|
| |
| Brief | FAQs
| THE
PAYMENT OF BONUS ACT, 1965
The Payment of Bonus Act, 1965, gives to the
employees a statutory right to a share in the profits of his employer. Prior to
the enactment of the Act some employees used to get bonus but that was so if
their employers were pleased to pay the same.
The Act enables the employees to get a minimum
bonus equivalent to one month's salary or wages (8.33% of annual earnings)
whether the employer makes any profit or not. But the Act also puts a ceiling on
the bonus and the maximum bonus payable under the Act is equivalent to about 2
1/2 months' salary or wage (20% of annual earnings).
It is to be noted that employees drawing salary or
wage exceeding Rs. 10000.00 per month are not entitled to get any bonus under the
Act. (w.e.f. 1 April 2006)
CHECKLIST
Applicability of Act
Every factory where in
10
or more persons are employed with the aid of power or an establishment in
which
20
or more persons are employed without the aid of power on any day during an
accounting year
|
|
Establishment
Establishment includes
Departments, undertakings and branches, etc. |
|
|
|
|
|
|
|
|
|
Computation of available
surplus
a. Income taxes and direct taxes as payable.
b.
Depreciation as per section 32 of Income Tax Act.
c.
Development rebate, investment or development allowance. {Section 5} |
|
Components of Bonus
Salary or wages includes dearness
allowance but no other allowances e.g. overtime, house rent, incentive or
commission. {Section 2(21)} |
|
Separate establishment
If profit and loss accounts are
prepared and maintained in respect of any such department or undertaking or
branch, then such department or undertaking or branch is treated as a
separate establishment.
{Section 3} |
|
|
|
|
|
|
|
|
|
Disqualification &
Deduction of Bonus
On
dismissal of an employee for;
-
Fraud; or
-
riotous or violent behavior
while in the premises of the establishment; or
-
theft, misappropriation or
sabotage of any property of the establishment or
-
Misconduct of causing financial
loss to the Employer to the extend that bonus can be deducted for that
year {Section 9 & 18}
|
|
Computation of gross profit
For banking company, as
per First Schedule.
Others, as per Second
Schedule {Section 4} |
|
|
|
|
|
|
|
|
|
Eligibility of Bonus
An employee will be
entitled only when he has worked for
30
working days in that year. {Section 8} |
|
Payment of Minimum Bonus
8.33%
of the salary or Rs.100 (on completion of 5 years after 1st
Accounting year even if there is no profit) {Section 10} |
|
Eligible Employees
Employees drawing wages
upto Rs.10000.00 per month or less.
For calculation purposes Rs.3500.00 per month maximum will be taken even if
an employee is drawing upto Rs.10000 per month.
{Section
12}
|
|
|
|
|
|
|
|
|
Time Limit for Payment of
Bonus
Within 8 months from the
close of accounting year {Section 19} |
|
Set-off
and Set-on
As per Schedule IV
{Section 15} |
|
|
|
|
|
|
|
|
|
|
Maintenance of Registers
and Records etc.
-
A register
showing the computation of the allocable surplus
referred to in clause (4) of section 2, in form A.
-
A register showing the
set-on and set-off of the allocable
surplus, under section 15, in form B.
-
A register showing the
details of the amount of bonus due to each of the employees, the
deductions under section 17 and 18 and the amount actually disbursed, in
form C. {Section 26 Rule 4}
|
|
|
|
|
|
|
|
|
|
|
Act not applicable to
certain employees of Life Insurance Corporation, General Insurance,
Dockyards, Red Cross, Universities & Educational Institutions, Chambers of
Commerce, Social Welfare Institutions, Building Contractors, etc. {Section
32} |
|
|
|
|
|
|
|
|
|
|
PENALTY
For contravention of any
provision of the Act or the Rule, imprisonment
upto 6 months or with fine upto
Rs.1000 {Section 28} |
| Brief | FAQs
|
|
