Understanding Bonus Obligations: Do We Pay Bonuses When Our Company Is Losing Money?

Dear All, kindly suggest regarding the Bonus Act, a few clarifications:

Eligibility to Pay Bonus Under Loss

1. If the company is under loss, are we still required to pay the bonus? Please clarify with some notes or any notifications.

Self-Registration for Companies with Less Than 20 Employees

2. Can we do self-registration even if the company has fewer than 20 employees?

Thanks/Regards.

Any establishment to which the Payment of Bonus Act, 1965 is applicable must pay a minimum bonus to employees, even if the company incurs a loss or does not have an allocable surplus in a particular accounting year. Please refer to Section 10 of the Payment of Bonus Act, 1965. Additionally, if you are interested, please see Section 26(1) of the Code on Wages, 2019, which is pending notification for enforcement.

Regarding your second question, it is not clear to me. If it relates to the applicability of the Payment of Bonus Act, 1965, it applies to every factory regardless of the number of employees. In other cases, the minimum number of employees required for the Act to apply is 20. However, the appropriate Government has the authority to reduce this number. I recommend referring to your State Rules for further clarification.

Thank you.

Thank you for your brief clarification. It was very helpful and informative. I will go through the PBA 1965 and Wage Rules as suggested.

Thanks/Regards,
Vinod Kumar A V