Employer Refusing Bonus Payment After Resignation: How Can I Claim It Under the Bonus Act?

Hey Seniors,

I just want to know the procedure to claim the bonus under the Payment of Bonus Act if the employer refuses to pay the amount for a resigned employee even though he fulfills the eligibility under the Bonus Act. Please guide me.

Dear Ram,

I kindly request you to review the provisions of Section 20 of the Payment of Bonus Act, 1965, which pertains to the recovery of bonus owed by an employer.

Sir, it is Section 21 of the PB Act. That too if the bonus is under settlement award or agreement as per provisions under the ID Act. So normally, an ID has to be raised before the conciliation officer so that the conciliation officer, after hearing parties, can issue a certificate of recovery. For raising an industrial dispute, a union is required. If no union is there, an individual can file a complaint with the Labour commissioner.

Kindly approach the Labour Department or local court as per your designation.

Col. Suresh Rathi

My sincere thanks to Ssuhr for the correction of the mistake that crept in due to my oversight.

Options for Employees Denied a Bonus Under the Payment of Bonus Act, 1965

Three options are available to an employee who is denied a bonus under the Payment of Bonus Act, 1965.

Option 1: Claiming a Bonus Under Section 21

One option is under Section 21, which allows an individual employee to claim a bonus if they cannot be represented by a Trade Union or choose not to have such representation for any reason, provided that the bonus claimed is under an award or a settlement. However, this option is time-limited, i.e., within one year from the date on which the bonus became due.

Option 2: Raising a Dispute Under Section 22

The second option is under Section 22 of the Act. A dispute under Section 22 is, by statutory fiction, expressly deemed to be an industrial dispute. In the case of Pappu v. Raja Tile and Match Works [(1988) I LLN 643 (Ker) (DB)], it has been definitively stated that when Section 22 applies, it is not possible to argue that the dispute is not an industrial dispute simply because it was raised by an individual employee.

Therefore, an employee who is denied a bonus under the Payment of Bonus Act due to resignation, if not considered a 'workman' under Section 2(s) of the Industrial Disputes Act, 1947, can make a representation under Section 21 of the PB Act to the Assistant Labour Commissioner for the area. The Assistant Labour Commissioner would conduct an inquiry, determine the bonus amount, provide directions to the employer, and if there is non-compliance, request the District Collector to recover the amount under the Revenue Recovery Act.

In the case of an employee who is or was a workman under the ID Act, they can raise a dispute under Section 22 of the Act before the area Conciliation Officer, who would treat it as a dispute under the ID Act and take necessary actions.

Option 3: Lodging a Formal Complaint Under Section 19

The last option, applicable in any other case, is to lodge a formal complaint under Section 19 of the PB Act with the Inspector. This should be done after the time limit for payment of bonus prescribed under Section 19(a) or (b), as the case may be. Any actions taken by the Inspector under the powers vested in him under Section 27 could result in penalties as prescribed under Section 28 of the Act, serving as a deterrent for any unwilling employer in the disbursement of bonuses.