Can Employers Withhold Bonuses if You're Not on Payroll by a Certain Date? Let's Discuss!

Can an employer deny the payment of a bonus because an employee is not on the payroll as of September 30th (left on March 30th)?

Bonus Accounting Period Calculation

How should the bonus accounting period be calculated - based on the financial year or from October to September?

No one can deny the bonus subject to conditions defined in The Payment of Bonus Act. Additionally, the calculation is based on the financial year, which starts from 1 April and ends on 31 March.

In the above-mentioned case, the bonus is applicable subject to his appointment conditions and the tenure he spent in that financial year.

Is there any point regarding "Present Role of employee as on date xx xx xx" in the Payment of Bonus Act - Beyond the financial year? For my knowledge, he should be in the role for a minimum of 30 days in the financial year!

In the above case, why is Sep'30th taken into account instead of Mar'31st? Please clarify...

Bonus is admissible to an employee who worked for a minimum of thirty days at any time during the accounting year, which is normally April to March. The accounting year may vary in the case of a company or corporation depending on when the accounts are closed or the P&L is presented in the AGM. Find out what is the case in your company. It is not necessary for an employee to be eligible for a bonus to be on the rolls on the day of the closing of accounts or when the P&L is presented if he worked for not less than 30 days during the said period.

Regards,
B. Saikumar HR & Labour Law Advisor Mumbai

I think the employer may not supply a bonus after an employee resigns because the Bonus Act is not strong enough. The reasons are:

1. Contravention of any provision of the Act - the employer would be punished with imprisonment of up to 6 months, or with a fine of up to Rs. 1000, or both. This is basically something no employee would be willing to accept.

2. If any bonus is due to an employee under a settlement, award, or agreement, they can make an application for its recovery to the Government, and the Government may issue a certificate to the Collector to recover the same as an arrear of land revenue. Employers typically do not include the bonus in any agreement, or even in the CTC. So, although the employee is eligible for the bonus, they can't claim and recover it as per the Act.

These are the reasons why some employers do not give bonuses to resigned employees. Are my points correct?

The employer cannot deny a statutory bonus to an employee based on personal whims or any arbitrary grounds, least of all resignation, if the employee is otherwise eligible under the Bonus Act. This eligibility includes completing a minimum of 30 days of service or having wages of Rs. 10,000/- per month or below. An employee's right to a bonus under the Bonus Act 1965 cannot be determined by an agreement between the management and the workmen (union). First, you should verify the issues raised by members.

Regards,
B. Saikumar
Mumbai

I have taken this point from the Payment of Bonus Act 1965. If any bonus is due to an employee under a settlement, award, or agreement, he can make an application for its recovery to the Government, and the Government may issue a certificate to the Collector to recover the same as an arrear of land revenue.

It seems an employee can apply for the recovery of a bonus to the government only if the bonus is indicated in his CTC or Agreement!

Bonus After Resignation

Can an employee get a bonus after resignation, whether it is included or not in his CTC?

Yes, employees should be given the bonus of the last financial year even if they resign in the next financial year because they have served during that period. But does it happen?

Regards,
Abhishek Sharma

If the bonus is due under an award or settlement and the employee fulfills the terms of such award or settlement, he can, if he is a workman, also make an application under Sec. 33-C of the Industrial Disputes Act to the appropriate government for the recovery of the bonus due from the employer, irrespective of whether the same is mentioned in CTC or not. Further, I bring to your notice the explanation to Sec. 21 of the Bonus Act, which states that the word 'employee' also includes a person who is no longer in employment. Therefore, an employee who resigned from service is also entitled to the bonus if otherwise fulfilling the eligibility criteria.

Regards,
B. Saikumar HR & Labour Law Advisor Mumbai

I note the point "if he is a workman"... What does it mean? Does it mean limited to only the workmen category? Can you please explain up to which level the bonus is applicable? From Technician up to...

To invoke the remedy available under Sec. 33-C of the Industrial Disputes Act, the person invoking it must be a workman under Sec. 2(s) of the ID Act who must be doing a manual, skilled, clerical, or technical job, etc., and excludes a manager. However, under the Bonus Act, not only a workman but also a manager can claim a bonus if his salary is Rs. 10,000 or below. A manager cannot invoke Sec. 33-C to recover a bonus.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Dear Seniors, could any of you please clarify my doubts?

Bonus Liability in a New Venture

1) In a new venture or organization that has been running for the last three years, will the employer be liable to pay a bonus?

2) What is the time period to pay a bonus once a new organization starts?

Thank you.