27PAYMENT OF BONUS ACT
Ans : This act ensures that employees have a statutory right to share the profits of the employer.
Q2) What is the minimum bonus prescribed by the Act?
Ans : The minimum bonus prescribed by the Act is 8.33 % of annual basic salary which is equivalent to one months basic salary or Rs. 100 whichever is higher.
Q3) What is the maximum bonus payable under the Act ?
Ans : The maximum bonus payable under the Act is two and a half months basic salary or 20 % of annual basic salary.
Q4) What is the applicability of the act ?
Ans : This Act is applicable to all establishments employing 20 or more persons.
Q5 ) In case after registering the establishment at any point in time, the number of employees working in it becomes less than 20 then will the Act apply ?
Ans : Any establishment which has been covered under the Act once shall continue to be governed by the Act even if the number of persons employed therein at any time falls below 20.
Q6) Who are entitled to be paid bonus ?
Ans : Any employee who is drawing a salary or wages up to Rs. 10,000 per month and who has worked for a minimum period of 30 days in a year is entitled to bonus.
Q7) Is a casual worker (whose job is not throughout the year but only for a few months) entitled to bonus ?
Ans : The only criteria for being entitled to bonus is to complete minimum period of 30 days of work in a year to be eligible for bonus.
Q8) For the purpose of this Act, what does the term “wages” include?
Ans : For the purpose of this Act wages means Basic salary + D. A. and does not include allowances, overtime salary, HRA, bonus, gratuity, employer's contribution to PF.
Q9) What is the time limit for an employer to pay the bonus?
Ans : Bonus must be paid within a period of 8 months from the close of the accounting year. If an employee does not get the bonus due to him, he can apply to the Government.
Q10) Why has the Act specified the maximum and minimum limit of the bonus ?
Ans : The principle behind fixing the maximum and minimum limit of the bonus is that the rate of bonus should not fluctuate from year to year.
Q11) Can an employee hold or deduct the bonus payable to an employee.
Ans : Only in case the employee is found guilty of misconduct causing financial loss to the employer, then the employer can deduct the or hold the employee's bonus.
Q12) In case there is a dispute regarding the payment of bonus then when is the bonus payable ?
Ans : Bonus is payable to the employee within 30 days of settlement of such dispute.
Q13) Can the employer have an agreement with the employee for a different rate of payment of bonus ?
Ans : Yes, there can be an agreement between the employer and the employee for a different rate of payment of bonus but then they need to follow the Act, i.e., Maximum of 20 % of basic & minimum of 8.33 % of basic salary.
Q14) Which establishments are exempt from paying bonus to its employees?
Ans : Any establishment which is newly set up is exempted from paying bonus to its employees in the first five years. If however the employer gains profits in the first five years then he has to pay bonus to its employees.
Q15) In case there is a change in the ownership of the establishment then is the establishment exempt from paying bonus ?
Ans : No, even if the ownership of the establishment has changed it will not be considered as a newly set up establishment and has to pay bonus.
Q16) When is the employee disqualified to receive bonus?
Ans : Any employee who is dismissed from the services on account of fraud, riotous or violent behavior, theft, misappropriation, or causes damage to company properties loses his claim on bonus.
Q17)In case the employee is entitled to bonus of last year but this year he/ she is dismissed on account of theft, fraud and dishonesty then can the employer hold the employee's previous bonus ?
Ans : In such a case the employer cannot hold the due bonus of the previous year.
Q18) If the employee is laid off and paid lay off wages then is the employee entitled to bonus for the period he/ she is laid off ?
Ans : In case of lay off the employee receives lay off wages then these wages would be considered as wages in the purview of this Act and the employer needs to pay bonus.
Q 19 ) In case the employer has a lot of branches/ departments which are spread over many places or states then will it considered as separate establishments or one single establishment ?
Ans : In such cases the establishment would be considered as one single establishment. unless a separate balance-sheet and profit or loss account is prepared.
From India, Solon
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FAQ - THE PAYMENT OF BONUS ACT-1.doc
FAQ - Payment of Wages (COVID - 19).pdf