Navigating Bonus Disputes and Presenty Card Requirements: Seeking Clarity on Legal Obligations

Hello friends,

I am working in a manufacturing unit in Pune. We are under the residuary category. The wages of the workers have been bifurcated during the last agreement, based on which a 20% Bonus has been disbursed for the year 2007-08. Now the Labour Officer is insisting that the Bonus has to be Rs. 8,400/- and cannot be anything less than that. Is this a valid statement? My Management is quite clear that the breakup of the wages - so long as they are above the minimum wages and there is a settlement with the workers' Union - GLO cannot dictate how much basic and bonus is to be paid. Please guide.

Secondly, we pay wages/salaries through the Bank and have been giving salary slips to all employees. Now GLO is insisting on Presenty cards which we discontinued after speaking with the workers. GLO also is insisting on taking permission from the government for issuing payslips - but we have not mentioned anything about computerizing salary. Is he right?

Please reply soon.

Kalpana Iyer

The basic salary (plus DA if applicable) of the employees who are eligible for a bonus is not indicated in the post. What does Rs 8400 stand for? Please clarify.

The Labour Officer has nothing to do with the bonus and matters connected therewith as long as there is no dispute. Certainly, the Labour Officer can ensure whether the company pays minimum wages at 8.33% or not. If the company is paying minimum wages, then the question of evasion will not arise.

I am not well acquainted with the word 'Presenty Card.' I presume it is a document in hard copy showing the salary with separate columns for Basic Salary, Dearness Allowance, Overtime wages, HRA, CCA, etc., Gross salary, and columns for deductions towards ESI, EPF, etc. Although you can generate payslips in soft form, it is advisable to have a record of payment of wages in hard copy as well.

Regards,
Madhu.T.K

Dear Mr. Madhu: Thanks for a prompt reply. ·We are paying minimum wages, but the break up is as per the wage settlement with the Union. ·8,400 Bonus is the limit as per last government notification. Minimum salary (Basic + DA) to be considered for Bonus = 3,500/- and maximum payable bonus @ 20% = 8,400/- maximum. ·My workmen gets Bonus @ 20%, ranging from 5,500/- to 3,500/- depending upon the break up of his individual wages. Reg. Presenty Cards which are supposed to be issued monthly, well they are perhaps called Attendance Cards. We are supposed to indicate a “P for days present against each date of the month. Salary details are not on this card. We are maintaining proper muster and salary/wages register in hard form and also taking signatures every month. Muster also shows leave balance. Still we are issuing Pay Slip also, but not the cards. Hope you have more clarity on the issue now. Please comment. Regards, Kalpana Iyer

Yes, Rs 8400 is the maximum bonus payable under the Payment of Bonus Act, calculated at 20% of Rs 3500 per month. An employee getting more than Rs 3500 but less than Rs 10000 will also receive a bonus as if their salary was Rs 3500. It is not mandatory to pay the maximum bonus, but what is required is to pay the minimum bonus at 8.33%. I understand that you are also paying the maximum bonus. Your workers' wages may be in the range from Rs 1458 to Rs 2291, as I understand from the amount of bonus paid. From your post, I also understand that minimum wages are ensured. If that is the case, there is no validity for the statement of DLO asking to pay the maximum bonus. As pointed out earlier, the DLO should only interfere when you pay less than the minimum bonus and there is a dispute regarding the rate and calculation of the bonus. If you have received any notice regarding this matter, you can submit your reply stating that you have paid a bonus at 20% of basic + DA, and since employees are earning less than Rs 3500 as wages, the question of calculating the bonus at Rs 3500 will not arise.

I understand that a Presenty Card is nothing but an attendance card as per the Factories Act or Shops and Establishment Act. The attendance card is a primary record of employees' attendance. It is typically issued to those who do not 'sign' the muster roll but whose attendance is marked in the muster roll by the time office clerk. This marking of 'P' for present and 'A' for absent is done after collecting the attendance cards from the factory gate where the cards are placed by the respective employee. The Attendance Card in form 28 (I believe so under the Factories Act) is a statutory document as far as a factory is concerned. If you can resume issuing the cards, it would be advisable to do so.

I do not think that prior permission is required for issuing pay slips. Please check whether any provision is quoted by the DLO in this regard.

Regards,

Madhu.T.K

Dear Ms. Kalpana,

All the discussion is valid as per statutory compliance. I would like to add that the Bonus is calculated based on the profit earned by the organization in the current year. The Bonus form must be submitted to the government, certified by the accounting department, and audited by the firm's accounting department.

Secondly, for making 'P', if the workforce is less than 150, a separate attendance record must be maintained with 'P' marked. Otherwise, workers resuming duty must sign in the register in the presence of the Security officer. Alternatively, the time office is the best place to obtain records. Additionally, from the 1st to the 3rd day of every month, in the case of the time office, attendance records must be sent department-wise, verified, and signed. These records must be kept for the HR Department for at least one year.

Furthermore, for the Bonus calculations, do you have a hard copy? Have you calculated each month with workers who are working or have left? If so, there should be no issues.

Lastly, have you provided the Labor Officer with a gift, voucher, or yearly token of appreciation during Diwali? This gesture is important for maintaining good relations.

With Regards,

Vivek

Hi Kalpana,

There's already been a nice discussion on this forum with some very appropriate contributions. Just to add a little, some of the Labour Office officials, especially in non-metros, have had to reconcile computerized statements generated by companies.

For instance, in Delhi, based on experience, there has been an acceptance of computerized statements of returns compilation and pay slips. Sadly, the "babus" or "clerks" and their mandarin bosses there have shown maximum resistance to change for eternity. They seem to only do what their forefathers have been doing - the old paper mill grind.

Therefore, it may be advisable to maintain certain documentation. Payslips will continue to be given, and the Labour Office has no say or objection to that. Any objections are baseless. You could, though, maintain the Presenty cards that they insisted on (though an unnecessary increase in efforts and paperwork), lest they keep pestering you by mentioning negative comments in your inspection book and repeatedly ask for some "palm greasing."

I am certain that A, B, C registers, all challans, and returns are being filed. Thank our stars that they have allowed credit to the bank accounts directly. They could have still insisted on the mundane process of payment in cash (as per stipulation in The Payment of Wages Act).

Bonus, once applicable, as we all know, is calculated by the process of computation of gross profits (First Schedule Sec 4 (a)), set on and set off (Form B Rule 4 (b)), and allocable/available surplus (as the case may be) (vide Form A Rule 4(1) u/s Sec 2(4) on profits. Also, Form C Rule 4 (c) for Bonus paid to employees for the relevant accounting year ending is maintained/filled as also Form D Rule 5 as Annual Return. His objections and insistence on payment of a bonus @ 20% are ill-founded and baseless. Often, these guys don't know themselves or try to browbeat company officials due to their lack of understanding.

Let his objections be provided in writing if he continues to bother you. A befitting reply, compliant with the law, will set it all right!

Regards,

Rahul Kumar