The Payment Of Bonus Act 1965 Scope and

The Payment Of Bonus Act, 1965

Scope and Application • The Act extends to whole of India. • Applicable to the establishments employing 20 or more workers employed on any day during an accounting year. • The Act is not applicable to non profit making organizations. • Covers all the banks. • Appropriate Govt. by notification in the official gazette can make the provisions of the Act applicable to any class of establishments including factories.

Objectives • To impose statutory obligation on the employer of every establishment defined in the Act to pay bonus to all eligible employees working in the establishments. • To outline the principles of payment of bonus according to prescribed formula. • To provide for payment of minimum (8. 33 per cent) & maximum bonus (20 per cent) & linking the payment of bonus with the scheme of “set off” & “set on”. • To provide machinery for enforcement of bonus.

Eligibility • Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year Disqualification § An employee shall be disqualified from receiving bonus under this act, § if he is dismissed from service for (a) fraud; or (b) riotous or violent behavior while on the premises of the establishment; (c) theft, misappropriation or damage of any property of the establishment.

3 Important Terms • Available Surplus • Calculate the Available Surplus. • Available Surplus = Gross Profit – ( deduct) the following : • Depreciation admissible u/s 32 of the Income tax Act. • Development allowance • Minimum Wages • Maximum Wages • Accounting Year

Computation • 1. It depends upon the percentage on which your company wants to give bonus to its employees. Minimum bonus is 8. 33% of basic salary earned during the accounting year and Maximum is 20% under the payment of Bonus Act, 1965. 2. Eligibility : Bonus under Payment of Bonus Act, 1965 is required to be to employees whose salary ( Basic) is of less than Rs. 3500. 00 per month during the accounting year for which bonus is to be paid. 3. Bonus is to be calculated for eligible employees assuming salary ( Basic) as Rs. 2500. 00 per month or less, if, it is less then Rs. 2500. 00 4. Multiply the yearly sum of salary thus worked out as per above clause 3 with rate of bonus. The figure is bonus payable to employee under the act. 5. Payment is to be made on Register prescribed under the act.

Maintenance of register, records and Inspectors • Every employer shall prepare and maintain such registers, records and other documents in such form and in such manner as may prescribed. • The appropriate Government may, by notification on the Official Gazette, appoint such person as it think fit to be Inspectors for the purposes of this Act and may define the limits within which they shall exercise jurisdiction.

Offences and Penalties • For contravention of the provisions of the Act or rules the penalty is imprisonment up-to 6 months, or fine up to Rs. 1000, or both. • For failure to comply with the directions or requisitions made the penalty is imprisonment up-to 6 months, or fine up to Rs. 1000, or both. • In case of offences by companies, firms, body corporate or association of individuals, its director, partner or a principal officer responsible for the conduct of its business, shall be deemed to be guilty of that offence, unless the person concerned proves that the offence was committed without his knowledge or that he exercised all due diligence