Eligibility under Payment of Bonus Act - what we take Basic or Total Gross. Kindly suggest - CiteHR
Madhu.T.K
Industrial Relations And Labour Laws
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Wage definition under the Payment of Bonus Act, 1965,
House rent allowance not under the exclusion clause then how come excluded from Bonus wage. it seems incorrect.

Pl.go thru' the provisions of the act reg.'wages' for the purpose of Bonus-
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Central Government Act
Section 2(21) in The Payment of Bonus Act, 1965
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(21) “salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include—
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation. —Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee; COMMENTS
(i) Lay-off compensation is included in the term of “salary” or “wages”; Mohan Kumar v. Deputy Labour Commissioner, (1991) 62 FLR 903 (Ker).
(ii) Dearness allowance and city compensatory allowance are included in the definition of “salary” or “wages” under section 2 (21) of the Act; S. Krishnamurthy v. Presiding Officer, Labour Court, (1986) 55 FLR 535.
(iii) Dearness allowance is a part and parcel of wages; Scindia Navigation Co. Ltd. v. Scindia Employees Union, (1983) 2 LLN 63.
(iv) Retaining allowance comes within the purview of section 2 (21); Chalthan Vidyut Sehkari Udyog v. Government Labour Officer, AIR 1981 SC 905.
(v) Remuneration in case of overtime work and commission payable to employees are excluded from the definition of “salary” or “wages”; All India Voltas & Volpart Employees' Federation v. Voltas Ltd., 1973 Lab IC 645.
(vi) Overtime allowance does not form part of “wages”; Associated Cement Co. Ltd. v. Their Workmen, AIR 1959 SC 925.
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Wages means the amount of remuneration agreed to be paid to an employee. This is the amount that an employee gets if he earns by working for a day or month or such other period. It should contain all allowances which are fixed and regular in nature. It is immaterial whether you bifurcate it into small components, like basic, HRA, Conveyance, Special allowance, etc.
A very simple method to find out what is an employee's wages is demonstrated below.
The gross salary of an employee is Rs 15000 per month. Of this basic pay amounts to Rs 5000, whereas there are components like HRA, Rs 3000, Conveyance allowance Rs 2000 and special allowance Rs 5000.
Now if he works for the entire month, he will earn Rs 15000
Suppose that he takes a couple of days' leave without pay. You will deduct Rs 1000 from his salary and pay only Rs 14000, on the presumption that his daily average of wages is Rs 500. that means the wages/ salary per month is Rs 15000. It is not that when he takes LOP, you will deduct such days' salary proportionate to basic wages only. If HRA and other allowances are not part of salary, you should pay him allowances in full and deduct LOP only from basic.
Special allowance is another component of salary which puts you in trouble. If this allowance is paid only to some employees considering their special skill to do the work, or hardship involved in the work, the same can be treated as separate from salary. t the same time, if it is paid to all employees, special allowance should also be considered as part of wages/ salary.
The above principle applies not only to bonus calculation but to payment of PF contribution, gratuity calculation, encashment of leave, lay off or retrenchment compensation etc.

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