Payment of Bonus - According to Bonus act - Is this applicable to ITES industry? What is the Industry standard?

Hi,

The payment of statutory bonus is for the service period until the 30th of September every year. My question is, if someone who is eligible for the statutory bonus leaves the company by December or at any time during the year after the last payout and is not on the company rolls during the actual bonus payout in the present year, will the company still have to pay the bonus prorated for the number of months that he was there after the last payout period? Is this applicable to the ITES industry? What is the industry standard for payment of statutory bonuses in the ITES industry?

- Lorein

Dear Friend,

As per the Bonus Act, an employee who draws a gross wage below Rs 10,000/- (Basic & DA) and works for not less than 30 actual working days during the last financial year is eligible to receive a bonus based on a monthly average of Rs 3,500/- (ceiling fixed by the act for calculation purposes) for the current year. The last date for making the payment of the bonus is fixed within 8 months on any date from closing the accounts of the company, i.e., 31st March. Therefore, the payment should be made on or before 30th November every year.

Regarding your query about making payment to employees who have left, the management must pay them a bonus proportionately for the period of their work during the last financial year. The rate of the bonus will always depend on the available surplus and allocable surplus, ranging from 8.33% to 20%.

Regards

As N.V. Rao has rightly said, the statutory bonus is calculated on the financial year surplus and not calculated from October to September. Hence, the left employee is eligible for a 9-month bonus on a pro-rata basis.

Hi,

The bonus can be claimed as unpaid wages. In this regard, you can approach the nearest Labour Office concerned, seek their advice, and have the application for unpaid bonus filed with the Authority for Payment of Wages.

Thanks and regards,

S.K. Johri

As per the Payment of Bonus Act, bonus for an accounting year is payable to an eligible employee who has worked in the establishment for at least 30 days during that accounting year. The bonus amount is to be paid to the eligible employee within 8 months of the end of that accounting year.

If the eligible employee leaves the establishment before the disbursement of the bonus for the preceding accounting year, he will have to be paid bonus for that accounting year if he has worked for at least 30 days during the said accounting year calculated on a pro-rata basis. In fact, if he leaves the establishment during the accounting year, he will still have to be paid when it is disbursed to the employees after the close of the accounting year for the period he had served during the said accounting year, provided he had worked for at least 30 days.

Thanks.

G. Hari

Dear Lorein,

Though my learned colleagues Sh N.V.Rao & Sh G.Hari have given a very descriptive legal position to resolve your problem, I would like to reply to your query in seriatim, which is as follows:

(i) If someone who is eligible for the statutory bonus leaves the company by December or anytime during the year after the last payout and is not on the company rolls during the actual Bonus payout in the present year - Section 8 of the Payment of Bonus Act, 1965 states that every employee who has worked in the establishment for at least 30 days during that accounting year shall be entitled to payment of bonus, even if his name is not on the muster rolls of the company on the day of the declaration or payment of bonus.

(ii) Will the company still have to pay the bonus prorated for the number of months that he was there after the last payout period? - Yes, under Section 13 of the Payment of Bonus Act, 1965, a company is obligated to pay bonus to their employees proportionately for the period they have worked during the last financial year.

(iii) Is the Payment of Bonus Act, 1965 applicable to the ITES industry? The Act is applicable to (a) every factory as defined under the Factories Act, 1948, and (b) every other establishment in which twenty or more persons are employed on any day during an accounting year. Since ITES industries have been classified as commercial establishments, the Payment of Bonus Act, 1965 covers all such establishments in which twenty or more persons are employed on any day during an accounting year. In Maharashtra, the Payment of Bonus Act, 1965 has been applied to all establishments that employ ten or more employees on any day during that accounting year.

(iv) What is the industry standard for payment of Statutory bonus in the ITES industry? - There is no separate standard for the payment of Statutory bonus in the ITES industry, subject to the application of Section 16 of the Payment of Bonus Act, 1965, which provides certain concessions to newly set up establishments.

BS Kalsi

Dear friends,

I am working in a large store. Could you please provide information about the bonus policy? What are the maximum and minimum limits of the bonus? Please provide a brief explanation.

Thank you!

Dear Pramod,

The minimum bonus of 8.33% is payable by every industry and establishment under Section 10 of the Act. The maximum bonus, including productivity-linked bonus, that can be paid in any accounting year shall not exceed 20% of the salary/wage of an employee under Section 31A of the Act.

Eligibility limit: ₹21,000
Calculation ceiling: ₹7,000 or the minimum wage for scheduled employment, as fixed by the appropriate Government, whichever is higher.

Hi,

We are from a Pvt Ltd firm and are currently seeking information regarding the applicability of bonuses and the calculation process.