Can Employers Choose Who Gets a Bonus Based on Performance? Let's Discuss!

My question to all is whether an employer can withhold bonuses from certain employees and only award them to selected employees.

It is compulsory under The Payment of Bonus Act, 1965. Under Section 1 of the said act:

1) This act applies to all factories.

2) Every other establishment in which 20 people are employed on any day of the accounting year.

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If the Payment of Bonus Act is applicable to the establishment and the people employed therein are "employees" as defined under section 2(13) of the Act, the employer cannot pay them statutory bonus based on his discretion in a "pick and choose" fashion unless such individuals do not meet the eligibility criteria under section 8 of the Act.

Discrimination in Bonus Disbursement

Since you have mentioned that your employer is discriminating among employees in the disbursement of bonuses, I presume that the Payment of Bonus Act, 1965, is applicable to the establishment. Regarding your queries about whether the employer can stop bonuses for some employees and pay selected employees, my reply is that the employer cannot deprive employees of bonuses if they meet the eligibility criteria. That is, if they have worked for at least 30 days in that year and are within the salary ceiling limit under the Act.

Regards, BS Kalsi

Dear Satya,

In continuation of my preceding mail, I would like to add that an employer can disqualify an employee who has been dismissed from service for fraud, theft, or riotous or violent behavior. If the bonus is not paid to the eligible employee, he can submit an application to the competent authority of the State Government.

BS Kalsi
Member since August 2011

Those employees who are coming under the bonus ceiling, it is compulsory for the employer to pay the minimum statutory bonus. But those employees whose salary/wages are more than the ceiling limit, it is up to the management whether to pay or not. If the management wants to pay, it may pay them as ex-gratia payment as it wishes.

If an employee is not receiving a salary for the last 2 years during the pendency of proceedings in court, can they claim a bonus from the employer?

No, the employer cannot stop paying bonuses to eligible employees as per the Bonus Act unless the employees are suspended and pending an inquiry. If that is the case, you can fight.

Sorry, your question seems a bit vague to me. The situation of non-payment of salary for a period of two years due to the pendency of court proceedings implies that it is a case of non-employment. In such a case, the right to claim a bonus for the period of non-employment depends on the final award only. If the award is for reinstatement with back wages, continuity of service, and all other attendant benefits, the employee should be paid a bonus for the period of non-employment.