Feeling Stuck: How Do You Handle Bonus Refusals in New IT Companies?

Dear HRs,

I work for an IT company, and it started a year ago. We just celebrated our 1st anniversary a few days ago. I asked for a bonus for Diwali, but they refused, pointing out that most of the employees have joined recently, so they are not ready to give a bonus. They mentioned that bonuses are not compulsory in IT firms. I don't know what to do. Kindly let me know your suggestions.

Regards,
Remi

Dear Remi,

You can take legal action if your basic salary is less than or equal to Rs. 10,000 and the company has earned a profit in the financial year. If the company has incurred a loss in the first financial year, then the company can't give you a bonus.

Regards,
Raj

Dear Remi,

The bonus act is applicable in factories and establishments where 20 or more persons are employed, and your firm is registered under the shop and establishment act. Therefore, as per the bonus act, your firm is also covered.

I agree with Raj, but I would not suggest taking legal action directly. You can involve other employees who are not working in your department to address this issue. Additionally, you can use the following link to learn about the amendments in this act that have been applicable since April 2006: http://pib.nic.in/release/release.asp?relid=32264

Remi,

The suggestions you received are truly helpful. The only addition I would make is that the bonus is payable to you as per the provisions of the Bonus Act, subject to your fulfilling the following criteria:

- That you have worked for at least 30 days in the last financial year
- That you are an employee under the provisions of the Payment of Bonus Act 1965 (as amended)

Furthermore, the amount of bonus payable is determined based on the allocable/available surplus, set-on and set-off value. The maximum amount of bonus payable is 20%, and the minimum is 8.33% of your earnings in the last financial year. Even if the company is a losing concern, it has to pay the minimum bonus, i.e., 8.33%.

If there is a recognized and registered union, an agreement/settlement is reached between the management and the union, and a copy of the same is sent to the Labor Department of the concerned area/state.

N.K. Tiwari

Dear All,

Thank you for your contribution. I am inquiring whether IT firms are covered by the Bonus Act. I have some additional questions as well. Could someone please provide me with your contact number so that I can call you and clarify my doubts?

Regards,
Remi

Dear Remi,

The Bonus Act is applicable to your organization as it is covered under the Shops and Establishment Act of your region. You have mentioned that your organization is new, and it has recently completed its first year. In this regard, I would like to emphasize that you should review Section 16 of the Payment of Bonus Act, 1965. It is crucial for a new organization.

Furthermore, if your Basic+DA exceeds Rs. 10,000, you would not be eligible for a bonus. Some companies, as a gesture of goodwill, still offer bonuses under different names such as Performance Incentive or Ex-Gratia.

Currently, I assume that your company will adhere strictly to the act, and no bonus will be provided. If you need any clarification, feel free to contact me at 9831000509.

Regards,
Nilendra