Can My Company Legally Withhold Bonuses Promised in CTC? Seeking Advice on Bonus Act Compliance

Hi All,

I'm working in a construction company. In CTC, the bonus component is included with 8.33% on the basic, which will be paid annually after completion of 1 year. Since the financial year is closing on 31st March, I have prepared the bonus statement as per the data from payroll data from Apr '08 to March '09. Employees who joined in the middle had their bonus prepared on a pro-rata basis.

Now, the management says they can't pay the bonus to the employees (which is part of the CTC) and are referring to the bonus act, asking for legal experts' consultation on the bonus payment.

My queries are:

- Does this come under the Bonus Act?
- I'm sure we need to pay the bonus. If not, on what grounds can we not pay the bonus in the above case?

Please write your comments on this...

Regards,
Hari Krishna

Dear,

There is no term like CTC. We have only created this term. If basic is less than 10k, then bonus payment has to be made. If basic is more than 10k per month, then you cannot compel for a bonus.

Thanks,
JS Malik

Dear Hari Krishna,

It is hereby clarified that earlier, according to Section 32(vi) of the Payment of Bonus Act, 1965, the employees employed through contractors on building operations were not covered under this Act. Consequently, they were not entitled to the benefits of this Act. However, by Act 45 of 2007, this clause has been omitted with effect from 01.04.2006. This means that building construction employees have become eligible to receive a bonus if it is payable and announced by the employer for the accounting year from 2006-07 onwards. For more details, please refer to Section 16 of this Act.

If you have made it clear in the CTC, then you should also pay the bonus as per the terms and conditions of employment. Pay the bonus that is on the higher side.

Submitted as requested.

Regards,

R.N. Khola
Sr. Associate
Haryana

Dear Malik Ji,

My query is whether payment of bonus and gratuity is applicable to the employees of a hotel that started operations in March 2009 in Noida, Uttar Pradesh. The hotel is owned by a company that had other businesses before and started the hotel under the same company.

Regards,

Dear,

If a hotel is started with the same name and the balance sheet is the same for the hotel and other businesses, then the Bonus Act will definitely apply.

Thanks,
J. S. Malik

Dear,

If a hotel is started with the same name and the balance sheet is the same for the hotel and other businesses, then the Bonus Act will definitely apply.

Thanks,
JS Malik

Dear Malik Ji,

My query is regarding a Pvt. Ltd. Company that commenced hotel operations in March 2009 in Noida, Uttar Pradesh. This is the company's first business venture, and they currently have a zero balance in their balance sheet. Would bonuses and gratuity be applicable to the employees joining the hotel? If not, what necessary steps should the hotel take to avoid any implications?

Regards,
Akhil Chhabra

Dear,

If it is a new company and it is their first balance sheet, and they have not earned any profit, then this hotel will be exempted for the first five years in case of bonus. However, there is no exemption for gratuity as gratuity will be applicable after five years only.

Thank you.
J.S. Malik