Employee Retired on April 30: Should They Get a Full Month's Bonus?

If an employee retired on 30 April and received a salary for 30 days, including his rest days, will he be entitled to a bonus for one month or not? Kindly help.

Certainly, for the financial year beginning in April, he should get a bonus since he had worked for 30 days.

In our opinion, this employee is not eligible to receive a bonus from the employer. According to section 8, he has not worked for thirty days in this accounting year. He has not worked on the rest days falling within these thirty days. Section 8 requires a minimum of 30 working days for eligibility. In this case, the employee has been employed for 30 days in April, but he has not worked for 30 working days to become eligible for a bonus in this accounting year.

Regards, R N KHOLA

When Mr. Vaibhav Tyagi has made it clear that the employee worked for 30 days in April and received a salary for 30 days, I don't understand why Mr. Khola, our Senior Member, has a different view about it. Days worked for this purpose shall include all eligible leave days, holidays, weekly off days, and also days on which the employee was laid off. Very simply, when the employee is paid a salary for 30 days, it should be construed that he has worked for 30 days.

The consideration for a bonus at the employer's discretion is because the employee is retiring. The case can be considered because the payslip of the employee shows 30 days and a full month's salary paid. In actuality, the employee physically worked less than 30 days.

If the employee had remained on a daily rate, then his attendance could have been between 25-26 days, accounting for the weekly off days, and he would have been paid only for the days he was physically present, therefore making him ineligible.

The law stipulates 30 physical working days in a financial year, which is not possible when working for just a single month.

As per the law, the employee is not eligible for a bonus as he was not present for 30 working days. There is no doubt about the same.

At the same time, many organizations, as a practice, are paying a bonus if any employee was present for the month but not present for 30 working days. It all depends on the organization's culture.

Regards, S K Bandyopadhyay

Let us read the post once again...

Employee Bonus Eligibility Upon Retirement

"IF AN EMPLOYEE RETIRED ON 30 APRIL & HE GOT SALARY FOR 30 DAYS INCLUDING HIS REST DAYS, WILL HE BE ENTITLED TO A BONUS OF ONE MONTH OR NOT? KINDLY HELP."

Here, there are two points to consider. Firstly, the employee retired on 30th April. Secondly, he received a salary for 30 days. It is evident that this payment covers 30 days, including his weekly off days and holidays. If he has been paid for 30 days of work, it raises the question of why he wouldn't qualify for a bonus. If he had taken a single day of loss of pay leave, resulting in a salary for only 29 days, then he would not meet the bonus criteria. However, in this scenario, as he received a salary for 30 days, indicating 30 days of work.

It is important to clarify that under labor laws, when determining eligibility for certain rights based on the number of days worked, the days worked should include holidays, eligible leave days, and weekly off days for which the employee received wages.

Types of Days Calculations Under Labor Acts

Number of days calculations under labor acts are of two types: normal monthly days inclusive of Sundays, holidays, etc., and actual working days. In the case of annual leave with wages calculation under Sec-79 of the Factories Act, the eligibility criteria are 240 working days, not general monthly days. To qualify for 240 days, there are conditions such as layoff and maternity leave considered as working days, but leave earned is restricted to the actual number of days worked. In the case of the Bonus Act, it is also actual working days with no qualifying clause.

Continuous Service Under the PG Act

Again, in the case of continuous service under the PG Act, it is normal monthly working days to qualify for 240 days.

Therefore, it is not universally true that in all cases, normal monthly working days have to be considered.

S K Bandyopadhyay (WB, Howrah)
CEO-USD HR Solutions
[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]
www.usdhrs.in

Under all these Acts, paid holidays, paid weekly off days, paid leave days of any type, leave on account of employment injury, layoff days, and legal strike days are considered as days worked. Therefore, if you have paid a salary for 30 days, there is no doubt that the individual has worked for 30 days.

Leave Eligibility Under the Factories Act

Under the Factories Act, there are two factors for leave eligibility: one for eligibility and another for the earning of leaves. For eligibility, 240 days are required, which shall include all paid holidays, etc. However, for the earning of leaves, only the days the employee was physically present will be considered.

I agree with Mr. Madhu T.K. The employee will be entitled to a bonus for one month since he worked for the entire month of April, including his rest.

Clarification on Working Days and Paid Holidays

No act has specified that paid holidays, paid weekly off days, paid annual/earned/privilege leave, paid casual/medical leave, layoff, work injury, legal strike, etc., are considered working days. Please specify the act where it is mentioned. Under the Factories Act, to qualify for 240 days, only three conditions are inbuilt: layoff, maternity, and any annual leave availed from earned leave of the previous year.

Calculation of Working Days Under the Factories Act

Under the Factories Act, working days are calculated as follows: 365 yearly days minus 52 paid weekly offs minus 10/12 paid festival holidays equals 301/302/303 working days. For leave eligibility, one must be present for 240 working days out of 300+ days.

Therefore, there is a big NO for considering working days as similar to calendar days/monthly days. Under any circumstances, working days do not include other paid holidays as it is arithmetically incorrect. It cannot be established, with illogical reasons, that working days and calendar days/monthly days are the same.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] www.usdhrs.in

My question is, if you have paid a salary for 30 days, how can you say that he has worked only for 26 days? Should only the days physically worked be considered for qualifying? When you work for one year, it is a year and not just 300 days. Even when unpaid holidays and unpaid weekly off days should not be considered as service interruptions, how can we exclude paid holidays and paid weekly off days from service?

One person worked for a year but not 365 days. It means working days are different from calendar days. Even in a year, for the majority of organizations except continuous processes, 365 days are not working days. The usual working days for a 6-day week organization are 365 - 52 weekly offs - 13 paid festival holidays = 300. Any person may not work for 300 days because of their paid leaves. Therefore, working days are less than even 300 days.

Payment to any person is usually based on an hourly rate/daily rate/monthly rate. If someone has a service condition of a monthly rate, they will receive the whole month's salary if they are present for all working days or have taken any paid leave, even if working 26 days in that month. For daily and hourly rate payments, the payment is made based on hours worked or days present.

Eligibility Criteria for Bonus and Leave

As per the Payment of Bonus Act, the eligibility criteria are 30 working days, not one month. In the case of the Factories Act, Annual Leave earnings are based on the number of working days present. But in the case of the Payment of Gratuity Act, it is 240 days of continuous service as calendar days, not working days, as per the definition of continuous service. Under the Bonus or Factories Act, there is no such condition.

Therefore, there is a distinct difference between working days and calendar days.

Hope this will clarify the doubts.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] www.usdhrs.in

I don't understand the theory of Mr. S K Bandyopadhyay. When you have offered a salary for 30 days, it should be construed as 30 working days because we will not pay for days not worked. Obviously, all paid holidays are considered working days only. It is not the case that every weekend you put an end to the service and then start the service after the weekly off. It is acceptable in the case of daily-rated employees for whom we pay for days worked, but for employees who are paid for holidays and weekly off days, if you pay for 30 days, how can it be that the working days are only 26?

Eligibility Criteria Under the Factories Act

The Factories Act has very clearly mentioned the eligibility criteria. Once an employee becomes eligible due to their service of 240 days in 12 months or proportionate to it, they become entitled to one day for every 20 days physically present. They are not entitled to earn leaves for the days they were not physically present even if they were paid for that time.

Eligibility for Gratuity Under the Payment of Gratuity Act

Under the Payment of Gratuity Act, eligibility for gratuity is determined by means of service, specifically continuous service, which means uninterrupted service of not less than 240 days. Interruptions in service due to reasons like sickness or accidents are not considered as breaking the continuous service. Even leave without pay, unless treated as an interruption of service through an office order, will be seen as uninterrupted service. The count is based on the days for which payment has been made, not just days physically present. If the service falls short of 240 days, any days related to occupational disease or accidents will be added. Similarly, days of leave without pay will be considered if no disciplinary action was taken for unauthorized absence.

Entitlement Under the Payment of Bonus Act

Section 8 of the Payment of Bonus Act states that "every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year." Here, there is no reference to physically present days, but to working days. If payment is made for 30 days, it should be considered remuneration for 30 days of service. The employee's attendance records, including ESI and EPF, should reflect 30 days. Mandays calculation considers actual physical days present, but for all other records, the count is based on remuneration for the service days.

In this specific case, the employee's working days are 30 in ESI and EPF because they were paid for 30 days. The status of employment remains unchanged on weekly off days and holidays. An employee found working for another firm during their off days may face disciplinary action for conducting business while employed elsewhere.

Agree with Madhu Sir. It means that, according to other members, his other statutory dues will also not be contributed for 30 days since he had not worked during that period, but his salary was still provided for the full 30 days.

Dear Mr. Madhu TK, I cannot understand your post properly, so I am not in a position to reply to all your points. The only point I can address is where you mentioned that under the Payment of Bonus Act, eligibility for a bonus for any financial year requires one to work 30 working days in a year. You then mentioned that there is no reference to physical present days, but it is about working days. What is the difference between physically present days and working on working days? If someone is not physically present, they cannot work on working days.

Therefore, there is no difference between physically being present and working on working days. Hence, you have agreed that being present and working for 30 working days is essential to be eligible for a bonus.

In my first post, I mentioned that some organizations pay a bonus for working a complete month without considering the requirement of 30 working days; this is a common practice and an additional legal benefit.

I will not make any further posts on this matter.

Warm regards,

S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] www.usdhrs.in

Understanding Employee Presence and Payment

Mr. S K Bandyopadhyay, the days physically present means the days on which the employee was present for work. The number of paid days need not be the days physically present. It shall include days for which the employee has been paid. The service in the company is considered based on the days the employee was employed.

Paid Holidays and Weekly Off Days

On paid holidays and weekly off days, a regular employee is an employee only. That is why he is paid for the holidays and weekly off days. He is paid a salary only when he is an employee. If an employee is paid for weekly off days, he should be an employee of the company on these weekly off days. A casual worker who is hired for a day or two is not paid for the weekly off days because he is not an employee on that day.

Casual Workers and Bonus Eligibility

If a casual worker has been engaged throughout a month, say April, with usual breaks for weekly off and if these weekly offs are unpaid, then he would not qualify for a bonus because he might have worked only for 26 days. The same theory cannot be applied in the case of regular employees who are paid for the month including weekly off days. In such cases, it should be the number of days salary paid which would decide the number of days of service.