INFORMATION ON BONUS

THE PAYMENT OF BONUS ACT, 1965

The Payment of Bonus Act, 1965 provides for the payment of bonus to persons employed in certain establishments, employing 20 or more persons, on the basis of profits or on the basis of production or productivity and matters connected therewith. 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.

Details of amendments to  the Payment of Bonus Act, 1965

SL 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

The last amendment of 2007 was notified on 13 December 2007 and made effective from 1^st April, 2006.

The minimum bonus of 8.33% of (Rs. 3500/- X 12= Rs. 42,000/-) is approximately Rs. 3500/-.

The 20% of above referred Rs. 42,000/- is Rs. 8,400/-.  However, the limit is given as Rs. 8,300/-.

The clause (vi) of Section 32 of the Act has also been omitted to bring employees employed through contractors on building operations within the ambit of the Act.

In the 47th session of Standing Labour Committee which was held on July 10, 2015 at SCOPE Complex, New Delhi under the Chairmanship of Sh. Bandaru Dattatreya, Hon’ble Minister of State (Independent Charge) for Labour & Employment) stressed that the Ministry is always at the forefront to contribute to inclusive growth and progress of industries as well as safeguarding the interests of all workers. He outlined that the Ministry has already initiated action on the issues like minimum pension, minimum wages, bonus, providing social security to all and strict enforcement of labour laws, which were discussed in the previous SLC. He emphasised that the Ministry has been proactive in providing decent work conditions and improved quality of life of workers. 

The said 47th Session of the Standing Labour Committee shortlisted five agenda items  for detailed deliberations in the 46th Session of Indian Labour Conference among which Amendment of Bonus Act – Removal of conditions on payment ceiling, eligibility limits, decisions to pay minimum bonus without linking to loss when the performance indicator satisfy grant of bonus was one of the item.

Now as per news reports and reliable sources it is learnt that Election Commission has given it’s nod for issuing ordinance on “Payment of Bonus Act”.

Now the matter will go to Cabinet and after it’s approval, necessary ordinance will be notified soon.

Now we may expect soon a bonus without any ceiling or a higher ceiling.