Not Giving Bonus To Third Party Employee - CiteHR
Kishorkulkarni
Law Practice
Bcarya
Assistant Manager - Hr
Pon1965
Construction
Couvery
Consultant
Namit Pedgaonker
H.r Executive
+1 Other

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Dear All,
I had query of not giving bonus to all TPC Employee.
I am in a Third Party contract in an organization, our contractor does'nt pay bonus to us, Is it legally right to do so ? Any Legal action can be taken against it.?
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You are on the Outsourcing Roll. You have to approach your employer (read Contractor) for bonus. Pon
Well, policy for bonus is different from company to company and decided by the owner or the board of directors
Most, often company allow bonus to their permanent or on-roll employees and offering the same to their contract employees totally depend on their choice..some company gives and some not.
Let us first see what a Bonus means under the Payment of Bonus Act, 1965 and how it comes into play. The Bonus though not defined in the Act, would mean partial sharing of profit what the employer has earned during an accounting year. The POB Act has evolved a formula of calculating bonus and the companies have to go by that formula. There are accounting terms such as available surplus, allocable surplus etc are used and with the Profit and Loss statement of the Company, one has to calculate the percentage of Bonus for that year. When there is no profit, then also a minimum bonus of 8.33% of earning during the accounting year is payable.

The act is applicable to factories and establishments employing 20 or more persons. But some states like Maharashtra have made this Act applicable when there are 10 or more persons employed.

In case of a new establishment, there is an exemption from payment of bonus for first five years or till earns a profit which ever is earlier.

There is also a ceiling on the salary drawn by employee and also a notional limit for calculation of bonus.

These are some of the features of payment of Bonus Act.

Now, considering all this aspects, you can just imagine how it is difficult to answer a query, "I am in a Third Party contract in an organization. Our contractor does not pay bonus to us. Is it legally right to do so ? Any Legal action can be taken against it.?

Well unless all details are received, how one can answer the question?
Thanx for all the replies from the seniors,
I had query that contractor should pay bonus to us , coz all the statuary compliance i.e P.F,E.S.I all this are compiled by the contractor, then why he is not eligible for the bonus, bonus act is applicable to all ......i should go to the principal employer for this.......
Regards,
Namit
Dear Namit,
First of all, just remove the tag of Third Party.
You are an employee for your employer. If your job particulars fulfill for eligibility of Bonus, then Bonus should be paid to you as per the Act and you deserve it. This is the First point.
Now, the second point, The Third Party (Contractual) matter, In this case, if your employer don't pay you bonus then it is the responsibility of the Principal Employer to ensure that the contractor should pay all the legal benefits to the deployed employees.
If the contractor don't pay and the PE also don't take interest in it, then you can lodge a complaint to the Labour Commissioner against both of them under The Payment of Bonus Act.
Dear Namit & Gupta Ji, I would like to correct one thing in above comment, the wages should be less than Rs. 10,000/- p.m.
Dear Namit,
Because the employer is covered under PF and E.S.I, it does not indicate, he is also automatically covered under Payment Bonus Act. In fact, each act has its own scope, applicability and coverage and hence, coverage under one act does not imply that the other acts are also applicable.
So, even if your firm is covered under ESI and PF acts, necessarily does not imply that Bonus act is also applicable and so one is entitled to Bonus.
As regards eligibility of Bonus, any employee drawing salary up to Rs. 10,000 pm is entitled to receive statutory bonus as if his salary is Rs. 3,500 pm. Obviously, those who derive more than Rs. 10,000 pm are out of the coverage of Bonus as such, they will not be entitled to Bonus under Payment of Bonus Act.
In majority of the cases contractor does not pay bonus to the manpower deployed by him and takes the plea/gives the justification that :

1- "he don't have enough profit margin"

2- " f employer agree to pay him only he will disburse otherwise NO."

Employer also does not take any interest to pressurize contractor.

As per statutory procedure and also suggested by Mr. B.C.Arya ; if any of the contractors employees individually or collectively lodge a complain with DLC.

What will be outcome of intervention of DLC :

- Will he or is he is authorized to force contractor to disburse bonus to its employees.

- Here again if contractor satisfied to DLC that he could not disburse due to low profit margin or any other justified reasons. In this situation what would be the action/decision of DLC ; can DLC instruct/order employer to disburse bonus on behalf of contractor or as a principal employer. Is DLCs decision is bound on any of the party (employer or contractor) or they can approach to higher authorities.

Seniors please guide as it is a common situation in almost all private sector organizations.
Is there any case law on this; if yes please give reference. Regards,
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