Dinesh DivekarDear Indu Sharma,
Have you read the provisions of the Payment of Bonus Act, 1965? Under this act:
New establishments are given infancy protection of 5 years to come under the purview of the Bonus Act. However, the new establishments earning profits within the infancy period of 5 years shall pay the bonus for the accounting years in which they earn profits.
To educate yourself, you may click the following link:
Therefore, the question that arises is whether or not your company has made a profit. If yes, then any way you are required to pay the bonus to the staff. In case if your company has not made a profit, even then also the act does not forbid paying the bonus. It is up to you.
By the way, if you decide to pay the bonus, then make proper calculations and also maintain the proper records. Route the payments through salary slips. You should not pay some vague amount and at a later stage, you need to justify it as a bonus only. To educate yourself on requirements of filing and records, you may click the following link:
Payment of Bonus and Maintenance of Registers - Assurance India
From India, Bangalore
indu-sharma1Dear Dinesh, Thank you so much for sharing the valuable information.
umakanthan53As rightly observed by Mr.Dinesh no statutory prohibition on the payment of bonus during the infancy period. If the management desires and the company's financial position permits, an amount equivalent to the minimum bonus of 8.33% can be given in the name of ex-gratia to the employees.
From India, Salem
Madhu.T.KAs per law you are expected to pay statutory bonus from the year in which you have made profits without considering infancy protection of five years and once you have made profit, then the infancy protection will cease to exist and you will have to pay bonus in the subsequent years even if you did not make any surplus in the coming years.
There is nothing wrong in paying ex gratia during infancy period. At the same time, please make sure that you will be able to continue paying bonus/ ex gratia in subsequent years even if the company is financially weak. Please think of an important psychology of employees that 'prvileges will become rights!"
From India, Kannur