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D. R. Haibat
M.Com. LL.B., DPM & IR, DAM
Corporate Consultant and Consulting Lawyer
NGO Member
Sharp Institute Of Individual & Organizational Development (SIIOD)
a) Every factory
b) Every other establishment employing 20 or more persons
The Govt. can , however, apply the Act to any establishment employing less
than 20 but not less than 10 persons.(The GOM by notification dated
1/4/1984 has applied the Act to factories and other establishments
employing 10 or more but less than 20 persons )
An establishment to which the Act applies shall continue to be governed by
the Act irrespective of any fall in the number of persons employed therein.
The Act shall not apply to the employees employed by any establishment in
public sector.
However, the provisions of this Act are made available to establishments in
public sector which sells any goods produced /manufactured by it or renders
any services in competition with an establishment in private sector and earns
income from such sale or services or both and quantified in the said sub
section.
Govt. can exempt any establishment from all or some of the provisions of the
Act for a specified period and subject to specified conditions only.
Sharp Institute Of Individual & Organizational Development (SIIOD)
FREE DEFINITIONS:
1. Accounting year
2. Appropriate Government
3. Allocable surplus / available surplus
4. Award
5. Company/corporation
6. Employee means any person (other than an employee) employed on
salary/wages not exceeding Rs.21,000/- p.m.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
7. Employer includes in relation to a factory, the owner or occupier of the
factory including the agent of such owner or occupier and the person
who has been named as a manager of the factory.
8. Establishment in private sector/establishment in public sector
9. Factory
10. Gross profit
Sharp Institute Of Individual & Organizational Development (SIIOD)
FREE DEFINITIONS:
11..Salary/wages means all remuneration (except overtime )payable to
an employee and includes dearness allowance but does not include :
• Any other allowances/ bonus , travelling concession and overtime
• Any value of house accommodation/supply of light, water etc. or any
other amenities at concessional rates i.e. any perquisites/fringe
benefits
• Any contribution to provident fund/pension fund
• Any retrenchment compensation/any commission
NOTE:
1. Where an establishment consists of different departments/
undertakings/ branches etc. situated at same or different places, all
such departments / undertakings/branches etc. shall be treated as
parts of the same establishment for the purpose of computation of
bonus under this Act.
2. Employees employed through contractors on building operations
entitled to get bonus.
Sharp Institute Of Individual & Organizational Development (SIIOD)
3. CALCULATION OF BONUS:
a)where the salary/wages of an employee is less than Rs. 7,000/- p.m., the annual
minimum bonus payable will be equivalent to his monthly salary/wages.
b) where the salary/wages of an employee is more than Rs. 7,000/- p.m. the annual
minimum bonus payable will be equivalent to his Rs.7,000/- or the monthly minimum
wages for the scheduled employment as fixed by the appropriate Govt., whichever is
higher.
c) where the salary/wages of an employee is more than Rs.21,000/- p.m., no bonus
shall be paid.
This amendment was made effective from 1/4/2014)
4. MODE OF PAYMENT OF BONUS:
The bonus shall be paid either by an account payee cheque in favour of the employee
or by crediting the same directly in the bank account of the employee.
5. TIME LIMIT FOR PAYMENT OF BONUS:
The bonus payable under this Act shall be paid:
a)within a period of eight months from the close of the accounting year
b) in case of dispute is pending ,within a period of one month from the date of
settlement of the dispute.
Sharp Institute Of Individual & Organizational Development (SIIOD)
6. COMPUTATION OF NUMBER OF WORKING DAYS:
An employee shall be deemed to have worked in the establishment in any accounting year also
during the following period:
a)Lay off
b)Authorised Leave with salary/wages /Maternity Leave
c) Absence due to temporary disablement caused by an accident arising out of and in the course
of his employment
7. SPECIAL PROVISIONS FOR NEW ESTABLISHMENTS :
In case of new establishments , for the first five accounting years ,bonus shall be payable only in
respect of the accounting year in which the employer derives profit from such establishment .
However ,when the ownership of the establishment is transferred from one person to another
or if the location and /or the Management is changed, such an establishment cannot be said to be a
new establishment .
8. DEDUCTIONS OF AMOUNTS FROM BONUS:
An employer can deduct from the bonus , the financial loss caused to him due any misconduct of
the employee.
9. DISQUALIFICATION FOR BONUS:
An employee shall be disqualified from receiving bonus ,if he is terminated/dismissed from the
services for :
*Fraud * Riotous or violent behaviour while in premises * theft ,misappropriation or
sabotage/damage to the property of the establishment
Sharp Institute Of Individual & Organizational Development (SIIOD)
THE POWER/AUTHORITY OF THE INSPECTORS APPOINTED BY THE
APPROPRIATE GOVT.:
a) To enter any premises of the establishment
b) To ask for examination any details ,records, registers, records ,books of accounts related
to the employees & their salary/wages etc.
c) To make copies of or take any extracts from books of accounts ,registers/records /
documents etc.
MAINTENANCE OF REGISTERS:
• Form A: A register showing computation of allocable Surplus
• Form B: A register showing set on and set off of the allocable surplus
• Form C: A register showing the details of bonus due to each employee ,the deductions
there from and the net amount disbursed
• Annual Returns in Form D :
a) This Form D is to be up loaded on the web portal of the Ministry of Labour and
Employment on or before 1st February
b) This Form D is also be filed to the inspector under the Act
• OFFENCES AND PUNISHMENT:
If any person, who is responsible for compliance under the Act contravenes any
provisions under the Act/Rules ,will be punishable with imprisonment for six months or
with fine of Rs.1,000/- or both.
Sharp Institute Of Individual & Organizational Development (SIIOD)
CLASSES OF EMPLOYEES NOT COVERED UNDER THE ACT :
• Employees of LIC/General Insurance Corporation
• Seamen covered under the Merchant Shipping Act,1958
• Dock Workers
• Central/State Govts. /Local Authorities and Reserve Bank of India
• Indian Red Cross, IFCI,DIC,UTI,NABARD,SIDBI NH Bank etc.
• The employer can not employ a woman during the six weeks immediately following
the day of her delivery or her miscarriage or medical termination of pregnancy.
• A woman is also required to abstain from working in any establishment during the
six weeks immediately following the day of her delivery or her miscarriage or
medical termination of pregnancy.
• A pregnant woman can also request her employer not to give her any work which is
of arduous (tough/difficult) nature or which involves long hours of standing or
which in any way is likely to interfere with her pregnancy or the normal
development of the foetus or is likely to cause her miscarriage or otherwise to
adversely affect her health etc. during the month immediately preceding the
period of six weeks ,before the date of her expected delivery or any period during
the said period of six weeks for which the pregnant woman does not avail of leave
of leave of absence under the Act.
• On such a request being made by her ,the employer shall not give her such work
during such period.
•
Sharp Institute Of Individual & Organizational Development (SIIOD)
1. Any woman entitled to maternity benefit under the Act shall give notice in
writing to her employer ,in the prescribed form(Form No.1) ,stating that her
maternity benefit and other amounts to which she is entitled under the Act may
be paid to her and also that she will not work in any establishment during the
period for which she receives maternity benefit.
In this notice, she will also state the date from which she will be absent from
work, not being a date earlier than eight weeks from the date of her expected
delivery.(However, failure to give notice shall not disentitle a woman to
maternity benefits or any other amount under the Act)
2. On receipt of the notice ,the employer shall permit such woman to absent
herself from the establishment during the period for which she receives the
maternity benefit.
3. The amount of maternity benefit for the period preceding the date of her
expected delivery shall be paid in advance by the employer to the woman on
production of necessary proof that the woman is pregnant and the amount
due for the subsequent period shall be paid by the employer to the woman
within forty eight hours of production of the necessary proof of the delivery of
the child.
Sharp Institute Of Individual & Organizational Development (SIIOD)