Dear team,

Does any sick industry need to pay a bonus? In case they sell the company to another concern, who is responsible for providing the bonus?

if sick will provide the Full and Final Settlement on management change, bonus component is mandatory??

Kindly clarify the doubt.

Thanks in Advance.
Nishanth L


Hi Nishanth,

The payment of bonuses and the responsibility for providing them in the case of a company sale can depend on various factors, including local laws, employment contracts, and company policies. It's important to note that employment laws and regulations can vary significantly between different countries and regions, so the specifics may differ based on the jurisdiction.

In many cases, when a company is sold, the responsibility for fulfilling employment-related obligations, including bonuses, may be transferred to the new owner. However, this can also depend on the terms negotiated during the sale and the local employment laws that apply.

If a company is in financial distress or considered a "sick industry," the payment of bonuses may be affected. In some cases, companies facing financial difficulties may not be able to afford bonus payments, and the responsibility for any outstanding bonuses may be part of the negotiations during a sale. The acquiring company may agree to take on these obligations, or it may be negotiated separately.

Regarding Full and Final Settlement on management change, this is typically subject to the terms and conditions outlined in employment contracts, company policies, and applicable labor laws. Bonus components may or may not be mandatory as part of the Full and Final Settlement, and this will depend on the specific agreements in place.


From India, Bangalore

I think the Bonus referred here is Statutory Bonus under the Payment of Bonus Act which is a central Act and same rule is applicable for all the States of India. Even if it is a sick organization , Bonus has to be paid minimum 8.33%, if the organization is in business beyond the holiday period under PB Act.

Now the question is who will pay the bonus which is depend on terms and conditions of acquisition ( sales ). Payment of Bonus is mandatory.

During Due diligence everything must be cleared between the parties ( Seller and Purchaser).

S K Bandyopadhyay ( WB, Howrah_
CEO-USD HR Solutions
+91 98310 81531

From India, New Delhi

A sick unit which comes under the scope of Sick Industrial Companies (Special Provisions) Act, 1985 or as declared as such by the Board for Industrial and Financial Reconstruction shall enjoy a lot of financial and fiscal concessions. But bonus at statutory rate being deferred wages, will not come under the scope of concessions. Therefore, Payment of statutory bonus at the rate of 8.33% is mandatory even to sick units and the amount should be provided in the accounts and the purchaser should either undertake to disburse the bonus or the full and final settlement or the consideration for purchase should include the bonus amount without fail.
From India, Kannur

The minimum rate of bonus needs to pay by the sick industry. In cases, where the industry does not generate any revenue and facing capital loss, still to calculate the labour liability and booked in Books, to disburse in future. Is the industry in BIFR or the propritor declaring sick a question?
In our country industries get Sick but proprietor remains Healthy all through and make others Sick😷
In case of ownership change in process of sale of the company, the responsibilty shifted to new owner. The new management of the industry needs all the liability of the employees i.e, Bonus and Full n Final as per the law.

From India, Mumbai
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