Former Employee's Bonus Payment Issue: How Should We Handle a Closed Account?

One of our employees resigned from the job on 31.03.2020. The bonus payable to the employee for the FY 2019-20 was sent to the bank through the salary account of the employee. It was learned that the employee had closed the salary account, and the cheque was returned by the bank. We tried to contact the employee using the official contact details. However, the employee no longer resides at the provided address. What action should we take regarding the bonus payable amount?

In spite of the best efforts, if you are unable to disburse the bonus amount owed to the ex-employee, you should deposit the amount into the unpaid accumulations account of the Karnataka Labor Welfare Fund under Section 7 of the Karnataka Labor Welfare Fund Act, 1965. By doing this, your legal liability to pay the amount is fully extinguished, and it is then the responsibility of the employee to claim the amount later from the Board.

You have tried your best to pay the bonus through the bank, but the employee closed down his bank account and is not residing at the address provided. The Form C (Bonus Paid Statement) shows NEFT failed/Bank Account closed due to unpaid amounts. Please also indicate the same reason in Form D and submit it to the licensing authority as compliance for the bonus payment.

There is no rush to deposit the unpaid bonus into the Labour Welfare Fund, but please keep the provision in your accounts for unpaid wages/bonuses. The employee may show up at any time once he receives the information.

Thank you.

Just one correction to what Mr. Umakanthan has explained. You are required to hold the money with you in the "unpaid wages" account and record it in the unpaid bonus register for a period of 3 years. If the employee does not come to claim the amount, then after 3 years, you are required to remit it to the welfare fund.

I assume you have sent a letter/email to the last registered address of the employee informing him that he is eligible for a bonus and that he should come and collect it.