This Act is to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity.
It extends to the whole of India. It applies to:
The available surplus in respect of any accounting year shall be:
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.
The employer is bound to pay to every employee in respect of that accounting year, bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of 20% of such salary or wage.
Disqualification for bonus
An employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for
Bonus is a compensation that is waged to the staff member for his contribution towards the establishment. The elementary objective to provide bonuses is to segment the profit grossed by the establishment amongst the staff members. In India there is a standard regulation relating to this process of recompense of bonus to the staff and that chief law is known as The Payment of Bonus Act, 1965. PionHR takes care of all legal compliances regarding Bonus Act.
The Payment of Bonus Act is mandatory for each organization and establishment hiring not less than 20 people on any day throughout the financial year. The organizations covered under the Act shall endure remunerating bonus even if the sum of staff members is less than 20 consequently.
Each staff member not drawing remuneration more than 10,000/- per month, who has been employed for not less than 30 days in a financial year, shall be qualified for the bonus for atleast of 8.33% of the remuneration even if there is the monetary loss in the organization.Whereas a greater of 20% of the staff’s remuneration is due as a bonus in a financial year. Though, in case of the staff members who earn between 3500/- to 10,000/- per month for the purpose of payment of bonus, their earnings would be reasoned to be 3500/-.
There are necessities and advantages for recently formed organizations as well. As per these benefits, the first five accounting years following the accounting year in which the employer sells goods or services, the bonus is payable only in respect of the accounting year, in which profits are made but the provisions of setting on and set off would not apply.
This Bonus Act is mandatory in all of India where ten or more staff are working or were working on any day of the earlier 12 months with the help of an authority. Or whereon 20 or more workers are working or were working on any day of preceding 12 months without the help of an authority.
Remuneration and dearness allowance are encompassed during the calculation of the bonus. Though, other payments such as overtime, HRA, incentives, or other components are excluded.
A worker who is terminated from his job on the grounds of scam, disorderly, or ferocious behaviour at the sites of the organization, or for the burglary, embezzlement, or sabotage of any of the belongings of the organization as stated in the Act. This shall not only debar him from getting the bonus for the financial year in which he was terminated but also for the previous years which were persisted due to him.