Do Contractors Need to Pay Bonuses to Less Than 20 Contract Laborers? Seeking Clarity

Hi Friends,

The Payment of Bonus Act, 1965 is applicable to those establishments wherein 20 or more employees were employed on any day of the preceding accounting year. Do contractors who are engaging less than 20 contract laborers on any day of the preceding 12 months also have to pay bonus to their contract laborers as per the provisions of the Payment of Bonus Act?

Please suggest appropriately.

Yogesh Kumar Singh

Hi,

Yes, a contractor is under a legal obligation to pay bonuses to his employees as per the provisions of the Payment of Bonus Act. However, the principal employer is not liable to pay bonuses to contract labor if the contractor fails to pay them.

Regards,
Anil Kaushik
Chief Editor - BUSINESS MANAGER - HR Magazine
Email: akaushikus@yahoo.com

Hi Anil,

Is the Payment of Bonus Act, 1965 applicable to contractors who engage even one contract laborer per day during the whole accounting year for which the bonus is to be paid?

Please suggest.

Regards,
Yogesh

Dear,

If the number of laborers engaged is less than 20 in the preceding twelve months, then he is not liable to pay a bonus.

Regards,
Nilendra

Dear,

Please refer to the definition of "Employer" and "Employee" in any Act, and you will see all the inclusions there.

With Regards,

V. Sounder Rajan

E-mail: rajanassociateslawfirm@yahoo.com, rajanassociates@eth.net, rajanassociateslawfrm@gmail.com

Dear,

Bonus is calculated on Basic & DA only. There are two catches in this. First, only those employees whose Basic+DA is less than 10,000 are eligible for a bonus. Secondly, their salary for calculating the bonus will be taken as 3,500 only. For example, if Basic+DA is 9,000, then the bonus will be calculated at 3,500 only. If it is less than 3,500, then on the actual amount.

Regards,
Nilendra