Bonus contemplated under the Payment of Bonus Act, 1965, is a one-time annual payment determined based on the performance of the establishment, calculated and paid on the basis of the total earnings of every eligible employee in an accounting year. Here, total earnings would mean the annual sum total of the components comprising the term "salary or wage" as defined under section 2(21) of the Act. Therefore, as rightly pointed out by Mr. Saswata Banerjee, the question of monthly-based calculation does not arise in the case of statutory bonus. Even assuming that such an exercise is done for the sake of administrative or accounting convenience, such a sum would be the interim bonus only mentioned under section 17(b) of the Act and can be deducted from the annual bonus payable at the close of the accounting year.
Interpretation of Section 12 After Amendment
As regards the point about the interpretation of section 12 after the amendment put forth by Mr. Varghese Mathew and concurred with by Mr. Saikumar, I beg to differ based on the following reasoning:
1. The object of the rise in the threshold wages from the existing Rs. 10,000/= to Rs. 21,000/= in the Amending Act is to bring more employees within the purview of the Act and make them eligible for a bonus considering the prevailing economic situation of the country.
2. The simultaneous amendment to section 12 of the Act raising the entitlement of employees to a bonus from the existing Rs. 3,500/= to Rs. 7,000/= with a "WHICHEVER IS HIGHER" conditional clause is to ensure a higher amount of bonus for the lowly paid employees as well as to enhance the bonus for employees with higher income.
Let me explain my point with illustrations:
(a) In the Case of Employees Under Scheduled Employments for Which Minimum Wages Are Fixed
The actual monthly wage of an employee for the purpose of a bonus is Rs. 8,000-00 against the minimum wages of Rs. 7,000-00. Here, a bonus of 8.33% or 20% has to be calculated based on the higher earnings of Rs. 96,000-00 (8,000 x 12) only.
In case the monthly wage is only Rs. 6,000-00 against the minimum wages of Rs. 7,000-00. Here too, the bonus has to be calculated based on the higher earnings of Rs. 84,000-00 (7,000 x 12) only. The rationale is that the lowly-paid employee should get a higher bonus based on higher wages.
(b) In the Case of Employees Beyond the Purview of the Minimum Wages Act, 1948
The actual monthly salary for the purpose of a bonus is Rs. 10,000-00. Here, the bonus has to be calculated based on the monthly notional wages of Rs. 7,000-00 only. The rationale is that, but for the amendments of sections 2(13) and 12, he would be entitled only to a lesser bonus on the lesser notional limit.
3. The conditional clause of whichever is higher with reference to minimum wages need not be applied to employees who are beyond the purview of the Minimum Wages Act.
Regards