Applicability of the Bonus Act 1965
This act is applicable to the whole of India. This Act shall apply to the following:
• every factory; and
• every other establishment in which twenty or more persons are employed on any day during an accounting year;
• any establishment or class of establishments as notified by the appropriate Government, employing such number of persons less than twenty as may be specified in the notification, that the number of persons so specified shall in no case be less than ten.
• an establishment to which this act applies shall continue to be governed by the Act notwithstanding that the number of persons employed falls below twenty or the number specified in the notification.
Employee
Section 2(13) defines the term ‘employee’ as any person employed on a salary or wage not exceeding `21,000/- per mensem (with effect from 01.04.2014) in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied. Apprentice will not be treated as an employee.
Employee Eligibility for bonus
Section 8 provides that every employee shall be entitled to receive bonus from his employer in an accounting year. For this he has to work in the establishment for not less thirty workings’ days in that accounting year.
An employee suspended but subsequently reinstated with full back wages cannot be treated to be ineligible for bonus for the period of suspension as held in ‘Project Manager, Ahmadabad Project, ONGC V. Sham Kumar Senegal’ – (1995) 1 LLJ 863
Minimum and Maximum Bonus
Section 10 provides that the employer shall be bound to pay every employee in respect of the accounting year a minimum bonus which shall be 8.33 % of the salary or wage earned by the employee during the accounting year or `100/- whichever is higher, whether or not the employer has any available surplus in the accounting year.
Section 11 provides that if the allocable surplus exceeds the amount of minimum bonus payable to the employee, the employer shall be bound to pay to every employee in that year in proportion to the salary or wage earned by the employee during the accounting year subject to the maximum of 20% of such salary or wage.
In absence of any allocable surplus in the concerned accounting year, only the minimum bonus is payable. However, in view of the settlement entered into by the employer before the Conciliation Officer for paying bonus at a higher rate the bonus was held accordingly payable for that year as held in ‘Dishergarh Power Supply Co., Limited V. Workmen’ – (1986) 3 SCC 450.
Bonus limit
Section 12 provides that where the salary or wage of an employee exceeds `10,000/- per month, the bonus payable to such employee shall be calculated as if his salary or wage were `10,000/- per month.
Eg. If any employee is working and salary is 15,000. Then for computation of bonus we are consider salary of Rs. 10,000.
Disqualification for bonus
Section 9 provides that an employee shall be disqualified from receiving bonus, if he is dismissed from service for fraud or riotous or violent behaviour while on the premises of the establishment or theft, misappropriation or sabotage of any property of the establishment.
Time limit
Section 19 provides that all amount payable to an employee by way of bonus shall be paid in cash by his employer. The time limit for making payment of bonus is-
• If there is a dispute regarding the payment of bonus is pending before any authority, then the payment shall be made within a month on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;
• In any other case, within a period of 8 months from the close of the accounting year. The appropriate Government or such authority as the appropriate Government may specify, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of 8 months to such further period or periods as it thinks fit; so however, that the total period so extended shall not in any case exceed 2 years.