Bonus for establishment - Is there any established time period?

Good Evening, My self Rakesh and I am working in MNC, my factory is still under construction from last 4 yers, there is no Production in the factory, but we have 45 Employees now, so can we propose for a bonus for who done one year in service, or bonus will effective from company earning profits onwards. Is there any established time period we have for a bonus, please suggest on this, when we are proposing to management we need to go with the clarity. Thank you

Dear Rakesh,

I would like you to go through the provisions of section 16 of the Payment of Bonus Act, 1965 in order to get a clear picture about the bonus liability of a newly started establishment.

In the case of a new establishment undergoing the phase of gestation, no bonus liability towards the employees employed during such period.
During the first 5 years the liability would arise only when production is commenced and profits are earned.