Meaning of payment of Bonus act:

Bonus is the payment made to employees out of the profitearned by the employees over and above the remunerationthey get.The bonus Act is the outcome of the recommendation made bythe tripartite commission which was set up by the governmentof India way back in 1961.on the certain changes September 2,1964 the government implemented the recommendations of the commission with certain changes ,Accordingly the paymentof bonus ordinance,1965 was promulgated on may 1965.Subsequently, it was accepted by the parliament accordingly inthe year 1965 , the Payment of Bonus act enacted

OBJECTIVE OF THE ACT:

1)

To impose statuary legal obligation on the employer of everyestablishment defined in the act to pay bonus to all eligibleemployees working in the establishment.
2)

To provide for payment of minimum and maximum bonus andlinking the payment of bonus with the scheme.
3)

T o provide machinery for enforcement of bonus.

4)

To outline the principle of payment of bonus according to prescribedformula.

APPLICABILITY OF BONUS

a)Every factory (as def. in Factories Act), & (b) Everyother establishment in which 20 or more persons (lessthan 20 but 10 or more if appropriate Govt. notifies) areemployed on any day subject to certain exemptions.ii) Employees' drawing remuneration of Rs. 3,500/-or more and those who have worked for lessthan 30 daysare not eligible to receive bonus under the Act.iii)Bonus to be paid within eight months from the expiry of the accounting year.

ACT IS NOT APPLICABLE

The employees of Municipal Corporation or Municipality.

Railway employees.

University and employees of educational institutions.

Public sector insurance employees, employees of RBIand public sector financial institutions.

Charitable hospitals, social welfare organizations anddefense employees.

IMPORTANT DEFINITION(SEC 2)
1)

A ccounting year: a)
In relation to corporation the year ending on the day onwhich account books of the corporation are closed or balanced.b) In relation to a company, the period on which any profit or loss account of the company is laid before its annual generalmeeting.c) In any other case,a) The year commencing from 1
st

April. Or b) If the accounts of an establishment maintained by theemployer are closed or balanced or any other day than the31 march, then it is up to the employer to fix any date onwhich it accounts are closed or balanced.

IMPORTANT DEFINITION
4) Awards: Award means an interim or a final determination of anyindustrial dispute of any question relating by labour court, industrialtribunal and national tribunal under the industrial dispute act 1947 or by an authority constitute by the government.5) Employee: Employee means any person employed on a salary or wage not exceeding. 35000 per month in any industry to do anyskilled,. Or unskilled, manual, clerical, supervisory, managerial andtechnical work.

IMPORTANT DEFINITION
6)"Employer" includes

(i) In relation to an establishment which is factory, the owner or occupier of the factory, including the agent of such owner or occupier,the legal representative of a deceased owner or occupier and where aperson has been named as a manager of the factory under Cl. (f) of sub-section (1) of Sec.7 of the Factories Act, 1948, the person named;and

(ii) In relation to any other establishment, the person who, or theauthority which, has the ultimate control over the affairs of theestablishment and where the said affairs are entrusted to a manager,managing director or managing agent, such manager, managingdirector or managing agent ;

IMPORTANT DEFINITIONS
7)" S alary or w age" means all remuneration (other than remuneration in respect of overti me work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to anemployment or of work done in such employment and includes dearnessallowance (that is to say, all cash payments, by whatever name called, paid toan employee on account of a rise in the cost of living, but does not include

(i)Any other allowance which the employee is for the time being entitled to ;(ii)The value of any house accommodation or of such of light, water, medicalattendance or other amenity or of any service of any confessional supply of food grains or other articles;

(iii) Any traveling concession ;

(iv) Any bonus (including incentive, production and attendance bonus) ;

(v) Any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employees under any law for the timebeing in force ;

(vi) Any retrenchment compensation or any gratuity or other retirement benefitpayable to the employees or any ex gratia payment made to him ;

(vii) Any commission payable to the employee.

DISQUALIFICATION OF BONUS

9. Disqualification for bonus Notwithstanding anything contained in this Act, anemployee shall be disqualified from receiving bonusunder this Act, if he is dismissed from service for -

( a ) f r a u d ; o r ( b )r i o t o u s o r v i o l e n t b e h a vi o u r wh i l e on t h e premises of the establishment; or

( c ) t h e f t , m i s a p p r o p r i a t i o n or s a bo t a ge of a ny property of the establishment.

COMPUTATION OF GROSSPROFIT

Computation of gross profits

The gross profits derived by anemployer from an establishment in respect of any accounting year shall

(a) In the case of a banking company, be calculated in the manner specified in the First Schedule

;(b) In any other case, be calculated in the manner specified in theSecond Schedule.

PAYMENT OF MINIMUM BONUS

Every employee shall be bound topay every eligible employeein respect of accounting year.

A minimum bonus which shall be 8.33% of the salary or wagesearned by the employee during the accounting year.

One hundred rupees( sixty rupees for employee below 15 yearsof age) Whichever is higher Whether or not the employer has any allocable surplus in theaccounting year.

PAYMENT OF MAXIMUM BONUS

In any accounting year The allocable surplus exceed the amount of minimum bonuspayable to the employees under the section 10

The employed shall, in lieu of such minimum bonus, be boundto pay bonus. Which shall be an amount in proportion to the salary or wagesearned by the employee during the accounting year.

Subject to a maximum twenty percent of such salary or wage.

TIME-LIMIT FOR PAYMENT OFBONUS:

ime-limit for payment of bonus [ Allamounts] payable to an employee by way of bonus under this Act shall be paid in cash by his employer -

(a) where there is a dispute regarding payment of bonuspending before any authority under section 22, within amonth from the date on which the a ward becomesenforceable or the settlement comes into operation, inrespect of such dispute;

(b) in any other case, within a period of eight months from the close of the accounting year: `

DEDUCTION FROM BONUS

Deduction

of certain amounts from bonus payable under the Act

Where inany accounting year, an employee is found guilty of misconduct causing financial loss to the employer,then, it shall, be lawful for the employer to deduct theamount of loss from the amount of bonus payable byhim to the employee under this Act in respect of thataccounting year only and the employee shall beentitled to receive the balance, if any.

PENALTY
Penalty If any person -(a) Contravenes any of the provisions of this Act or any rule made thereunder; or

(b) To whom a direction is given or a requisition ismade under this Act fails to comply with the directionor requisition.He shall be punishable with imprisonment for a termwhich may extend to six months, or with fine whichmay extend to one thousand rupees, or with both.

MAINTENANCE OF RECORD

26 Maintenance of register, records,etc

Every employer shall prepare and maintain suchregisters, records and other documents in such form and insuch manner as may be prescribed