PAYMENT
OF BONUS (AMENDMENT) ACT 2015
HOW
TO CALCULATE BONUS AS PER PAYMENT OF BONUS ACT AMENDED IN 2015?
The
payment of bonus has been amended and notified by the central government on 1st
Jan 2016.
Major changes in the amended Act are as under.
ELIGIBILITY FOR BONUS: Employees earning upto
Rs.21000 salary or wage (earlier limit Rs.10000). Salary or wage means only
basic pay and dearness allowance).
WAGE OR SALARY CEILING
FOR CALCULATION OF BONUS: Rs.7000 or the wages fixed by the government under Minimum
Wages Act whichever is higher (earlier
limit was just Rs.3500).
EFFECTIVE DATE: Retrospectively with
effect from 1st April 2014.
Let us understand the implications by the following
examples.
LIST OF YOUR EMPLOYEES AS ON 31ST
MARCH 2014 AND THEIR ELIGIBILITY FOR BONUS
Name
|
Designation
|
Basic pay (Rs).
|
DA (Rs)
|
HRA (Rs)
|
Other allowances (Rs)
|
Total (Rs)
|
Eligibility as on 31 Mar 2014
|
Eligibility as per amended Act
|
Remarks
|
Abudul
|
Officer
|
20000
|
2000
|
1000
|
1000
|
24000
|
NO.
Basic +DA is more than 10K
|
NO.
Basic +DA is more than 21K
|
Do not pay
|
Binoy
|
Manager
|
10000
|
12000
|
1000
|
1000
|
24000
|
Chinnu
|
Supervisor
|
14000
|
8000
|
2000
|
3000
|
27000
|
Dodda
|
Worker
|
7000
|
4000
|
3000
|
2000
|
16000
|
NO.
Basic +DA is more than 10K
|
YES.
Basic + DA is less than 21K
|
Calculate and pay w.e.f 1st April 2015 on
Rs.7K pay
|
Elangov
|
Manager
|
8000
|
3000
|
3000
|
1000
|
15000
|
Francies
|
Manager
|
8000
|
5000
|
8000
|
2000
|
23000
|
Gopal
|
Manager
|
8000
|
3000
|
2000
|
11000
|
24000
|
Hamsa
|
Worker
|
8000
|
2000
|
3000
|
10000
|
23000
|
NO.
Basic +DA is more than 10K
|
YES.
Basic + DA is less than 21K
|
Their pay is fixed under minimum wages Act. Hence pay
on full basic +full DA.
|
Indu
|
Worker
|
8000
|
2000
|
3000
|
2000
|
15000
|
Jockey
|
Worker
|
10000
|
2000
|
3000
|
2000
|
17000
|
Krishna
|
Supervisor
|
10000
|
2000
|
3000
|
2000
|
17000
|
Lokesh
|
Supervisor
|
10000
|
4000
|
4000
|
1000
|
19000
|
Muniya
|
Supervisor
|
10000
|
4000
|
4000
|
1000
|
19000
|
Nazeer
|
Worker
|
3000
|
4000
|
4000
|
1000
|
12000
|
YES. Basic + DA is less than 10K. Calculate on Rs.3500 wages.
|
YES.
Basic + DA is less than 21K. Calculate on Rs.7000 wages.
|
You have already paid on Rs.3500 wages. Now calculate
and pay the difference.
|
Ompraka
|
Worker
|
3000
|
2000
|
3000
|
2000
|
10000
|
Preeti
|
Worker
|
3000
|
2000
|
3000
|
2000
|
10000
|
Quaseem
|
Worker
|
3000
|
2000
|
3000
|
2000
|
10000
|
Raja
|
Worker
|
3000
|
2000
|
3000
|
2000
|
10000
|
Shiva
|
Worker
|
3000
|
2000
|
3000
|
2000
|
10000
|
Thomas
|
Worker
|
2000
|
1000
|
3000
|
2000
|
8000
|
YES. Basic + DA is less than 10K. Calculate on actual wages i.e. on Rs.3000
wages.
|
YES.
Basic + DA is less than 21K. Calculate on Rs.7000 wages.
|
You have already paid on Rs.3000 wages. Now calculate
and pay the difference.
|
Uday
|
Worker
|
2000
|
1000
|
3000
|
2000
|
8000
|
Vidya
|
Worker
|
2000
|
1000
|
3000
|
2000
|
8000
|
Watson
|
Worker
|
2000
|
1000
|
3000
|
3000
|
9000
|
Xevier
|
Worker
|
2000
|
1000
|
3000
|
2000
|
8000
|
Yellappa
|
Worker
|
2000
|
1000
|
3000
|
2000
|
8000
|
Zende
|
Worker
|
2000
|
1000
|
3000
|
2000
|
8000
|
KNOW MORE ABOUT
PAYMENT OF BONUS ACT 1965
Chapter
25
The Payment
of Bonus Act, 1965
The dictionary meaning of the term bonus is
something given or paid in addition to what is usual or
expected. It is a sum of money or an equivalent given to an employee in
addition to the employee's usual wages.
Prior to the
payment of bonus Act was passed, bonus was linked to profits, which means that
if an establishment did not make profits in a particular year the employer was
not liable to pay bonus. In other words payment of bonus was not mandatory. But
this Act provides for mandatory payment of annual bonus by employer to certain
class of employees whether the establishment made profit or loss.
But during the
first five years from the year in which a new establishments sells goods or
renders service, bonus shall be payable only if and in respect of the years in
which it makes profit. If the establishment does not make profit during the
first five years, it need not pay bonus for those years but it should start
paying from sixth year irrespective of the profit or loss.
Applicability
The Act is applicable to every factory and
any other establishment in which twenty or more persons are employed on any day
during an accounting year. Within these
organizations employees drawing wages upto Rs.10000(Rs.21000 with effect from 1st
April 2014) per month are eligible for receiving the bonus. Where the monthly
wages of any eligible employee exceeds Rs.3500 (Rs.7000 with effect from 1st
April 2014 the bonus shall be calculated as if the monthly wages are Rs.3500
(Rs.7000 or the minimum wages fixed by the government under Minimum wages Act whichever is higher).
Important
definitions
a)
Available Surplus shall be the gross profits for that year after deducting,
depreciation, development rebate or investment allowance allowed to the
employer under income tax Act, direct tax payable by the employer and the
deductions specified in schedule III of the Act.
b) Allocable surplus means in relation to an employer, being a company other than a
banking company which has not made the arrangements for payment of dividends
out of profits, in accordance with section 194 of Income Tax Act, sixty-seven
per cent of the available surplus in an accounting; year; and in any other
case, sixty percent of such available surplus.
c) Appropriate Government means in relation to an establishment in respect of which the
appropriate Government under the Industrial Disputes Act, 1947, is the Central
Government, the Central Government; in relation to any other establishment, the
Government of the State in which that other establishment is situated.
d)
Employee means any person other than an
apprentice employed on a salary or wage not exceeding ten thousand rupees per month
in any industry to do any skilled or unskilled manual, supervisory, managerial,
administrative, technical or clerical work for hire or reward. It is important
to note here that employee is not defined based on designation or nature of
work rather it is defined on the basis of monthly salary.
e) Set on means where for any accounting year, the
allocable surplus exceeds the amount of maximum bonus payable to the employees
in the establishment under section 11, then, the excess shall, subject to a
limit of twenty per cent. of the total salary or wage of the employees employed
in the establishment in that accounting year, be carried forward for being set
on in the succeeding accounting year and so on up to and inclusive of the
fourth accounting year to be utilized for the purpose of payment of bonus in
the manner illustrated in the Fourth Schedule.
f) Set off means where for any accounting year, there is
no available surplus or the allocable surplus in respect of that year falls
short of the amount of minimum bonus payable to the employees in the
establishment under section 10, and there is no amount of sufficient amount
carried forward and set on under sub-section (1) which could be utilized for
the purpose of payment of the minimum bonus, then, such minimum amount or the
deficiency, as the case may be, shall be carried forward for being set off in
the succeeding accounting year and so on up to and inclusive of the fourth
accounting year in the manner illustrated in the Fourth Schedule.
g) Wage or salary means all remuneration other than over-time allowance capable of
being expressed in terms of money, which would, if the terms of employment,
express or implied, were fulfilled, be payable to an employee in respect of his
employment or of work done in such employment and includes dearness allowance.
h)
But does not include (i) any
other allowance which the employee is
for the time being entitled to; (ii) the value of any house accommodation or
supply of light, water, medical attendance or other amenity or of any service
or of any concessional supply of food grains or other articles; (iii) any
traveling concession; (iv) any bonus (including incentive, production and
attendance bonus); (v) any contribution paid or payable by the employer to any
pension fund or provident fund or for the benefit of the employee under any law
for the time being in force; (vi) any retrenchment compensation or any gratuity
or other retirement benefit payable to the employee or any ex gratia payment
made to him; (vii) any commission payable to the employee. Where an employee is
given in lieu of the whole or part of the salary or wage payable to him, free
food allowance or free food by his employer, such food allowance or the value
of such food shall, for the purpose of this clause, be deemed to from part of
the salary or wage of such employee.
Eligibility for bonus
a) Employees drawing monthly wage up to Rs.10000 per month are eligible
for receiving bonus from the employer once in a year (section 2[13]).
b) Where the monthly wage exceeds Rs.3500, bonus shall be calculated as
if the wage is Rs.3500 per month (section 12).
c) The employee should have worked in the establishment for at least 30
days during the accounting year. The days of layoff, leave with wages, the days
of absent due to temporary disablement caused by accident arising out of and in
the course of employment and the days of maternity leave with wages shall be
included to compute the minimum number of days worked (section 8 & 14).
d) The minimum bonus payable shall be 8.33% of the annual wages drawn
by the employee or Rs.100 which ever is higher. In case of employees who are
less than 15 years of age the minimum
bonus payable shall be 8.33% of the annual wages drawn by the employee
or Rs.60 whichever is higher(section 10).
e) Where the employee has not worked on all the working days during the
previous accounting year the minimum bonus of Rs.100 or Rs.60 as the case shall
be proportionately reduced if it is more than 8.33% of the monthly wage(section
13).
f) Where the allocable surplus is more than the minimum bonus stated
above the employer shall pay higher percentage of annual wage as bonus subject
to a maximum of 20% of the annual wage (section 11).
g) In respect of newly started establishments for the first five
accounting years the employer is liable to pay bonus only for the accounting
years in which profit is made without applying the provisions of set on and
setoff. For the sixth accounting year set on or setoff shall be made by taking
into account the surplus or deficiency of fifth and sixth accounting years
only. For the seventh accounting year set on or setoff shall be made by taking
into account the surplus or deficiency of fifth, sixth and seventh accounting
years only (Section 16).
h) Where the employer has paid interim bonus before the due date the
employee is eligible to receive only the balance amount (Section 17).
i)
During the financial year if any eligible employee
has caused financial loss to the employer such losses can be adjusted and
remaining amount of bonus shall be payable(Section 18)
j)
Bonus shall be paid in cash.
Bonus shall be paid within 8th month from the last day of closing
the accounting year. Where there is any dispute pending under section 22 in
respect of bonus payable, it shall be paid within one month from the date of
award becoming enforceable or settlement
becoming operational in respect of the said dispute (Section 19).
Disqualification for
receiving bonus
An eligible employee shall be disqualified from receiving bonus
under this Act if he is dismissed from service for, fraud, riotous or violent
behavior while on the premises of the establishment, or theft, misappropriation
or sabotage of any property of the establishment (section 9).
Recovery of bonus
a) Section 21 and 22 of the Act prescribes the procedure for recovery
of unpaid bonus as under.
b) Where any bonus due to an employee from the employer under an award,
settlement or agreement, the employee or
any person authorized by the employee and in case of death of the employee, his
legal heirs shall make an application to the authority notified by the
government for the recovery of the money due to him. For this purpose the
Government of Karnataka has notified the Deputy Labour Commissioners as
authorities by it notification dated 5th April 2006. If the authority is satisfied that the money
claimed is payable, it shall issue a certificate to the District Collector to
recover the due as if land revenue and pay to the employee.
c) Such application shall be made within one year from the due date.
d)
If there is any dispute between
the employee and the employer in respect of bonus payable under this Act it
shall treated as dispute under Industrial Disputes Act 1947, and resolved
accordingly.
Penalties
a) Section 28 to 30 of the Act deals with penal provisions as under.
b) Any person who contravenes any provision of this Act or the Rule or refuses to obey the order/ requisition made
under this Act shall be punished with imprisonment
up to six months and fine up to one thousand rupees.
c) No court shall take cognizance of any offence under this Act unless
a complaint is made by the Labour Commissioner.
d)
No court inferior to the court
of presidency magistrate or judicial magistrate of first class shall try any
offence under this Act.
Authorities
The Government of Karnataka by gazette
notification No.LD/139/LET/2011(2) dated 9th June 2011 has appointed
the following officials of labour department to exercise the official powers
under this Act.
a) Authority to grant
permission for change of accounting year under section 2(1) (iii)(b): Labour Commissioner
b) Inspectors under Section
27: Labour Commissioner, Additional Labour
Commissioner, Joint Labour Commissioner, Deputy Labour Commissioner, Assistant
Labour Commissioner and Labour Officer of the respective jurisdiction.
c) Authority under Section 21: Deputy Labour Commissioner
of respective jurisdiction.
d)
Authority under section 30 to initiate prosecution: Labour Commissioner, authorized by the government.
Registers to be maintained, returns to be submitted and notices to be
displayed
a) Register of allocable surplus in Form A.
b) Register of the set on and set off allocable surplus in Form B.
c) Register of bonus paid and deduction made from the bonus in From C.
d)
Annual return Form D to the
inspector within 30 days from the last date set for payment of bonus under the
Act.
