Is it legally possible to pay Bonus at different rates for different cat of workmen. Such as for Permanent employees 20% and for temporary and contract employees 8.33% being the common principle employer
From India, Verna
From India, Verna
Dear Ragul,
The rate of bonus payable is relatable to the performance of the establishment in a particular accounting year and the amount that can be set off from the accumulations in this regard in case of short-fall if any..
Since the temporary employees are also on the rolls of the establishment and their contribution to the performance can not be undermined by the nature of their employment, it is not fair to grant them bonus at a reduced rate.
In so far as the contract labour are concerned, basically the responsibility to pay bonus rests with the contractor as it is a separate entity. However it is the common practice in vogue to quantify the commitment of bonus at the minimum rate of 8.33% to add up to the contractors' charges. However, it is open to the Principal Employer to grant a higher rate of bonus to contract labour too on par with the regular employees. The legality of the rate of bonus in this regard is solely dependent on the profits earned by the contractor as a separate entity.
From India, Salem
6018The rate of bonus payable is relatable to the performance of the establishment in a particular accounting year and the amount that can be set off from the accumulations in this regard in case of short-fall if any..
Since the temporary employees are also on the rolls of the establishment and their contribution to the performance can not be undermined by the nature of their employment, it is not fair to grant them bonus at a reduced rate.
In so far as the contract labour are concerned, basically the responsibility to pay bonus rests with the contractor as it is a separate entity. However it is the common practice in vogue to quantify the commitment of bonus at the minimum rate of 8.33% to add up to the contractors' charges. However, it is open to the Principal Employer to grant a higher rate of bonus to contract labour too on par with the regular employees. The legality of the rate of bonus in this regard is solely dependent on the profits earned by the contractor as a separate entity.
From India, Salem
Dear Sir,
Thanks for your inputs, However i need clarification on payment pf Bonus.
As contractor being a separate entity and if they pay bonus on monthly basis is it ok - what is role of principle employer in this case.
Rahul
From India, Verna
Thanks for your inputs, However i need clarification on payment pf Bonus.
As contractor being a separate entity and if they pay bonus on monthly basis is it ok - what is role of principle employer in this case.
Rahul
From India, Verna
Dear Rahul,
In a sense, the gap between principle and practice existing everywhere makes its ubiquitous presence in Contract Labour System also. Since a contractor is a separate entity for all legal purpose, it is open to him to rotate the services of contract labour in his roll among various Principal Employers' establishments depending on work requirements and he may charge at different rates for the service rendered to each PE. At times due to unforeseen circumstances, he may incur losses in a particular contract work. Hence, his liability to pay bonus to his contract workmen under the Payment of Bonus Act,1965 stands still at large irrespective of their place of actual engagement during the particular accounting year. This is the principle. But what the practice actually is that the contractor secures the contract first and depending on the rates of service-charges approved, determines the the no of people required and mobilises them accordingly. Unfortunately, the applicability of the Minimum Wages Act,1948 and the Contract Labour Act,1970 come into play and legal compulsion is thrust upon both the contractor and principal employer. Sec.20 and 21 of the CLRA Act creates vicarious liability on the part of the principal employer in case of failure by the contractor in respect of welfare and pecuniary measures. In order to protect the interest of contract labour and ensure the payment of their statutory dues, some High Courts have fixed the ultimate responsibility of bonus and gratuity payments on the PE based on the principles of vicarious liability and social justice. So, my suggestion would be to discourage the practice of monthly bonus payment and make it annually.
From India, Salem
In a sense, the gap between principle and practice existing everywhere makes its ubiquitous presence in Contract Labour System also. Since a contractor is a separate entity for all legal purpose, it is open to him to rotate the services of contract labour in his roll among various Principal Employers' establishments depending on work requirements and he may charge at different rates for the service rendered to each PE. At times due to unforeseen circumstances, he may incur losses in a particular contract work. Hence, his liability to pay bonus to his contract workmen under the Payment of Bonus Act,1965 stands still at large irrespective of their place of actual engagement during the particular accounting year. This is the principle. But what the practice actually is that the contractor secures the contract first and depending on the rates of service-charges approved, determines the the no of people required and mobilises them accordingly. Unfortunately, the applicability of the Minimum Wages Act,1948 and the Contract Labour Act,1970 come into play and legal compulsion is thrust upon both the contractor and principal employer. Sec.20 and 21 of the CLRA Act creates vicarious liability on the part of the principal employer in case of failure by the contractor in respect of welfare and pecuniary measures. In order to protect the interest of contract labour and ensure the payment of their statutory dues, some High Courts have fixed the ultimate responsibility of bonus and gratuity payments on the PE based on the principles of vicarious liability and social justice. So, my suggestion would be to discourage the practice of monthly bonus payment and make it annually.
From India, Salem
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