The term "bonus" has not been defined in the Payment of Bonus Act, 1965. Webster's International Dictionary, defines bonus as "something given in addition to what is ordinarily received by or strictly due to the recipient". The Oxford Concise Dictionary defines it as "something to the good into the bargain (and as an example) gratuity to workmen beyond their wages".
L.A.T Formula regarding payment of bonus:
A dispute relating to payment of bonus by the Cotton Mills of Bombay was decided by the Industrial Court, Bombay. An appeal against the award of the Industrial Court was considered by the Full Bench of the then Labour Appellate Tribunal (Mill Owners' Association, Bombay v. Rashtriya Mill Mazdur Sangh, Bombay, 1959 II LLJ 1247).
In its decision, the LAT laid down the principles involved in the grant of bonus to workers. These principles are known as the LAT Formula. According to the formula, the following prior charges were to be deducted from gross profits:
1. Provision for depreciation;
2. Reserve for rehabilitation;
3. Return of 6 per cent on the paid up capital; and
4. Return on the working capital at a lower rate than the return on paid-up capital.
The balance, if any, was called "available surplus" and the workmen were to be awarded a reasonable share out of it by way of bonus for the year.
Bonus is really a reward for good work or share of profit of the unit where the employee is working. Often there were disputes between employer and employees about bonus to be paid. It was thought that a legislation will solve the problem and hence Bonus Act was passed. Unfortunately, in the process, bonus has become almost as deferred wages due to provision of payment of minimum 8.33% and maximum 20% bonus. Bonus Act has not in any way reduced the disputes.
The Act is applicable to (a) any factory employing 10 or more persons where any processing is carried out with aid of power (b) Other establishments (established for purpose of profit) employing 20 or more persons. Minimum bonus payable is 8.33% and maximum is 20%. Bonus is payable annually within 8 months from close of accounting year. Bonus is payable to all employees whose salary or wages do not exceed Rs 3,500 per month provided they have worked for at least 30 days in the accounting year. However, for calculation of bonus, maximum salary of Rs 2,500 is considered.
Once the Act is applicable, it continues to apply even if number of employees fall below 20. The Act is applicable to Government companies and corporations owned by Government which produces goods or renders services in competition with private sector. However, the Act is not applicable to Government employees, the employees of Municipal Corporation or Municipality, railway employees, university and employees of educational institutions, public sector insurance employees, employees of RBI and public sector financial institutions, charitable hospitals, social welfare organisations and defense employees. The Act does not apply to any institution established not for purposes of profit.
Establishments to which the Act is applicable - The Act applies to— (a) every factory; and (b) every other establishment in which twenty or more persons are employed on any day during an accounting year. [section 1(3)].
Act not to apply to certain classes of employees:
Section 32 of the Act provides that the Act shall not apply to the following classes of employees:
1. Employees employed by any insurer carrying on general insurance business and the employees employed by the Life Insurance Corporation of India;
2. Seamen as defined in clause (42) of Section 3 of the Merchant Shipping Act, 1958;
3. Employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948 and employed by registered or listed employers;
4. Employees employed by an establishment engaged in any industry called on by or under the authority of any department of Central Government or a State Government or a local authority;
5. 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) Institutions (including hospitals, chambers of commerce and social welfare institutions) established not for the purpose of profit;
6. Employees employed through contractors on building operations;
7. Employees employed by the Reserve Bank of India;
8. 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, 1961;
c) The Deposit Insurance Corporation;
d) The National Bank for Agriculture and Rural Development;
e) The Unit Trust of India;
f) The Industrial Development Bank of India;
fa) The Small Industries Development Bank of India established under Section 3 of the Small Industries Development Bank of India Act, 1989;
fb) The National Housing Bank;
Any other financial institution (other than Banking Company) being an establishment in public sector, which the Central Government may by notification specify having regard to (i) its capital structure; (ii) its objectives and the nature of its activities; (iii) the nature and extent of financial assistance or any other concession given to it by the Government; and (iv) any other relevant factor.
Apart from the above, the appropriate Government has necessary powers under Section 36 to exempt any establishment or class of establishments from all or any of the provisions of the Act for a specified period having regard to its financial position and other relevant circumstances and it is of the opinion that it will not be in the public interest to apply all or any of the provisions of this Act thereto. It may also impose such conditions while according the exemptions as it may consider fit to impose.
Important Definitions
Accounting Year
"Accounting Year" means-
1. In relation to a corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balances;
2. In relation to a company, the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up;
3. In any other case-
(a) the year commencing on the 1st day of April; or
(b) if the accounts of an establishment maintained by the employer thereof are closed and balances on any day other than the 31st day of March, then, at the option of the employer, the year ending on the day on which its accounts are so closed and balanced.
Provided that an option once executed by the employer under paragraph (b) of this sub-clause shall not again be exercised except with the previous permission in writing of the prescribed authority and upon such conditions as that authority may think fit. [Section 2(1)]
Allocable Surplus:
It means (a) in relation to an employer, being a company (other than a banking company) which has not made the arrangements prescribed under the Income-tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of Section 194 of that Act, 67% of the available surplus in an accounting year.
(b) In any other case, 60% of such available surplus [Section 2(4)].
Available Surplus:
It means the available surplus under Section 5. {Section 2(6)}.
Award:
"Award" means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947 or by any other authority constituted under any corresponding law relating to investigation and settlement of industrial disputes in force in a State and includes an arbitration award made under Section 10A of that Act or under that law [Section 2(7)].
Employee
"Employee" means any person (other than an apprentice) employed on a salary or wages not exceeding Rs.3,500 per mensem in any industry to do any skilled or unskilled, manual, supervisory, managerial, administrative, technical or clerical work or hire or reward, whether the terms of employment be express or implied. [Section 2(13)]
Part time permanent employees working on fixed hours are employees.
Employer
"Employer" includes:
1. In relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as a manager of the factory under clause (f) of Sub-section 7(1) of the Factories Act, 1948, the person so named; and
2. In relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent. [Section 2(14)]
Establishment in Private Sector:
It means any establishment other than an establishment in public sector.[Section 2(15)]
Salary or Wages:
The "Salary or Wage" means all remuneration (other than remuneration in respect of over-time work) 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 (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living) but does not include:
1. any other allowance which the employee is for the time being entitled to;
2. the value of any house accommodation or of supply of light, water, medical attendance or any other amenity or of any service or of any concessional supply of foodgrains or other articles;
3. any traveling concession;
4. any bonus (including incentive, production and attendance bonus);
5. 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;
6. any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex-gratia payment made to him;
7. any commission payable to the employee [Section 2(21)]
'Factory' has same meaning as per Factories Act. [section 2(17) of Bonus Act].
The words used are 'number of persons employed'. Hence, all persons employed are to be considered, including those who are not eligible for bonus. Thus, all employees including those, whose salary or wages exceed Rs 3,500 per annum will have to be considered for purpose of deciding eligibility.
MEANING OF 'ESTABLISHMENT' - The word 'establishment' is not defined in the Act. Normally, 'establishment' is a permanently fixed place for business. The term 'establishment' is much wider than 'factory'. It covers any office or fixed place where business is carried out.
ESTABLISHMENT IN PUBLIC SECTOR COVERED ONLY IN CERTAIN CASES - The Act applies to establishment in public sector only if the establishment in public sector sells the goods or renders services in competition with an establishment in private sector, and the income from such sale or services or both is not less than twenty per cent, of the gross income of the establishment in public sector for that year. [section 20(1)]. In other cases, the provisions of this Act do not apply to the employees employed by any establishment in public sector. [section 20(2)]. As per section 32(v)(c), the Act does not apply to any institution established not for purposes of profit.
Establishment in public sector means an establishment owned, controlled or managed by— (a) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) (b) a corporation in which not less than forty per cent of its capital is held (whether singly or taken together) by the Government; or the Reserve Bank of India; or a corporation owned by the Government or the Reserve Bank of India. [section 2(16)]. Establishment which is not in public sector is 'establishment in private sector' [section 2(15)].
"Corporation" means any body corporate established by or under any Central Provincial or State Act but does not include a company or a co-operative society. [section 2(11)].
ESTABLISHMENTS TO INCLUDE DEPARTMENTS, UNDERTAKINGS AND BRANCHES - Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act. [section 3]
Who are eligible for bonus - Employees drawing salary or wages upto Rs 10,000 per month are entitled to bonus, if he has worked for at least 30 working days in an accounting year. Even a worker working in seasonal factory is eligible if he has worked for at least 30 working days. Apprentices are not eligible for bonus.
With the promulgations of this Ordinance, the salary ceiling has been increased
to Rs.10, 000/- P.M. The entitlement for calculation of Bonus
will be Rs. 3,500/-P.M. Effective from 01/04/2006. The
current celling of 3500/- for bonus was fixed in April 1995. The bonus celling
had been fixed at 1600/- in 1965 which was raised to 2500/- in 1985 and 3500/-
in 1995 by ameding section 2 (13) of the payment of bonus act.
Those
employed through contractor on building operation have now been covered under
the Payment of Bonus Act.
Though the
cover is for employees earning basic and DA up to 10,000/-, you should restrict
their basic and DA to Rs.3, 500/- p.m. or actual basic and DA for the month
whichever is lower, for bonus computation.
An employee
should be in service for minimum 30 days during the previous financial year.
Payments should be made before the expiry of 8 months from the start of a FY
i.e. before end of NOV.
The
statutory rate of bonus is: Minimum 8.33% on basic and DA for the year. Maximum
basic and DA cannot exceed 42,000/- p.a. (3500 x 12) for bonus computation.
Salary above Rs. 3,500 is not considered for calculation of Bonus. [section 12]. Employee drawing salary/wage exceeding Rs 10,000 is not entitled to any bonus under the Act.
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THE PAYMENT OF BONUS (AMENDMENT) ACT, 2015
With the promulgations of this amendment, the salary ceiling has been increased to Rs.21,000/- P.M. The entitlement for calculation of Bonus will be Rs. 7000/-P.M. Effective from 01/01/2014/15 (Subject to correction).
Though the cover is for employees earning basic and DA up to 21,000/-, you should restrict their basic and DA to Rs.7000/- p.m. or actual basic and DA for the month whichever is lower, for bonus computation.
An employee should be in service for minimum 30 days during the previous financial year. Payments should be made before the expiry of 8 months from the start of a FY i.e. before end of NOV.
The statutory rate of bonus is: Minimum 8.33% on basic and DA for the year. Maximum basic and DA cannot exceed 84,000/- p.a. (7000 x 12) for bonus computation.
Salary above Rs. 7000 is not considered for calculation of Bonus. [section 12]. Employee drawing salary/wage exceeding Rs 21,000 is not entitled to any bonus under the Act.
DUTIES / RIGHTS OF EMPLOYER
DUTIES
Ø To calculate and pay the annual bonus as required under the Act
Ø To submit an annul return of bonus paid to employees during the year, in Form D, to the Inspector, within 30 days of the expiry of the time limit specified for payment of bonus.
Ø To co-operate with the Inspector, produce before him the registers/records maintained, and such other information as may be required by them.
Ø To get his account audited as per the directions of a Labour Court/Tribunal or of any such other authority.
RIGHTS
Ø An employer has the following rights:
Ø An employer has the following rights:
Ø Right to forfeit bonus of an employee, who has been dismissed from service for fraud, riotous or violent behaviour, or theft, misappropriation or sabotage of any property of the establishment.
Ø Right to make permissible deductions from the bonus payable to an employee, such as, festival/interim bonus paid and financial loss caused by misconduct of the employee.
Ø Right to refer any disputes relating to application or interpretation of any provision of the Act, to the Labour Court or Labour Tribunal.
ELIGIBILITY FOR BONUS IF WORKED FOR MINIMUM 30 DAYS - Every employee shall be entitled to be paid be his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year. [section 8]
Computation of amount available for distribution as bonus - The establishment has to prepare a balance sheet and profit and loss account of the year and calculate the 'gross profit', 'available surplus' and 'allocable surplus' as per method and formula given in Bonus Act.
The first step is to calculate 'Gross Profit'. As per section 4, the gross profit in respect of any accounting year is required to be calculated as per First Schedule to Act in case of banking company and as per second schedule in case of other establishments. After calculation of 'Gross Profit' as per section 4, next step is to calculate 'Available Surplus'. As per section 5, 'available surplus' is calculated by deducting sums as specified in section 6 from 'gross profit' arrived at as per section 6 and adding difference equal to income tax on the bonus paid in the preceding year.
Thus, Available Surplus is equal to Gross Profit [as per section 4] less prior charges allowable as deduction u/s 6 plus amount equal to income tax on bonus portion calculated as per proviso (b) to section 5.
Allocable surplus is equal to 60% of 'available surplus' calculated as per provisions of section 5. [In case of company which does not deduct tax at source as per provisions of section 194 of Income Tax Act, 'allocable surplus' will be 67% of 'available surplus']. This 'allocable surplus' has to be distributed as bonus among employees in proportion to the salary or wages actually earned by each employee during the year. However, this is subject to minimum 8.33% and maximum 20% as explained below.
CALCULATION OF BONUS SIMPLIFIED:
The method for calculation of annual bonus is as follow:
1. Calculate the gross profit in the manner specified in-
a) First Schedule, in case of a banking company, or
b) Second Schedule, in any other case.
2. Calculate the Available Surplus.
a) Available Surplus = A+B, where A = Gross Profit – Depreciation admissible u/s 32 of the Income tax Act - Development allowance - Direct taxes payable for the accounting year (calculated as per Sec.7) – Sums specified in the Third Schedule.
b) B = Direct Taxes (calculated as per Sec. 7) in respect of gross profits for the immediately preceding accounting year – Direct Taxes in respect of such gross profits as reduced by the amount of bonus, for the immediately preceding accounting year.
3. Calculate Allocable Surplus
a) Allocable Surplus = 60% of Available Surplus, 67% in case of foreign companies.
b) Make adjustment for 'Set-on' and 'Set-off'. For calculating the amount of bonus in respect of an accounting year, allocable surplus is computed after considering the amount of set on and set off from the previous years, as illustrated in Fourth Schedule.
c) The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages received by them during the relevant accounting year.
4. In case of an employee receiving salary or wages above Rs. 2,500 the bonus payable is to be calculated as if the salary or wages were Rs. 2,500 p.m. only.
Set off and set on provisions - It may happen that in some years, the allocable surplus is more than the amount paid to employees as bonus calculating it @ 20%. Such excess 'allocable surplus' is carried forward to next year for calculation purposes. This is called 'carry forward for being set on in succeeding years'. The ceiling on set on that is required to be carried forward is 20% of total salary and wages of employees employed in the establishment. In other words, even if actual excess is more than 20% of salary/wages, only 20% is required to be carried forward. The amount set on is carried forward only upto and inclusive of the fourth accounting year. If the amount carried forward is not utilised in that period, it lapses [section 15(1)].
Similarly, in a particular year, there may be lower 'allocable surplus' or no 'allocable surplus' even for payment of 8.33% bonus. Such shortfall is also carried to next year. This is called 'carry forward for being set off in succeeding years'. Thus, in every year, 'allocable surplus' is calculated. To this amount, set on from previous years is added. Similarly, set off, if any, from previous years is deducted. This gives amount which is available for distribution as bonus. The amount set off is carried forward only upto and inclusive of the fourth accounting year. If the amount carried forward is not set off in that period, it lapses. [section 15(2)]
Minimum bonus - Every employer shall be bound to pay to every employee in respect of any accounting year, a minimum bonus which shall be 8.33 per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. Where an employee has not completed fifteen years of age at the beginning of the accounting year, the minimum bonus payable is 8.33% or Rs 60 whichever is higher. [section 10].
While computing number of working days, an employee shall be deemed to have worked in an establishment even on the days on which (a) He was laid off (b) He was on leave with salary/wages(c) He was absent due to temporary disablement caused by accident arising out of and in course of employment and (d) Employee was on maternity leave with salary/wages. [section 14].
Payment of maximum bonus - Where in respect of any accounting year, the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage. [section 11(1)]. - - In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section. [section 11(2)].
Thus, maximum bonus payable to employee is 20% in any accounting year.
Salary or wages for calculating bonus - Where the salary or wage of an employee exceeds Rs 10,000 per month, the bonus payable to such employee under sections 10 or 11 shall be calculated as if his salary or wages were Rs 3,500 per month. [section 13]. In other words, employees drawing salary or wages between Rs 3,500 to Rs 10,000 per month, are entitled to bonus on the basis of Rs 3,500 per month salary only.
Special Provisions with respect to certain newly set up establishments:
In the case of newly set up establishments following provisions have been made under Section 16 for the payment of bonus:
1. Where an establishment is newly set up whether before or after commencement of this Act, the employees of such establishment shall be entitled to be paid bonus under this Act in accordance with the provisions of sub-sections (1-A), (1-B) and (1-C).
(1-A) In the first five accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this Act in relation to that year, but without applying the provisions of Section 15.
(1-B) For the sixth and seventh accounting year in which the employer sells the goods produced or manufactured by him or renders services as the case may be, from such establishment, the provisions of Section 15 shall apply subject to the following modifications, namely:
i. For the sixth accounting year:
Set on set off, as the case may be, shall be made in the manner illustrated in the Fourth Schedule taking into account the excess or deficiency, if any as the case may be, of the allocable surplus set on or set off in respect of the fifth and sixth accounting year.
ii. For the seventh accounting year:
Set on or set off, as the case may be, shall be made in the manner illustrated in the Fourth Schedule taking into account the excess or deficiency, if any, as the case may be of the allocable surplus set on or set off in respect of the fifth, sixth and seventh accounting years.
(1-C) From the eighth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be from such establishment, the provisions of Section 15 shall apply in relation to such establishment as they apply in relation to any other establishment.
Explanation I-For the purpose of sub-section (1) an establishment shall not be deemed to be newly set up merely by reason of a change in its location, management or ownership.
Explanation II- For the purpose of sub-section(IA), an employer shall not be deemed to have derived profit in accounting year unless-
a) He has made provision for that year's depreciation to which he is entitled under the Income-tax Act or, as the case may be, under the Agriculture Income tax law, and
b) The arrears of such depreciation and losses incurred by him in respect of the establishment for the previous accounting years have been fully set off against his profits.
Explanation III-For the purposes of sub-section (1A), (1B) and (1C), sale of the goods produced or manufactured during the course of the trial running of any factory or of the prospecting stage of any mine or an oil field shall not be taken into consideration and where any question arises with regard to such production or manufacture, the decision of the appropriate Government, made after giving the parties a reasonable opportunity of representing the case, shall be final and shall not be called in question by any court or other authority.
(2) The provisions of sub-sections (1A), (1B) and (1C) shall, so far as may be, apply to new departments or undertakings or branches set up by existing establishments:
Provided that if an employer in relation to an existing establishment consisting of different departments or undertakings or branches(whether or not in the same industry) set up at different periods has, before the 29th May, 1965, been paying bonus to the employees of all such departments or undertakings or branches were set up, on the basis of the consolidated profits computed in respect of all such departments or undertakings or branches, then, such employer shall be liable to pay bonus in accordance with the provisions of this Act to the employee of all such departments or undertakings or branches (whether set up before or after that date) on the basis of the consolidated profits computed as aforesaid.
Within the meaning of Section 16(1-A) the word "profit" must obviously be construed according to its ordinary sense. A sense which is understood in trade and industry because the rationale behind Section 16(1-A) is that it is only when the employer starts making profits in the commercial sense that he should become liable to pay bonus under the Act.
Profit in the commercial sense can be ascertained only after deducting depreciation and since there are several methods of computing depreciation, the one adopted by the employer, in the absence of any statutory provision to the contrary, would govern the calculation. Explanation II to Section 16(1-A) says that the employer shall not be deemed to have derived profits unless he has made provision for that years' depreciation to which he is entitled to under the Income-tax Act. This explanation embodies a clear legislative mandate that in determining for the purpose of sub-section(1A) of Section 16 whether the employer has made profit from the establishment in accounting year, depreciation should be provided in accordance with the provisions of the Income-tax Act.
Clearly, therefore, if depreciation is as prescribed in the Income Tax Act, There is no profit for the year in question and there is no liability on the part of the employer to pay bonus under the Act (The Management of Central Coal Washery v. Workmen, 1978-II Labour Law Journal 350).
Adjustment of customary or interim bonus:
Where in any accounting year-(a) an employer has paid any Puja bonus or other customary bonus to an employee; or (b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable; then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance (Section 17).
Deductions of certain amounts from bonus:
Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act, in respect of that accounting year only and the employee shall be entitled to receive the balance, if any. (Section 18)
Time limit for payment of bonus:
(a) Where there is a dispute regarding payment of bonus pending before any authority under Section 22, all amounts payable to an employee by way of bonus under this Act shall be paid in cash by his employer, within a month from the date from which the award becomes enforceable or the settlement comes into operation, in respect of such dispute.
(b) In any other case, the bonus should be paid within a period of eight months from the close of the accounting year. However, the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of 8 months to such further period or periods as it thinks fit, so, however, that the total period so extended shall not in any case exceed two years (Section 19).
Reference of disputes under the Act:
Where any dispute arises between an employer and his employee with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State and provisions of that Act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly. (Section 22)
Accuracy of Accounts:
Where any industrial dispute arises with respect to bonus payable under the Act, the audited balance sheet and profit and loss account of a corporation or a company or a banking company shall be presumed to be correct. Similarly, in the case of employers not being corporation, company or banking company, audited accounts will be presumed to be correct for the purpose of payment of bonus.
Bonus linked with production or productivity:
Section 31A enables the employees and employers to evolve and operate a scheme of bonus payment linked to production or productivity in lieu of bonus based on profits under the general formula enshrined in the Act. However, bonus payments under Section 31A are also subject to the minimum of 8.33 % and maximum of 20%. In other words, a minimum of 8.33% is payable in any case and the maximum cannot exceed 20 % (Section 31A).
Agreements inconsistent with the Act:
Subject to the provisions of Section 31A, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State.
Power of Exemption:
If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act. (Section 36)
Government should consider public interest, financial position and whether workers contributed to the loss, before grant of exemption (J.K Chemicals v. Maharashtra, 1996 III CLA Bom 12).
Application of certain laws not barred:
Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State (Section 39).
RECOVERY OF BONUS DUE
Ø Where any bonus is due to an employee by way of bonus, employee or any other person authorised by him can make an application to the appropriate government for recovery of the money due.
Ø If the government is satisfied that money is due to an employee by way of bonus, it shall issue a certificate for that amount to the collector who then recovers the money.
Ø Such application shall be made within one year from the date on which the money became due to the employee.
Ø However the application may be entertained after a year if the applicant shows that there was sufficient cause for not making the application within time.
OFFENCES AND PENALTIES
Ø For contravention of the provisions of the Act or rules the penalty is imprisonment upto 6 months, or fine up to Rs.1000, or both.
Ø For failure to comply with the directions or requisitions made the penalty is imprisonment upto 6 months, or fine up to Rs.1000, or both.
Ø In case of offences by companies, firms, body corporate or association of individuals, its director, partner or a principal officer responsible for the conduct of its business, as the case may be, shall be deemed to be guilty of that offence and punished accordingly, unless the person concerned proves that the offence was committed without his knowledge or that he exercised all due diligence.
