Are Contract Laborers Entitled to Bonuses Under the Payment of Bonus Act? Let's Discuss!

Dear All,

Under the Payment of Bonus Act, are contract laborers eligible for a bonus? If yes, is it compulsory to pay the bonus to the contract laborers? If not, what are the penal provisions under the act?

RNS

Dear Swamy,

Whoever the Contractor is, they also get the profit since they are taking a profit. Therefore, they are also eligible to pay bonuses to their employees under normal practice. The Principal Employer needs to ensure whether the bonuses are paid to the Contract Employees. In the Wage Pattern itself, the Principal Employer must break down the payment, including the bonus.

The Bonus Act may address the Infancy Period, which exempts organizations below 5 years of age from paying bonuses. However, the same act clearly states that if an organization starts making a profit within 2 years, it must pay bonuses to its employees from the beginning with interest. This is why most organizations start paying bonuses from the initial Budget Year.

As the Contractor is under the Principal Employer, the Parent of the Contractor should adhere to the Contract Labour Act (Regulation & Abolition). Therefore, as a Principal Employer, you must ensure that bonuses are paid to your Contract Employees. It is important to confirm with the Contractor whether the bonuses have been disbursed or not.

Thanks & Regards

Kindly quote the exact government orders under which a bonus has to be paid to the contract labor. As a principal employer, I have to obtain sanction from our account department to reimburse the bonus paid by the contractor. For orders, please.

Definitely, you should pay the bonus to the contract labor if they work more than 30 days in the respective financial year.

Regards,
Manoj Prasad
Gurgaon

Please Resolve the Following Queries:

1. An establishment is exempted from paying a bonus in its infancy period (i.e., the first 5 years). Here, are we talking about the contractor's establishment or the Principal Employer's?

2. Somebody said in the above post that any employee who has worked for more than 30 days in a year is eligible for a bonus. Suppose an employee starts working in the Principal Employer's (PE's) factory from September, and the bonus is paid in October. When will this employee be paid a bonus for the first time?

3. What are the wage limits for eligibility and the calculation of a bonus?

The answer to your query is as follows:

1. For a brief description of the infancy period, please refer to the Payment of Bonus Act.
2. Bonus is always calculated for the financial year (FY) from April to March only and will be paid within 8 months after closing the FY. Hence, the eligibility of an employee will also be calculated within the FY only.
3. The wage limit for eligibility for Bonus is Rs. 10,000/- (Basic+DA) per month, while the calculation must be done up to a maximum wage (Basic+DA) of Rs. 3,500/- per month.

Please let us know if you need any further clarification. Thank you.

Kind regards

Dear Seniors, can you suggest if a contract employee who receives a salary after the deduction of ESI & PF will also receive a bonus as per the Bonus Act at the time of full and final settlement, even if the bonus is not specified in his agreement?

Regards,
Ashish K.

I just want to know whether the contract employees are eligible for an attendance bonus since their wages are calculated based on 26 days. They are also asking for overtime. I am looking forward to your valuable replies. Please note, they are not in manufacturing but are involved in operations and maintenance.

Regards

If the principal employer is liable for the payment of a bonus, does the contractor have to maintain a bonus register, or does the principal employer include the contract labor and maintain the register? Please advise.

Please be sure that the bonus for contracted labor is not the responsibility of the principal employer. The employees of the contractor cannot be treated on par for the purposes of the bonus. This has been established in court judgments.

Dear sir,

I have been working on a third-party contract for an MNC company for the past 4 years. My basic salary is 9000/-, and other allowances amount to 25990/- with no DA. My contractor deducts PF considering (PF + DA = 9000/-). Am I eligible for a bonus? Please guide me in this regard.

Regards,
Yogesh Darade