Hi I would like to know the details just like a short note for \" Bonus Linked with production/ productivity\"
From India, Pune
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From India, Pune
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Understanding Bonus Linked with Production/Productivity
The bonus is being paid based on the profit made by a company. One of the two definitions of bonus is 'Profit Share.' The second one is 'Deferred Wages.'
However, even if some companies achieve their target, they may be unable to make optimum profit due to conditions beyond their control, such as the fall of prices, depreciation, etc. At this juncture, an agreement may be signed between the Management and Unions as per Section 31A of the Bonus Act introduced/amended in 1976, which is called the production/productivity linked bonus. Under this clause, the profit will not be considered. Instead, the quantum of production, manpower, the installed capacity of the company, etc., will be accounted for.
Section 31A in The Payment Of Bonus Act, 1965
31A. Special provision with respect to payment of bonus linked with production or productivity: Notwithstanding anything contained in this Act— (i) where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), or (ii) where the employees enter into any agreement or settlement with their employer after such commencement, for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive the bonus due to them under such agreement or settlement, as the case may be: (Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under section 10 shall be null and void in so far as it purports to deprive them of such right:) (Provided further that) such employees shall not be entitled to be paid such bonus in excess of twenty per cent of the salary or wage earned by them during the relevant accounting year.
Regards,
Abbas. P. S.
From India, Bangalore
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530The bonus is being paid based on the profit made by a company. One of the two definitions of bonus is 'Profit Share.' The second one is 'Deferred Wages.'
However, even if some companies achieve their target, they may be unable to make optimum profit due to conditions beyond their control, such as the fall of prices, depreciation, etc. At this juncture, an agreement may be signed between the Management and Unions as per Section 31A of the Bonus Act introduced/amended in 1976, which is called the production/productivity linked bonus. Under this clause, the profit will not be considered. Instead, the quantum of production, manpower, the installed capacity of the company, etc., will be accounted for.
Section 31A in The Payment Of Bonus Act, 1965
31A. Special provision with respect to payment of bonus linked with production or productivity: Notwithstanding anything contained in this Act— (i) where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), or (ii) where the employees enter into any agreement or settlement with their employer after such commencement, for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive the bonus due to them under such agreement or settlement, as the case may be: (Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under section 10 shall be null and void in so far as it purports to deprive them of such right:) (Provided further that) such employees shall not be entitled to be paid such bonus in excess of twenty per cent of the salary or wage earned by them during the relevant accounting year.
Regards,
Abbas. P. S.
From India, Bangalore
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This is a nice update. I want to know, while entering into an agreement for a productivity-linked bonus under Sec. 31-A of the Bonus Act, whether the employer is also bound to pay the minimum bonus under Sec. 10 of the Act.
Regards,
B. Saikumar
From India, Mumbai
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Regards,
B. Saikumar
From India, Mumbai
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Yes, the employer is bound to pay the minimum bonus under Sec. 10 of the Bonus Act. I shall reproduce the provision already quoted above as "..........the employees relinquish their right to receive the minimum bonus under Section 10 shall be null and void...........".
Regards,
Abbas. P. S.
From India, Bangalore
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Regards,
Abbas. P. S.
From India, Bangalore
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I also hold the same opinion, but some have differed with me, saying that the employer need not pay the minimum bonus once the productivity-linked bonus is paid. Now, I am satisfied that I have correctly interpreted Sec. 31-A. Thanks for clarifying.
Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
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Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
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