Bonus Payment Dilemma: Should Resigned Employees Get Their Bonus Now or Later?

Dear Experts, can anybody tell me if it is required to pay the bonus amount for resigned employees along with their full and final settlement, or can the factory pay the bonus to resigned employees on their regular bonus payment date by informing the employee of the bonus date?

Regards,
Yuva

Yes, an employee covered by the Payment of Bonus Act 1961 is entitled to be paid a bonus at the time of F&F settlement if they worked for more than 30 working days during the relevant accounting year for which the bonus has been declared. If the bonus, as mentioned by you, is other than the statutory bonus and payable under a contract or settlement, then the question of whether the bonus is payable or not depends upon the terms of the contract/settlement.

Regards,
B. Saikumar

Dear Mr. Sasi, Thanks for your reply, and if possible, kindly share with me the law requirement section which states that the statutory bonus has to be paid along with the F&F. This information would be helpful for me.

Regards, Yuva

Bonus Payment for Resigned Employees

Section (8) of the PBA states that every employee is entitled to be paid a bonus in an accounting year under the Act if they have worked in the establishment for not less than thirty working days in that year. Once you become entitled to a bonus under Section (8), the liability falls on the employer to pay it within 8 months from the close of the accounting year as per Section 19. The Act does not specifically mention that the bonus shall be paid at the time of the Full and Final (F&F) settlement. However, it is a prudent administrative practice to pay all monies due to an employee at the time of the F&F settlement in line with the spirit of the term "Full and Final" settlement.

Regards,
B. Saikumar