Understanding the Bonus Act Amendment: When Does the New Minimum Apply?

Dear forum members,

I want to know about amendments in the Bonus Act, in which the government has increased the minimum amount from Rs. 2500 to Rs. 3500.
What is the date of applicability?

Thanks and regards,
Amit Kumar Garg

Hi,

I have already posted the details in another thread in "labour and employee relations". You can go through the same.

Regards,
Anil Kaushik

Hi Everybody,

In this amendment, the focus is on the Minimum Basic Salary. Now, it has been raised to Rs. 10,000. This means that in the government sector, where Class I officer posts generally start with a minimum basic of Rs. 8,000 or Rs. 8.5 K, they will also be included in the bonus scheme.

Generally, in all establishments where the Factory Act applies, Bonus is applicable. In the service industry, there are companies where some form of Bonus is provided.

Regards,

Tikam S Shekhawat
Email: tikamindia@rediffmail.com

Government raises salary limit for bonus

October 01, 2007 16:06 IST

Ahead of the festival season, the government on Monday handed a bonanza to millions of industrial workers by approving changes to the Bonus Act, which would make workers drawing up to Rs 10,000 monthly salary eligible for an annual bonus.

Hitherto, only those drawing a monthly salary of up to Rs 3,500 were eligible to claim a bonus.

The Cabinet has approved the amendment to Section 12 "to raise the eligibility limit for the payment of a bonus from the salary or wage of Rs 3,500 to Rs 10,000 per month," Labour Minister Oscar Fernandes said.

He said construction workers, even if they have worked for a month with builders or contractors, would also be eligible to avail of a proportional bonus from their employers.

The decision would benefit seven per cent of the total workforce in the country, which is working in the organized sector, said the Minister.

The payout proposal is broadly in line with the recommendations of the 41st session of the Indian Labour Conference (ILC) held in April this year, and is the result of a long-pending demand of the trade unions, particularly the CPI(M)-affiliated Centre for Indian Trade Unions (CITU).

Sources said since the next session of Parliament would be called in November, the government may bring an ordinance for the purpose.

Though the minister declined to comment on the financial implications of the decision, sources said the government had paid between Rs 300 crore (Rs 3 billion) and Rs 350 crore (Rs 3.5 billion) last year on account of the ad hoc bonus at a maximum of Rs 2,467 per employee.

With immediate effect, we need to consider the bonus for this festival season based on the last financial year.

CP

Dear Member,

As per a new scheme cleared by the Union Cabinet, the bonus ceilings for both private and public sector workers would be raised. The Cabinet approved an increase in the ceiling for bonus calculation to Rs 3,500 from the current level of Rs 2,500. The eligibility limit for bonus has also been upped. This will bring more workers within the ambit of bonus. Now, bonus eligibility will be for workers whose basic and Dearness Allowance is less than Rs 10,000. Earlier, workers earning up to Rs 6,000 were covered under the bonus act. To ensure these two hikes, the government will amend section 2(13) and 12 of the Payment of Bonus Act, 1965.

The effective date of the above change in ceilings has not been declared. Probably this is a political move again taken by the Government in order to please the left parties, who are after the Govt. on Atomic issues.

Regards,
SPC

Dear All,

I am working with a Pvt. Ltd Company. Every year, we are paying a Rs. 3500 bonus to every employee whose salary starts from Rs. 2500 to Rs. 50,000 per month. I would like to know how much the bonus will increase after the amendment when we apply for this.

Regards,
R/P/Dixit

Hi, whoever crosses Rs. 3500 and falls below Rs. 10000, you have to pay Rs. 3500 as a bonus. Anybody earning less than Rs. 3500 as basic salary, you have to calculate the bonus based on the basic amount as per the bonus policy. According to the act, you have to charge 8.33% per month.