Are Trainees Entitled to Bonuses Under the Payment of Bonus Act? Let's Discuss!

Whether a trainee is eligible for a bonus under the Payment of Bonus Act!

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Thank you.

Hi,

A trainee is not an employee as per management views; hence, they will not be eligible for a bonus. To keep the trainees in good morale, mostly the management uses to provide ex-gratia according to the company's financial position. As a matter of right, trainees are not eligible for a bonus.

Regards,

R. Sudhakar

Sudhakar, could you provide me with some authority on which to base what you've said about trainees not being eligible for a bonus? I need it ASAP, please. Thank you.

By virtue of section 2(13) of the Payment of Bonus Act, 1965, an apprentice is not an employee. Therefore, an apprentice is not eligible for any kind of profit-sharing bonus or incentive (section 13(2) of the Apprentice Act, 1961). Similarly, as per the Apprentice Act, section 18, the provisions of any labor law will not apply to apprentices. However, in order to be exempted from these regulations, the trainee should have been hired for training following the provisions of the Apprentice Act, 1961. An employer is expected to take trainees in designated trades only, specifically from the panel of ex-ITIs designated for this purpose, and after entering into a training contract with the trainee/guardian. The training period will be strictly limited to one year. All others will be considered employees, regardless of the designation.

Regards,

Madhu.T.K

Hi,

Only apprentice trainees are not eligible for a bonus. Otherwise, other trainees who are not appointed under the Apprentice Act 1961 are fully entitled to a bonus, and there is no specific clause in the Bonus Act that states trainees are not entitled to a bonus. Kindly clarify whether other trainees, who are not appointed under the Apprentice Act 1961, are entitled to a bonus. If not, please inform us which clause of the Bonus Act should apply to this particular point. Some organizations appoint fresh degree/diploma holders of engineering as trainees and put them on a trainee program for a duration of six months. In this case, what formula will be adopted under the Bonus Act?

Ashok Kumar

Bonus is in fact regarded as deferred wages. But at the same time, with the exception of a minimum bonus of 8.33%, it is payable out of allocable surplus, which is nothing but net profit arrived at after some calculations as provided in schedules attached to the Bonus Act. Section 13 clearly mentions who is an employee, and under this section, an employee means 'any person other than an apprentice.' Therefore, an apprentice trainee is not an employee and hence need not take part in bonus sharing.

Under the Apprentice Act, 1961, apprentices are not expected to take part in any bonus. When viewed from the ESI Act and ID Act, trainees are not to be clubbed with employees. A recent Supreme Court judgment in favor of Campco, rejecting the order of the Provident Fund organization, has pointed out that all trainees (even those other than Apprentices) are to be excluded from EPF. Therefore, trainees are not entitled to get a bonus as per any Act. However, any employer is free to grant any privilege to any worker, including a trainee. That is up to the employer. But always remember that privileges become rights later on, and a bonus once paid to trainees will become their right. This will be reflected in future negotiations as well. Not only the negotiations of the same employer but it will also affect the negotiations of others in the same industry or location.

Regards,

Madhu.T.K

Dear Madhu Sir,

Well said. Privileges, once given, become a right later. So one should think twice before giving any unwanted privileges.

Regards,
Sebuks

Dear Madhu,

Kindly arrange to provide the judgment copy of the Supreme Court decision wherein it was decided that trainees can be excluded from the benefits of EPF. This is because, during inspections, the Enforcement Officer (PF) consistently requested the deposit of PF contributions on the wages/salary paid to trainees. It would be very useful for us if you could provide this information.

Thanks,
ASHOK KUMAR