How Should Companies Handle Financial Losses from Bonus Act Amendments? Seeking Advice on Compensation Practices

Dear All,

I have a very urgent question related to the amendment in the Bonus Act. Due to this amendment, those employees whose basic is less than or equal to Rs 10,000 will now get a bonus. Here lies a problem. Some of the employees in my company were receiving Ex gratia previously (which was a part of their CTC, and the percentage of Ex gratia was much higher than the bonus obviously), but now due to the amendment, the company has paid them a bonus. As a result, they have suffered a financial loss. Please let me know whether the company should compensate them since the employees are losing out on their money (as it was a part of their CTC). What have other companies done? Have they compensated the employees or not? Kindly advise. Also, what should be done in those cases where the Ex gratia was not a part of CTC (meaning employees have been receiving Ex gratia as a matter of practice)? Should we compensate the balance amount (Ex gratia - bonus)? Please do let me know what other companies have done. Thanks a lot.

Thanks,
Ritu Agarwal

Dear Ritu,

Legally, no protection is required. However, many companies protect the amount paid and pay bonus + ex-gratia.

Manoj

Dear Ritu,

We were also having the same problem, but we have protected their CTC because it is a negotiated salary, and the company should protect it. You can put the rest amount in any other head.

Thanks,
J S Malik

Dear Friends,

This issue may be approached in two ways: one legal approach and another moral approach based on the customs and traditions of the company. Legally, you have no obligation to protect, but for the sake of ensuring industrial peace, we should protect the amount which they were getting. In this case, whatever is legally due as a bonus may be given under the heading "bonus," and the rest of the amount in the "ex gratia" heading.