New Loss Making Unit From Existing Company Paying Bonus Only To Selective Staff

Payment of bonus for a loss making new unit for the deputed and transferred staff.

Facts

1. The unit is new and not making any profits it is in its second year of operation.

2. Some of the employees are on deputation/ transferred from the parent company

3. Separate balance sheet and P&L is maintained for the unit.

4. The unit has permanent labour, contract labour as well as new and old staff transferred from other units of the company.

5. The Parent company is profit making and effecting bonus to employees @ 20% in all its units. having both individual balance sheets and consolidated balance sheet for the whole organisation..

Questions are

1. Is The new unit is liable to pay bonus

2. Whether the company is justified in extending bonus only to employees who are on transfer/deputation to new loss making unit. As they were enjoying the benefit earlier. Will it be called discriminatory.

3. If the unit is not liable for bonus, can it pay selectively to some who work along with the deputed staff in certain department like accounts, purchase etc to keep the moral high without extending to every one in the unit

Would greatly appreciate fellow members views on this

1. A new unit will enjoy infancy period of 5 years , added to this your version is " it is a loss making unit"
Hence, no employees who are on the rolls are not eligible for bonus.
2. Since a few employees are from Parent Company which has separate P & L they will be eligible to have
bonus benefits as they are not on the rolls of the loss making unit.
3. The parent company can not pay Bonus to selective staff of loss making unit since it is too unfair, if it
if it continue to do so definitely it will land up in trouble in the near future if the loss making unit has any
labour problems.

Loss making units are not eligible to pay Bonus if there final P&L says no profit.
Regards
Ajay Singh
+91 9320410200

Thank you M/s Pratheeksha, Ajay for your kind comments, as mentioned some of the employees are transferred from units where they were enjoying the bonus, after shifting to the unit their CTC would come down compared to their peers. further few more employees in the same cadre were working with them in the same departments. As the bonus is not a liability on the company at least for 5 years or till loss making years which ever is earlier, does the company has the discretion to pay bonus to those as mentioned above instead of all. IT is more like additional pay due to circumstances.
regards

new loss making unit from existing company paying bonus only to selective staff
1. Transfer should not reduce the earning or pay package. Before transfer you were paying 20% bonus, now you have to compensate here in new unit, which is new one & loss making. Hence you may treat this 20% amount as Annual Allowance or any other allowance.
2. If you start paying 20% amount to the other staff who has been working with the above, then other employees ( workers/staff /contract) will start making problems
Regards
SDP

Hello Mr. Raghvan,
1 If employer wants they can pay the bonus to employees but no legal obligation if employer not paying the amount.
2 As your already maintaining the separate balance sheet so no needs to pay the Bonus to transferred or ..... employees
3 Yes you can give incentive to selective peoples depends on their performance and review system must be same for all.
Thanking you,
regards,
Ashish

The unit not making profit in a company are not liable to be paid bonuses from the parent company.
It cannot be called discriminatory to pay those in the parent company making bonues only.

As per the Payment of Bonus Act new orga-nisations are exempted from payment of Bonus for Five Year. in the 6th. year minimum 8.33% can be considered
When the new Company/orgn.is is
maintaining P&L Account and
Balance Sheet, It has to run
on its own set rules and regulations. When some of
the employees are transferred to new co. and
on rolls of new co. their pay should be protected before they are transferred
and no discrimination should
be shown by paying them Bonus at the new unit.
However, if anybody comes
on deputation they will will
draw the salary etc. as they
have been drawing at their
parent unit, provided their
terms of deputation in the letter should spell clearly.
Eswararao Ivaturi.