Hi, I have two questions.
I work for a service industry and engage in contract labor.
The company is six years old and is loss-making.
my questions are
1 even though I am a loss-making company, am i liable to pay the minimum bonus of 8.33%? if so can i pay for the back period now. (this is our 7the year running)
2 Am I liable to pay a bonus to my contract labor, eg. canteen staff, peons, drivers etc.
From India, Gurgaon
I work for a service industry and engage in contract labor.
The company is six years old and is loss-making.
my questions are
1 even though I am a loss-making company, am i liable to pay the minimum bonus of 8.33%? if so can i pay for the back period now. (this is our 7the year running)
2 Am I liable to pay a bonus to my contract labor, eg. canteen staff, peons, drivers etc.
From India, Gurgaon
Hi,
yes you are liable to pay Bonus at the minimum rate of 8.33%. Its mandatory. Law says that if you are not able to make the payment to minimum bonus you dont have any right to exist. However there has been a little flexibility given by the Law. These are called SET ON and SET OFF. In case you are not able to pay minimum bonus, you can set it OFF to deduct in next years. E.g., Let us suppose you have generated so much profit that u can only pay 7% as bonus. Now u have to pay 8.33% as minimum but the additional 1.33% you may SET OFF to deduct in next 3 year after which the arrears have to be settled mandatorily. E.g., Suppose you generate so much profit that u can pay 12% bonus in next year now you can deduct 1.33% and pay only 10.67%.
Similar is the rule of SET ON......which is applicable if you generate more profit than 20%
No you are not liable to pay Bonus to Contract Labor but still you have to make sure that the bonus is paid by the contractor in the presence of your company representative.
Amit Goyal
From India, Delhi
10yes you are liable to pay Bonus at the minimum rate of 8.33%. Its mandatory. Law says that if you are not able to make the payment to minimum bonus you dont have any right to exist. However there has been a little flexibility given by the Law. These are called SET ON and SET OFF. In case you are not able to pay minimum bonus, you can set it OFF to deduct in next years. E.g., Let us suppose you have generated so much profit that u can only pay 7% as bonus. Now u have to pay 8.33% as minimum but the additional 1.33% you may SET OFF to deduct in next 3 year after which the arrears have to be settled mandatorily. E.g., Suppose you generate so much profit that u can pay 12% bonus in next year now you can deduct 1.33% and pay only 10.67%.
Similar is the rule of SET ON......which is applicable if you generate more profit than 20%
No you are not liable to pay Bonus to Contract Labor but still you have to make sure that the bonus is paid by the contractor in the presence of your company representative.
Amit Goyal
From India, Delhi
many thanks amit. what if the contractor refuses to pay, will i still be liable. how can i ensure he pays. what is the general practice in these matters.
From India, Gurgaon
From India, Gurgaon
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Bigger bonuses for more as Lok Sabha amends Payment of Bonus Act - The Economic Times.pdf
THE PAYMENT OF BONUS ACT.doc