Can anyone elaborate on the Bonus act 1965?
Is it applicable only to factory or is it applicable to all establishment, even to those covered under shop and establishment act.
If so, is it mandatory to pay 8.33% as a Bonus even in an IT or R&D organization.
From India, Madras
Is it applicable only to factory or is it applicable to all establishment, even to those covered under shop and establishment act.
If so, is it mandatory to pay 8.33% as a Bonus even in an IT or R&D organization.
From India, Madras
Dear Colleague,
I give be blow points for your reading.
THE PAYMENT OF BONUS ACT, 1965
The Payment of Bonus Act, 1965 provides for the payment of bonus to persons employed Factories and in certain establishments, employing 20 or more persons, on the basis of profits or on the basis of production or productivity and matters connected there with. Central government can notify the application of the Act to the establishment employing more than 10 persons
The minimum bonus of 8.33% is payable by every industry and establishment under section 10 of the Act. The maximum bonus including productivity linked bonus that can be paid in any accounting year shall not exceed 20% of the salary/wage of an employee under the section 31 A of the Act.
Bonus is payable within 8 months of closing of Accounting year. Employees who had worked not less than 30 days or more are eligible subject to their Wage ceiling mentioned (Now 21K). For Calculation, we need to consider Rs.7000/- Or Minimum Wages in case of Scheduled Employment whichever is higher per men sum.
Details of amendments to the Payment of Bonus Act, 1965:
S.No Year Of Amendment Eligibility Limit (Rs. Per Month) Calculation Ceiling (Rs. Per Month)
1. 1965 Rs. 1600 Rs.750
2. 1985 Rs.2500 Rs. 1600
3. 1995 Rs. 3500 Rs. 2500
4. 2007 Rs. 10000 Rs. 3500
5. 2015 Rs. 21000 Rs. 7000 Or the minimum wage for scheduled employment, as fixed by the appropriate Government, whichever is higher.
Applicability of the Act to Factories and Establishments:
a) Every factory registered under Factories Act
b) Establishment employing 20 or more than 20 on any day during the year
c) Central government can notify the application of the Act to the establishment
employing more than 10 persons
2. Following employees are not covered with the provision of this Act
a) Apprentices
b) Employees of Central Government or Local Authority
c) Employees of Public Sector which sells goods manufactured by it.
d) Employees of other Public Sector
e) Seaman etc., registered under Dock Workmen (Regulation of Employment) Act,
1948
f) Employees of LIC, GIC, Red Cross, Inland Water Transport, Universities and
other Educational Institutions.
g) New establishment for 5 years following accounting year in which employers sell
goods produced or in which he derives profit from the establishment whichever is
earlier. The newly set up establishment is exempted from paying bonus to its employees in the first five years following the year in which the employer sells the goods produced or manufactured
by him. If, however, the employer derives profit in any of the first five year, he has to pay bonus
for that year. The provisions of set on and set off are not applicable in such cases. {Section 16}
As far as Profit making establishments are concerned and firms meeting the other conditions for coverage of the Act like number of employees as stated above, the Bonus is payable in line with the Act at Minimum Level or Maximum Level based on the profits and other calculations.
Kindly have a look at a provision under Payment of Bonus Act which has a specific Section 32 where in there is a list of Establishments given which are not covered under the Act. In simple words all other establishments + Profit+ Stipulated number of employees working in that establishments ....then the Bonus is payable.
As far as Labour Laws Applicability to Software Organizations, I share one good article for your reading. This will be a good reference.
https://www.legawise.com/software-co...mployment-laws
Our Colleagues from time to time given lot of clarifications on this subject on various questions in the previous years and you may kindly refer those replies also in addition to this for more clarity.
All the Best and God Bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
309I give be blow points for your reading.
THE PAYMENT OF BONUS ACT, 1965
The Payment of Bonus Act, 1965 provides for the payment of bonus to persons employed Factories and in certain establishments, employing 20 or more persons, on the basis of profits or on the basis of production or productivity and matters connected there with. Central government can notify the application of the Act to the establishment employing more than 10 persons
The minimum bonus of 8.33% is payable by every industry and establishment under section 10 of the Act. The maximum bonus including productivity linked bonus that can be paid in any accounting year shall not exceed 20% of the salary/wage of an employee under the section 31 A of the Act.
Bonus is payable within 8 months of closing of Accounting year. Employees who had worked not less than 30 days or more are eligible subject to their Wage ceiling mentioned (Now 21K). For Calculation, we need to consider Rs.7000/- Or Minimum Wages in case of Scheduled Employment whichever is higher per men sum.
Details of amendments to the Payment of Bonus Act, 1965:
S.No Year Of Amendment Eligibility Limit (Rs. Per Month) Calculation Ceiling (Rs. Per Month)
1. 1965 Rs. 1600 Rs.750
2. 1985 Rs.2500 Rs. 1600
3. 1995 Rs. 3500 Rs. 2500
4. 2007 Rs. 10000 Rs. 3500
5. 2015 Rs. 21000 Rs. 7000 Or the minimum wage for scheduled employment, as fixed by the appropriate Government, whichever is higher.
Applicability of the Act to Factories and Establishments:
a) Every factory registered under Factories Act
b) Establishment employing 20 or more than 20 on any day during the year
c) Central government can notify the application of the Act to the establishment
employing more than 10 persons
2. Following employees are not covered with the provision of this Act
a) Apprentices
b) Employees of Central Government or Local Authority
c) Employees of Public Sector which sells goods manufactured by it.
d) Employees of other Public Sector
e) Seaman etc., registered under Dock Workmen (Regulation of Employment) Act,
1948
f) Employees of LIC, GIC, Red Cross, Inland Water Transport, Universities and
other Educational Institutions.
g) New establishment for 5 years following accounting year in which employers sell
goods produced or in which he derives profit from the establishment whichever is
earlier. The newly set up establishment is exempted from paying bonus to its employees in the first five years following the year in which the employer sells the goods produced or manufactured
by him. If, however, the employer derives profit in any of the first five year, he has to pay bonus
for that year. The provisions of set on and set off are not applicable in such cases. {Section 16}
As far as Profit making establishments are concerned and firms meeting the other conditions for coverage of the Act like number of employees as stated above, the Bonus is payable in line with the Act at Minimum Level or Maximum Level based on the profits and other calculations.
Kindly have a look at a provision under Payment of Bonus Act which has a specific Section 32 where in there is a list of Establishments given which are not covered under the Act. In simple words all other establishments + Profit+ Stipulated number of employees working in that establishments ....then the Bonus is payable.
As far as Labour Laws Applicability to Software Organizations, I share one good article for your reading. This will be a good reference.
https://www.legawise.com/software-co...mployment-laws
Our Colleagues from time to time given lot of clarifications on this subject on various questions in the previous years and you may kindly refer those replies also in addition to this for more clarity.
All the Best and God Bless,
Dr.P.SIVAKUMAR
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
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