Hello learned members and seniors,
I work for a small family business in Mumbai, that was started by the current director's father about 50 years back. The total count of employees (including the Housekeeping staff) is 8. The founder of the firm used to give a month's pay as a Diwali bonus to all of his employees, but we do not wish to give such a bonus to the two new joiners. Since the other 6 employees have been working with us for the last 20-30 years, we cannot stop giving them the bonus. The director is now in a dilemma of how to tell the new joiners that they will not be getting a bonus (we do not want to have bad blood in the firm) or any other way out of this situation as giving the new joiners a bonus will lead to negativity in the older employees (Excluding the Housekeeping staff, all of the others are somewhat on a similar pay scale).
I would be much obliged if you'll help me with this employee relations issue.
Thanking you in advance.
From India, Mumbai
I work for a small family business in Mumbai, that was started by the current director's father about 50 years back. The total count of employees (including the Housekeeping staff) is 8. The founder of the firm used to give a month's pay as a Diwali bonus to all of his employees, but we do not wish to give such a bonus to the two new joiners. Since the other 6 employees have been working with us for the last 20-30 years, we cannot stop giving them the bonus. The director is now in a dilemma of how to tell the new joiners that they will not be getting a bonus (we do not want to have bad blood in the firm) or any other way out of this situation as giving the new joiners a bonus will lead to negativity in the older employees (Excluding the Housekeeping staff, all of the others are somewhat on a similar pay scale).
I would be much obliged if you'll help me with this employee relations issue.
Thanking you in advance.
From India, Mumbai
Bonus is a differed wages. If the 2 new joiners have joined after April,21 of this year, they are not eligible for Bonus this year. As a good gesture employer may offer them some token amount in the form of ex-gratia.
From India, New Delhi
337From India, New Delhi
Giving a token gift to the new joiners is a good idea to make them feel that Company thinks about them too. I would suggest, to include a rule/clause about Bonus in the Appointment letter itself not to offend any new employee and you will not have to answer them on one to one basis. Many companies state a rule about Bonus that - to be eligible for Bonus an employee needs to complete One year of Service.
Hope this helps!
From India, Pune
Hope this helps!
From India, Pune
The establishment should have had 20 or more workers earlier and has come under the purview of Payment of Bonus Act since then. Otherwise your establishment will not have legal obligation to pay bonus as an establishment not being a factory should have at least 20 employees to make the Bonus Act applicable to it. But once the Act has become applicable to the organisation the liability to pay bonus will not cease just because the number of employees has dropped down to 8.
If the (new) employees have worked at least for 30 days (not one year) in the financial year 2020-21 (April 20 to March 21), then they should be given bonus. On the other hand, if they have joined some time in this financial year (2021-22), then they need not be paid bonus. If you want to put a full stop to customary practices, you can do it now by refusing to pay bonus to those who are not eligible to it now. The new joinees, obviously, will not expect any bonus this year. But if you pay it to them now, you will be creating a custom which will become a headache to you in future. Therefore, if joined this financial year, refuse bonus and tell them that the bonus (as rightly said by Mr Nanu) is a deferred wage of last financial year and is available only to those who have worked at least for 30 days in the last financial year, and they will get it from next year onwards.
Another important thing with regard to eligibility to get bonus is the salary and no employee whose monthly wages exceeds Rs 21000 is legally entitled to any bonus.
From India, Kannur
If the (new) employees have worked at least for 30 days (not one year) in the financial year 2020-21 (April 20 to March 21), then they should be given bonus. On the other hand, if they have joined some time in this financial year (2021-22), then they need not be paid bonus. If you want to put a full stop to customary practices, you can do it now by refusing to pay bonus to those who are not eligible to it now. The new joinees, obviously, will not expect any bonus this year. But if you pay it to them now, you will be creating a custom which will become a headache to you in future. Therefore, if joined this financial year, refuse bonus and tell them that the bonus (as rightly said by Mr Nanu) is a deferred wage of last financial year and is available only to those who have worked at least for 30 days in the last financial year, and they will get it from next year onwards.
Another important thing with regard to eligibility to get bonus is the salary and no employee whose monthly wages exceeds Rs 21000 is legally entitled to any bonus.
From India, Kannur
From the detailed inputs furnished in the post, it is evident that the establishment remains out of the purview of the Payment of Bonus Act, 1965.
However, the Pooja bonus, in our country, is generally a payment made every year at the discretion of the employer. When it has been the practice for long without interruption, it becomes a customary benefit. I think that it has nothing to do with the 'bonus' contemplated under the Payment of Bonus Act, 1965. In this connection, I would like to quote the following observation of the ho'ble Supreme Court in its judgement in Mumbai Kamgar Sabha, Bombay v. Abdullabhai Faizullabhai [ AIR 1976 SC 1455 ]:
" The Bonus Act speaks, and speaks as a whole Code, on the sole subject of profit-based bonus but is silent on and cannot, therefore, annihilate by implication, other distinct and different kinds of bonus such as the one oriented on custom. The Bonus Act does not bar claims to customary bonus or those based on conditions of service ".
Therefore, I would second the suggestions of Ms. Vaishali. Naturally, the new joiners cannot expect the customary bonus paid to the employees who have been in the service of the establishment for more than a year. Just a token gift will do this year and they are sure to get the customary bonus next year, if they remain in service.
From India, Salem
However, the Pooja bonus, in our country, is generally a payment made every year at the discretion of the employer. When it has been the practice for long without interruption, it becomes a customary benefit. I think that it has nothing to do with the 'bonus' contemplated under the Payment of Bonus Act, 1965. In this connection, I would like to quote the following observation of the ho'ble Supreme Court in its judgement in Mumbai Kamgar Sabha, Bombay v. Abdullabhai Faizullabhai [ AIR 1976 SC 1455 ]:
" The Bonus Act speaks, and speaks as a whole Code, on the sole subject of profit-based bonus but is silent on and cannot, therefore, annihilate by implication, other distinct and different kinds of bonus such as the one oriented on custom. The Bonus Act does not bar claims to customary bonus or those based on conditions of service ".
Therefore, I would second the suggestions of Ms. Vaishali. Naturally, the new joiners cannot expect the customary bonus paid to the employees who have been in the service of the establishment for more than a year. Just a token gift will do this year and they are sure to get the customary bonus next year, if they remain in service.
From India, Salem
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