Whether the employer can make separate Bonus / Exgratia policy to active and inactive employees? - CiteHR
Umakanthan53
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Dear Friends, Whether the employer can make separate Bonus / Exgratia policy to active and inactive employees? The employer is paying Bonus and Exgratia to active employee and only settling Bonus (i.e minimum bonus Rs.7000/-) to resigned employee. Whether it is correct?
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Hi Sathish,
Pl.note the following amendment reg.Bonus.:
THE PAYMENT OF BONUS (AMENDMENT) ACT, 2015
NO. 6 OF 2016
[31st December, 2015.]
An Act further to amend the Payment of Bonus Act, 1965.
BE it enacted by Parliament in the Sixty-sixth Year of the Republic of India as follows:—
1. (1) This Act may be called the Payment of Bonus (Amendment) Act, 2015.
(2) It shall be deemed to have come into force on the 1st day of April, 2014.
2. In section 2 of the Payment of Bonus Act, 1965 (hereinafter referred to as the
principal Act), in clause (13), for the words ‘‘ten thousand rupees’’, the words ‘‘twenty-one thousand rupees’’ shall be substituted.
3. In section 12 of the principal Act,—
(i) for the words ‘‘three thousand and five hundred rupees’’ at both the places
where they occur, the words ‘‘seven thousand rupees or the minimum wage for the
scheduled employment, as fixed by the appropriate Government, whichever is higher’’
shall respectively be substituted;
(ii) the following Explanation shall be inserted at the end, namely:—xxxxx
xxx
Amendment notifications and explanatory notes are attached for your ready reference.
--------------
It seems your co. is having too many categories of employees. There is no classification such as 'active' and 'inactive'. Frankly I don't understand who are active and who are not i.e. inactive. The act doesn't recognise such classifications. What's important for you to note is - for the purpose of "Annual/statutory bonus" -
i. employees drawing wages upto Rs.21,000 are to be covered and
ii.the bonus amount shall be computed as if their wages is maximum of Rs.7000 or minimum of wages as declared by the govt. "whichever is higher".
Secondly,
So far as ex-gratia is concerned there is no act to govern such a policy. Generally ex-gratia is considered as payment in a financial year as 'Ex-gratia' in lieu of Bonus, which normally is paid to those who are not covered under the Bonus act. Many follow the very same limits as prescribed under the Bonus Act in cases of ex-gratia payment also. But there is NO statutory limits prescribed and no rights to demand for such employees for payment of 'ex-gratia', to my knowledge.

Attached Files
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File Type: pdf Payment of Bonus Act amendment gazette copy (1).pdf (83.6 KB, 22 views)
File Type: docx Payment_of_Bonus_Rules.docx (45.0 KB, 16 views)
File Type: docx HISTORY OF BONUS PAYMENT IN INDIA.docx (25.6 KB, 12 views)

Dear Sathish,
I think your very doubt about the correctness of the decision itself is the answer to your query. Ex-Gratia cannot be claimed as a matter of right is a judicially settled issue as of now. But your classification of employees for the purpose of ex-gratia into "active" and " inactive" seems to be a bit odd in as much as the services done during the past year is reckoned as the only criterion. By active employee and inactive employee what you mean is not based on the effort contributed by such employees to the establishment's works during the year for which ex-gratia is to be paid along with the statutory bonus but only their continued service in the following year. It can be an effective measure towards employee retention. But such a decision to deprive the employees leaving service in the following year of a benefit accrued because of their contribution to the establishment pertaining to the previous year of service would certainly raise a question of both Law and Ethics. Law and Ethics are different only at the bottom line in that what a person must do and what a person should do in a given situation. In my opinion Law and Ethics are always in alignment and they do not contradict each other. Therefore, correctness of your decision depends how equally you evaluate the past contribution of those employees who still remain in service and those who left their service later.
Hi Sathish,
Pl.note the following amendment reg.Bonus.:
THE PAYMENT OF BONUS (AMENDMENT) ACT, 2015
NO. 6 OF 2016
[31st December, 2015.]
An Act further to amend the Payment of Bonus Act, 1965.
BE it enacted by Parliament in the Sixty-sixth Year of the Republic of India as follows:—
1. (1) This Act may be called the Payment of Bonus (Amendment) Act, 2015.
(2) It shall be deemed to have come into force on the 1st day of April, 2014.
2. In section 2 of the Payment of Bonus Act, 1965 (hereinafter referred to as the
principal Act), in clause (13), for the words ‘‘ten thousand rupees’’, the words ‘‘twenty-one thousand rupees’’ shall be substituted.
3. In section 12 of the principal Act,—
(i) for the words ‘‘three thousand and five hundred rupees’’ at both the places
where they occur, the words ‘‘seven thousand rupees or the minimum wage for the
scheduled employment, as fixed by the appropriate Government, whichever is higher’’
shall respectively be substituted;
(ii) the following Explanation shall be inserted at the end, namely:—xxxxx
xxx
Amendment notifications and explanatory notes are attached for your ready reference.
--------------
It seems your co. is having too many categories of employees. There is no classification such as 'active' and 'inactive'. Frankly I don't understand who are active and who are not i.e. inactive. The act doesn't recognise such classifications. What's important for you to note is - for the purpose of "Annual/statutory bonus" -
i. employees drawing wages upto Rs.21,000 are to be covered and
ii.the bonus amount shall be computed as if their wages is maximum of Rs.7000 or minimum of wages as declared by the govt. "whichever is higher".
Secondly,
So far as ex-gratia is concerned there is no act to govern such a policy. Generally ex-gratia is considered as payment in a financial year as 'Ex-gratia' in lieu of Bonus, which normally is paid to those who are not covered under the Bonus act. Many follow the very same limits as prescribed under the Bonus Act in cases of ex-gratia payment also. But there is NO statutory limits prescribed and no rights to demand for such employees for payment of 'ex-gratia', to my knowledge.

Attached Files
Membership is required for download. Create An Account First
File Type: docx HISTORY OF BONUS PAYMENT IN INDIA.docx (25.6 KB, 4 views)
File Type: docx Payment_of_Bonus_Rules.docx (45.0 KB, 8 views)
File Type: pdf Payment of Bonus (Amdmt) Rules 2019. 29.1.19.pdf (185.3 KB, 13 views)
File Type: pdf Payment of Bonus Act amendment gazette copy (1).pdf (83.6 KB, 12 views)

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