All my dear Questioners,
I think Mr.Madhu and others have answered your questions very patiently. Still then the fact that many doubts spring from the given answers indicates what is needed is the proper understanding of the concept of bonus.Only then we can read in between the lines and cull out the logical ideas behind each and every provision of the Enactment.So, let me briefly state the following to help us refresh our understanding: The dictionary meaning of the term "bonus" is that anything pleasant that is extra and more or better than expected and in Indian labor-management relations context it acquired significance initially as an extra gratuitous periodical payment to workmen beyond their normal wages. Interestingly, the Payment of Bonus Act,1965, an exclusive special legislation on the subject-matter of bonus which inter alia refers to various provisions of the Companies Act and the Income Tax Act, does not define the term " bonus" obviously because of the conflicting notions of "profit-sharing" and "gratuitous payment"existed then in the minds of the workers and employers respectively during the two WORLD WARS. That's why the Bonus Commission constituted in the year 1961 to advise the Govt. of India, rather refrained from defining the term "bonus' and confined itself to construe the concept of bonus as sharing the profits of the establishment by its workers. It all started with the textile industry in Bombay and Ahmedabad in the year 1917. The Mill Owners who made good profits due to war conditions granted 10% of increase in wages to their workmen as " war bonus" which was later termed as "special allowance" on account of the hike in the prices of foodstuffs and increased to 15%. The recession following the World War I and the boom during the World War II gave rise to many disputes in all industries nation-wide and after independence, the Industrial Policy 1948 recognised the principles that (1) fair wages to labour (2) fair return on capital (3) reasonable reserves for maintenance and expansion of the undertaking and (4) labor's share of the surplus profits, calculated on a sliding scale normally varying with production after provision for (2) and (3) above. Taking note of the prevalence of low level of wages across the country and in tune with the spirit of Article 43 of the Constitution which enjoins upon the State to secure " living wages" to all the workers, the higher judiciary began to interpret the term "bonus" as "deferred wages". That's why there is a provision in the Act for the compulsory payment of minimum bonus even in the absence of profits. Initially it was 4% or Rs.40/- whichever higher but subsequently increased to 8.33% or Rs.100/- whichever is higher in respect of accounting year 1979 on wards.Computation of available surplus as explained in Sec.5 of the Act will show that it is the work of the Financial Expert to arrive at what is allocable as bonus and it is the duty of the HR to determine the quantum of maximum bonus in consultation with the workmen.
From India, Salem
6016I think Mr.Madhu and others have answered your questions very patiently. Still then the fact that many doubts spring from the given answers indicates what is needed is the proper understanding of the concept of bonus.Only then we can read in between the lines and cull out the logical ideas behind each and every provision of the Enactment.So, let me briefly state the following to help us refresh our understanding: The dictionary meaning of the term "bonus" is that anything pleasant that is extra and more or better than expected and in Indian labor-management relations context it acquired significance initially as an extra gratuitous periodical payment to workmen beyond their normal wages. Interestingly, the Payment of Bonus Act,1965, an exclusive special legislation on the subject-matter of bonus which inter alia refers to various provisions of the Companies Act and the Income Tax Act, does not define the term " bonus" obviously because of the conflicting notions of "profit-sharing" and "gratuitous payment"existed then in the minds of the workers and employers respectively during the two WORLD WARS. That's why the Bonus Commission constituted in the year 1961 to advise the Govt. of India, rather refrained from defining the term "bonus' and confined itself to construe the concept of bonus as sharing the profits of the establishment by its workers. It all started with the textile industry in Bombay and Ahmedabad in the year 1917. The Mill Owners who made good profits due to war conditions granted 10% of increase in wages to their workmen as " war bonus" which was later termed as "special allowance" on account of the hike in the prices of foodstuffs and increased to 15%. The recession following the World War I and the boom during the World War II gave rise to many disputes in all industries nation-wide and after independence, the Industrial Policy 1948 recognised the principles that (1) fair wages to labour (2) fair return on capital (3) reasonable reserves for maintenance and expansion of the undertaking and (4) labor's share of the surplus profits, calculated on a sliding scale normally varying with production after provision for (2) and (3) above. Taking note of the prevalence of low level of wages across the country and in tune with the spirit of Article 43 of the Constitution which enjoins upon the State to secure " living wages" to all the workers, the higher judiciary began to interpret the term "bonus" as "deferred wages". That's why there is a provision in the Act for the compulsory payment of minimum bonus even in the absence of profits. Initially it was 4% or Rs.40/- whichever higher but subsequently increased to 8.33% or Rs.100/- whichever is higher in respect of accounting year 1979 on wards.Computation of available surplus as explained in Sec.5 of the Act will show that it is the work of the Financial Expert to arrive at what is allocable as bonus and it is the duty of the HR to determine the quantum of maximum bonus in consultation with the workmen.
From India, Salem
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Amendment to Payment of Bonus Act 2015.jpg
Bigger bonuses for more as Lok Sabha amends Payment of Bonus Act - The Economic Times.pdf
THE PAYMENT OF BONUS ACT.doc