those employees whose salary is upto Rs.10,000..
I have also asked for the company's which are exempted from this coverage....this has not been answered.
Request you to kindly clarify
ananth

Dear Ananth

Ref Sec 10 of the Payment of Bonus Act as given below.

The Bonus Act was coceptualised on the principle of Profit Sharing.

However, the Committe appointed for this purpose also had to address the issue of Deferred Wage.

These are the logical steps.

1. Any organisation needs to calculate first the Availbale Surplus as per the calculations provided for in the Payment Of Bonus Act.

2. Calculate Allocable Surplus ( 60% or 67%) from the Available surplus.

3.Pay bonus on the basis of Allocable surplus ( percentage need to be worked based on this amount)

4. If there is no allocable surplus, pay minimum bonus but set off this amount in the next year

5. If allocable surplus is more, then set on this amount for the next year

Read these steps alongwith Sec 10. Whether there is allocable surplus or not still the Company needs to pay minimum but can set off this amount

There are provisions for seton and setoff and refer Sec 15 for this purpose

To answer you question now reaqd sec 10 and it says all employers will pay bonus whether they have allocable surplus or no.

Does this answer your question.?

Bonus Act is a very elaborate legislation and it is difficult to explain everything in a page

You can ask more questions and I will reply

But just go through these sections and then ask questions

Siva

The eligibility for bonus by a workman is Rs.10000/- (basic plus da). However, calculation will be made on a maximum amount of Rs.3500/-. For example an employee is getting a basic+ DA Rs.2000/-. Calculation will be made on Rs.2000/- whether it is 8.33% or 20%. and when an employee is getting basic plus DA of Rs.9500/- his bonus will be calculated on a maximum amount of Rs.3500/- and not on 9500/-. Whether bonus will be paid @ 8.33% or 20% it depends upon financial posisiton of company and bargaining with employees. Bonus is paid to all workman even daily wage workers. But people undergoing training under Apprenticeship act are not elligible for bonus. A registered company either under factories act or shops and establishment act employeeing more than 30 employees at a time and doing perenial business are bound to give bonus.
Hope my personal view on bonus act will meet the quest.

As per Payment of Bonus Act, every employee whose salary (Basic + DA) doesnot exceed Rs 10000 and who had worked for at least 30 days in the preceding year is eligible to get bonus at a minimum rate of 8.33%. Hoever, bonus of employees drawing salary between Rs 3500 and Rs 10000 will be calculated as if their salary were Rs 3500.

The qualifying days of work of 30 is counted taking into account the lay off days, days of absence due to employment injury etc, maternity leave, and so on just what is required to ensure continuous service under any Act- ID Act, Factories Act, Gratuity Act etc.

According to section 32, certain classesf employees are excluded. As such:

(i) employees employed by any insurer carrying on general insurance business and the employees employed by the Life Insurance Corporation of India;

(ii)seamen as defined in clause (42) of section 3 of the Merchant Shipping Act, 1958 ( 44 of 1958);

(iii)employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), and employed by registered or listed employers;

(iv)employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a Local authority;

(v)employees employed by --

(a) the Indian Red Cross Society or any other institution of a like nature (including its branches);

(b)universities and other educational institutions;

(c)nstitutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit;

(viii) employees employed by the Reserve Bank of India;

(ix)employees employed by --

(a) the Industrial Finance Corporation of India;

(b)any Financial Corporation established under section 3, or any Joint Financial Corporation established under section 3A, of the State Financial Corporations Act, 1951 (63 of 1951);

(c)the Deposit Insurance Corporation;

5[(d)the National Bank for Agriculture and Rural Development;]

(e)the Unit Trust of India;

(f)the Industrial Development Bank of India;

This means all other establishments are bound to pay bonus.

Regards,

Madhu.T.K

Thanx madhu Sir,
But one doubt what will happen in case company suffered loss in that perticular year?
Regards
Prasad