Amendment in The Payment of Bonus Act, 1965.
This is to inform you that both the Houses of the Parliament have passed the Payment of Bonus Act amendment Bill yesterday. As per the news broadcasted on Radio, the said bill has been passed with retrospective effect i.e. from financial year 2014-2015.
Prior to the said amendment, the employee was defined under section 2(13) which reads as under:
“employee means any person (other than an apprentice) employed on salary or wages not exceeding Rs.10,000/- per month in any industry to do any skill, manual, supervisory, managerial, administrative, technical or clerical work for higher or reward whether the terms of employment be expressed or implied”.
As per the amendment the salary/wage limit of Rs.10,000/- has been enhanced to Rs. 21,000/- per month. The nett financial impact of the same will be that those employees who are drawing salary/wages not more than Rs.21,000/- per month and those who are working in skill, manual, supervisory, managerial, administrative, technical or clerical work, will also be entitled to receive bonus henceforth.
Prior to this amendment as per section 12 where the salary/wages of an eligible employee exceeds Rs.3500/- per month (Rupees Three Thousand Five Hundred Only) the bonus payable to such employee under this act i.e. minimum @ 8.33% or maximum @20% as the case may be, was calculated as if salary or wages or such an employee was Rs.3500/- (Rupees Three Thousand Five Hundred Only).
In the aforesaid amendment the figure of Rs.3500/- (Rupees Three Thousand Five Hundred Only) has been increased to Rs.7,000/- (Rupees Seven Thousand Only) per month. Prior to the amendment the eligible employee was entitled to receive minimum bonus of Rs.3500/- per annum @ 8.33% and a maximum bonus of Rs.8400 (Rupees Eight Thousand Four Hundred Only) @ 20% as the case may be. Now the employer will have to pay minimum bonus of Rs.7,000 per annum @8.33% instead of Rs.3500 per annum and maximum bonus of Rs.16,800/- @20% instead of Rs.8,400/- per annum.
Since the amendment is with retrospective effect, for the financial year 2014-2015, the employer will have to pay difference between Rs.3500 and Rs.7000 per annum, in case the employer has paid minimum bonus @8.33% during the said financial year and in case if the employer has paid maximum bonus of Rs.8400 @20% during the said financial year, such a employer will have to pay the difference between Rs.8400 and Rs.16800/-. In all other cases the employer has to pay the proportionate difference, as may be the case.
In addition this, the employer will have to pay the bonus to those employees whose salary i.e. basic + DA was more than Rs.10,000 but less than Rs. 21,000/- per month during the said financial year 2014-2015.
Dy. Manager HR.
26th March 2016 From India, Mumbai