Our company has not paid bonous due to heavy loses to company.Also No provision was made in balance sheets.The account of the co is NPA what reply is suitable in labour Inspectors inspection violation shown. I am replying Since the company suffred huge loses
therefore company is not in a position to pay bonous this year. company is not violated this is on account of heavy losses to company which can be seen from P&L account of the company.pl advice your views

From India, Solan
Dear Jitender,

I would request you to go through section 10 of the Payment of Bonus Act,1965 which mandates the payment of minimum bonus @ 8.33% of the salary or wage earned by the employee during the accounting year or one hundred rupees whichever is higher whether or not the employer has the allocable surplus in the year. As you know, when the company has incurred heavy losses, there will not be any allocable surplus.

In this connection, I would like to quote the observation of the Supreme Court in Jalan Trading Co (P) Ltd. v D.M.Aney [ AIR 1973 SC 233] that section 10 of the PB Act,1965 compelling the employer to pay the statutory minimum bonus even in years where there has been a loss sustained by the management IS REASONABLE or IN PUBLIC INTEREST within the meaning of Articles 19(2) and 302 of the Constitution.

Therefore, your reply on the ground of losses cannot be acceptable.

From India, Salem

As Umakanthan Sir has pointed out huge loss for the previous accounting year is not the answer when the Labour Inspector seeks your reply on non-payment of bonus. As per the Payment of Bonus Act there is provision for set on or set off to deal with surplus and deficit in payment of bonus amount. Here set off is needed so that is explained below:
For an accounting year, when there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under Section 10 and there is no amount of sufficient amount carried forward and set on under Sub-section (1) that could be utilized for the purpose of payment of the minimum bonus then such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year.

So you may have to think on the above lines, find a solution to the problem and then reply accordingly.

From India, Mumbai

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