[The following post is contributed
by Bhushan Shah from Mansukhlal Hiralal & Company]
by Bhushan Shah from Mansukhlal Hiralal & Company]
The Payment
of Bonus Act, 1965 (“Bonus Act”) requires
the payment of compulsory bonus to certain employees of an establishment which
employs 20 or more persons. The erstwhile provisions of the Bonus Act provided for
payment of bonus to the employees drawing a salary not exceeding Rs 10,000/- per
month and who has worked for not less than 30 days in an accounting year. Further,
the erstwhile provisions of the Bonus Act provided that in the event the wage/salary
of an employee exceeds Rs 3,500/- and Rs 500/- per month then, the bonus shall be
calculated on the salary as being Rs 3,500/-.
of Bonus Act, 1965 (“Bonus Act”) requires
the payment of compulsory bonus to certain employees of an establishment which
employs 20 or more persons. The erstwhile provisions of the Bonus Act provided for
payment of bonus to the employees drawing a salary not exceeding Rs 10,000/- per
month and who has worked for not less than 30 days in an accounting year. Further,
the erstwhile provisions of the Bonus Act provided that in the event the wage/salary
of an employee exceeds Rs 3,500/- and Rs 500/- per month then, the bonus shall be
calculated on the salary as being Rs 3,500/-.
Amendment
The
Payment of Bonus (Amendment) Act, 2015 (“Amendment Act”) received
Presidential assent on 31 December 2015. The Amendment Act provides for major
changes in the eligibility limit and calculation of bonus of the employees
under the Bonus Act.
Payment of Bonus (Amendment) Act, 2015 (“Amendment Act”) received
Presidential assent on 31 December 2015. The Amendment Act provides for major
changes in the eligibility limit and calculation of bonus of the employees
under the Bonus Act.
Increase in Eligibility Limit:
The Amendment Act has widened the scope and eligibility of payment of bonus to
employees from the earlier drawn salary of Rs 10,000/- to Rs 21,000/- now.
The Amendment Act has widened the scope and eligibility of payment of bonus to
employees from the earlier drawn salary of Rs 10,000/- to Rs 21,000/- now.
Calculation of Bonus:
Further for the purpose of calculating
bonus, the salary limit which was earlier Rs 3,500/- has now been revised to Rs
7,000/-.
Further for the purpose of calculating
bonus, the salary limit which was earlier Rs 3,500/- has now been revised to Rs
7,000/-.
Retrospective Amendment:
This Amendment Act is made applicable retrospectively from 1 April 2014.
However, Kerala High Court has stayed the retrospective applicability of the Amendment
Act. Vide an interim order, the Kerela High Court has held that the Amendment Act
shall be applicable prospectively from 2015-16.
This Amendment Act is made applicable retrospectively from 1 April 2014.
However, Kerala High Court has stayed the retrospective applicability of the Amendment
Act. Vide an interim order, the Kerela High Court has held that the Amendment Act
shall be applicable prospectively from 2015-16.
Comments
The Amendment
Act is a positive move by the Government as it revises the limits for payment
of bonus commensurate with the realities of today’s economic scenario. However,
the Amendment Act should have been made applicable prospectively as
retrospective application of the Amendment Act has caused unrest amongst employers
and has given rise to unnecessary litigation.
Act is a positive move by the Government as it revises the limits for payment
of bonus commensurate with the realities of today’s economic scenario. However,
the Amendment Act should have been made applicable prospectively as
retrospective application of the Amendment Act has caused unrest amongst employers
and has given rise to unnecessary litigation.
– Bhushan Shah