Understanding the Payment of Bonus Act, 1965: When, How, and Who Benefits?

Dear All,

Please provide me with information on the Payment of Bonus Act, 1965. When is it supposed to be given and how is the computation done? Who all are eligible to receive the bonus?

Regards,
Jyotsna

Payment of Bonus Act, 1965
Applicability

I) (a) Every factory (b) every other establishment in which 20 or more persons (less than 20 but 10 or more if appropriate govt. notifies) are employed on any day subject to certain exemptions.

II) Employees drawing remuneration of Rs 3500/- or more and those who have worked for less than 30 days are not eligible for bonus under the Act.

III) Bonus to be paid within 8 months from the expiry of the accounting year.

Eligibility

I) Every person (other than an apprentice) drawing a salary up to Rs 3500/- p.m.

II) Every person drawing a salary between Rs 2501/- and Rs 3500/- p.m., the bonus payable to him is to be calculated as if his salary were Rs 2500/- p.m.

- Bhavik H. Chheda
[Website: www.chhedaconsultancyservices.com]

Dear Jyotasana,

First, refer to the Payment of Bonus Act to understand the concept. The bonus should be paid to employees within 8 months from the date of completion of the financial year. For example, if March is the ending year, then it should be paid by the end of November.

As per the act, the bonus can be paid a minimum of 8.33% and a maximum of 20% of the total annual basic wages earned in the financial year. An employee who draws a salary up to Rs. 3500/- is eligible for a bonus.

We have heard about recent amendments regarding the bonus, but we have not received any circular from the government.

Regards,
Bhushan Dahanukar