Payment Of Bonus Act - Contract Labour - CiteHR
Amit_goyal_2002
Sap Hr Professional
Sbhaduri
Legal Consultant

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Hi
I have two questions.
I work for a service industry and engage contract labour.
The company is six years old and is loss making.
my questions are
1 even though i am a loss making company, am i liable to pay the minimum bonus of 8.33%? if so can i pay for the back period now. (this is our 7the year running)
2 Am i liable to pay bonus to my contract labour, eg. canteen staff, peons, drivers etc.

Hi,

yes you are liable to pay Bonus at the minimum rate of 8.33%. Its mandatory. Law says that if you are not able to make the payment to minimum bonus you dont have any right to exist. However there has been a little flexibility given by the Law. These are called SET ON and SET OFF. In case you are not able to pay minimum bonus, you can set it OFF to deduct in next years. E.g., Let us suppose you have generated so much profit that u can only pay 7% as bonus. Now u have to pay 8.33% as minimum but the additional 1.33% you may SET OFF to deduct in next 3 year after which the arrears have to be settled mandatorily. E.g., Suppose you generate so much profit that u can pay 12% bonus in next year now you can deduct 1.33% and pay only 10.67%.

Similar is the rule of SET ON......which is applicable if you generate more profit than 20%

No you are not liable to pay Bonus to Contract Labor but still you have to make sure that the bonus is paid by the contractor in the presence of your company representative.

Amit Goyal

many thanks amit. what if the contractor refuses to pay, will i still be liable. how can i ensure he pays. what is the general practice in these matters.
Hi,
Its your responsibility to get the bonus paid by the contractor. You have to create pressure on the contractor. If the bonus is not paid by the contractor you may hold his bills to be paid till the time compliance is met.
Amit Goyal
9850927168

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