PAYMENT OF BONUS ACT, 1965

 

Object of the Act

To provide certain statutory right to the employees to share the profit of the employer.

 

Applicability of Act

Every factory where in 10 or more persons are employed and Other establishments in which 20 or more persons are employed on any day during an accounting year.

Certain States like Maharashtra has made this Act applicable to all the Establishments employing minimum 10 employees.

 

Exemption for newly set up Establishments

Newly set up establishment is exempted from paying bonus for the initial 5 years, provided no profit is made during these years. If the employer derives profit in any of the first five years, he has to pay bonus for that year.

 

Eligibility for Bonus

• Employees (other than Apprentice) drawing salary (basic + DA) upto Rs.10,000/- p.m.

• An employee will be entitled only when he has worked for 30 working days in that financial year.

 

Benefits

• Minimum Bonus is 8.33% of total salary earnings (basic + DA) for the financial year. (Calculation to be done as if the maximum salary were Rs.3,500/- p.m.)

• Maximum bonus is 20%

 

Disqualification & Deduction of Bonus

On dismissal of an employee 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 or

• Misconduct of causing financial loss to the Employer to the extent that bonus

can be deducted for that year.

 

Time Limit for Payment of Bonus

Within 8 months from the close of accounting year.

 

Set-off and Set-on

As per Schedule IV. Sec. 15

 

Maintenance of Registers and Records

A register showing the computation of the allocable surplus , in Form ‘A’.

A register showing the set-on and set-off of the allocable surplus, in form ‘B’.

A register showing the details of the amount of bonus paid, in Form ‘C’

 

Filing of Retun.

Annual Return to be filed in form ‘D’ to the concerned Authority.

 

Penal Provision

For breach of provisions of the Act, the employer shall be punishable with imprisonment upto 6 months and/or fine not exceeding Rs.1,000.