BONUS FOR RESIGNED EMPLOYEES
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BONUS FOR RESIGNED EMPLOYEES

trisha_hr Started The Discussion:

Dear All

I am thankful to you all for the support given for my post.

In our company, resigned employees were asking for Bonus for the previous year they worked with us. But our Management says that Person having salary for more than 10000/- per month are not eligible for bonus as per Act.

Is is fair to deny like this. What is the legal opinion for eligibility for Bonus as per amended act.

With regards

Trisha
HR Professional

Hiten Parekh - Member Since: Jul 2007
Hi Trisha !

You have to consider following facts :

1 The category of employees - whether workmen, supervisory staff, managers.

2 CTC agreed upon while recruitment. (As you seem to be talking about staff members and middle level employees, in such cases the CTC is decided and agreed upon while recruiting them) You have to act as per the agreed CTC bifurcated in allowances and payments under statutory provisions like bonus and pf.

3 Those who reached above the limit prescribed in the bonus act gradually due to increments. (were earlier getting bonus but now have reached above the ceiling should be paid the amount adjusted as some other allowance. This is to maintain their CTC)

Hope this makes sense. Do let me have feedback.

- Hiten

saravana kumar - Member Since: Jun 2007
Hi Friend,

Based on your query, Bonus Act. I have given details below from our President of India.


Centre approves amendment in Bonus Act
Tuesday, October 30, 2007 10:59 [IST]

New Delhi: The Centre has promulgated an ordinance approving changes in the Payment of Bonus Act, which would make workers drawing up to Rs 10,000 monthly salary eligible for annual bonus.

President Pratibha Devisingh Patil promulgated the Payment of Bonus (Amendment) Ordinance of 2007 on October 27, an official release said here today.

Hitherto, only those having a monthly salary of upto Rs 3,500 were eligible to claim bonus.

The Cabinet on October one had approved the amendment to Section 12 of the Act "to raise the eligibility limit for payment of bonus from the salary or wage of Rs 3,500 to Rs 10,000 per month".

The decision would benefit seven per cent of the total workforce in the country which is working in the organised sector.

The payout proposal is broadly in line with recommendations of the 41st session of the Indian Labour Conference (ILC) held in April this year, and is the result of a long-pending demand of the trade unions, particularly by the CPI (M)-affiliated Centre for Indian Trade Unions (CITU).

Source : PTI

I found an interesting one on your post, For working staffs /employees in a company seems not getting right bonus with good percentage. But, In your company , resigned employees are demanding for bonus is idiotic way. How it happens or possible?

Regards,

Saravana

Executive - HR

trisha_hr - Member Since: Oct 2007
Thanks a lot Mr.Saravana for your wonderful information. But in our company we pay bonus for all(only for the existing employees) For the resigned employees the Management shirks responsibility by saying they were drawing Rs.10000/- while they were working with us.

Nice response from Hiten also.

With warm regards

Trisha
HR Professional

Hiten Parekh - Member Since: Jul 2007
Hi Trisha !

I was not clear about your question while posting my reply. Apologise.

Well as far as amendment is concerned you have to check the date of applicability for any amendment. If the past employees are eligible for bonus as per the provisions applicable / inforce during their employment.

Ammended provisions can not be considered for calculating / coverage for cases prior to the ammendment.

Hope this time I have got it right. :)

- Hiten

Kalyan R - Member Since: Aug 2007
Hi Trisha

The issue can be categorized into two:

a) For those who are coverable under the Payment of Bonus Act

b) For those who are not coverable under the Act.

In case of left employees under category (a), you can not deny them bonus as they are statutorily eligible to receive the same.

In case of left employees under category (b), please check the offer/appointment order issued to them:

Normally companies show Bonus, contribution towards PF, Gratuity etc in the CTC to attract talent. If Bonus is shown as part of CTC, you cannot deny them the same. If the left employees file a claim against the employer, they will succeed.

Moreover it has to be seen in HR angle also. The left employers should be the real ambassadors of the company and by denying this amount what the company will achieve? Any organization which believes in best people practices will not deny the payments due to the employees left on flimsy grounds.

Hope you will agree.

Thanks & Regards

Kalyan R

nilendrachand - Member Since: Aug 2007
Hi Trisha,
The amendments in Bonus Act is applicable w.e.f. 1st April'06. Hence for the financial year 2006-07, first you will have to check how many employees had their Basic+DA less than or equal to 10000. Then you will have to check whether they have worked for more than 30 days in that financial year or not. If both the conditions has been satisfied then you will have to give them bonus for that financial year even if they now cease to be employee of your organization.

The rationale is that those who has ceased to be your employee now, were employee of your organization for a part of that financial year from which the amendment is effective.

If your company deny to pay these "eligible employee" bonus, and if they go to court then they will win coz court sees these employees as the employee of your company for that period. There are host of cases for these kind of cases. Hence, try to give them bonus, if they are eligible for it.

Regards,
Nilendra

Kalyan R - Member Since: Aug 2007
Hi

I have missed out one point.

Hiten has mentioned that amended provisions cannot be considered for calculating/coverage for cases prior to the amendment.

When you go through the recent amendment made to the Payment of Bonus Act, you can find that the amendment was given effect for the period 2006-07, which is payable now. In other words bonus should be calculated for the earnings made from 1st April 2006 to 31st March 2007. Hence employees left even after 31st March 2007 will be entitled for bonus if they have bonus earnings during 2006-07.

Thanks & Regards

Kalyan R

trisha_hr - Member Since: Oct 2007
Hi friends Greetings Thank you Nilendra and Kalyan for your timely updation on this subject. Expecting your support always I remain Trisha HR Professional

akm18 - Member Since: Aug 2005
Hi Just to says 1. if Bonus is part of CTC- Bonus is Fundamental rights. 2. If he served for the declared Bonus - whether CTC or not - He has a right to claim. Regards Arun K Mishra



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