Startup company with 68 employees, under R&D development, are they eligible for bonus?

Dear Team,

A newly startup company with 68 employees is currently under R&D development. Are they eligible for a bonus?

Thank you.

During the first five years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, the establishment is not required to pay statutory bonus, subject to the condition that the bonus shall be payable in respect of the accounting year in which the employer derives profit from such establishment (Section 16(1A) of the Payment of Bonus Act 1965).

Being an R&D Establishment, it has to be seen whether the Payment of Bonus Act would apply at all.

This is in continuation of what Mr. KK (!) HR has stated on the question.

Section 32 of the Payment of Bonus Act, 1965 exhaustively enumerates the list of employees employed by certain types of establishments to whom the provisions of the Act are not applicable.

R&D employees are not included in the exempted class of employees. Therefore, the 68 employees of the R&D Wing of the newly start-up establishment are also entitled to statutory bonus subject to the provisions of sections 12 and 16 of the Act.