The Bonus Act 1965
We are paying more than a 20% bonus/ex gratia to the permanent workers. We have more than 1,200 contract workers working continuously on various jobs. The unions are demanding the management to pay more than the 20% bonus, i.e., more than Rs. 8,400/- to the contract workers.
My question is, what is the responsibility of the principal employer regarding the payment of a bonus to the workers working under a contractor? Kindly clarify my doubt in detail.
Regards,
GIRI
From India, Hyderabad
Acknowledge(0)
Amend(0)
4We are paying more than a 20% bonus/ex gratia to the permanent workers. We have more than 1,200 contract workers working continuously on various jobs. The unions are demanding the management to pay more than the 20% bonus, i.e., more than Rs. 8,400/- to the contract workers.
My question is, what is the responsibility of the principal employer regarding the payment of a bonus to the workers working under a contractor? Kindly clarify my doubt in detail.
Regards,
GIRI
From India, Hyderabad
Acknowledge(0)Amend(0)
It is the responsibility of the Principal Employer to comply with the statutory requirements and hence pay the bonus as per the Bonus Act if they are eligible. However, paying more than the statutory bonus, Ex-Gratia, is a matter of negotiations.
Regards,
From India, Pune
Acknowledge(0)Amend(0)
Regards,
From India, Pune
Acknowledge(0)Amend(0)
The principal employer is liable to pay the bonus as per the provisions of the Payment of Bonus Act and ensure that statutory rights are fulfilled. The contractor cannot ask for an abrupt increase in the bonus unless the contractor prepares a balance sheet, ensures proper records, and provides it to the principal employer for the payment of statutory bonus to the contractors. The bonus is now referred to be paid based on the contractor's profitability and the allowable surplus available in the contractor's firm and not the principal employer. Therefore, the contract workers themselves do not ask for an increased bonus.
Regards
From India, Visakhapatnam
Acknowledge(1)
Amend(0)
Regards
From India, Visakhapatnam
Acknowledge(1)Amend(0)
Answers to Bonus Payment Queries
I. For contract workmen, it is the primary responsibility of the contractor to pay the bonus to its employees by 30th November every year for the previous year.
II. In case the contractor fails, it becomes the responsibility of the principal employer to comply with this requirement.
III. The Payment of Bonus Act (amendment) states that the eligibility for a bonus is restricted to employees with a base pay of up to Rs. 10,000/month (Basic + DA). For the payment of a bonus, Rs. 3,500/month or the actual basic, whichever is lower, is to be considered.
IV. You may combine these points to successfully negotiate the matter with the concerned parties.
Please let me know if you need further clarification.
Best regards
From India, Chandigarh
Acknowledge(0)Amend(0)
I. For contract workmen, it is the primary responsibility of the contractor to pay the bonus to its employees by 30th November every year for the previous year.
II. In case the contractor fails, it becomes the responsibility of the principal employer to comply with this requirement.
III. The Payment of Bonus Act (amendment) states that the eligibility for a bonus is restricted to employees with a base pay of up to Rs. 10,000/month (Basic + DA). For the payment of a bonus, Rs. 3,500/month or the actual basic, whichever is lower, is to be considered.
IV. You may combine these points to successfully negotiate the matter with the concerned parties.
Please let me know if you need further clarification.
Best regards
From India, Chandigarh
Acknowledge(0)Amend(0)
Thank you very much. What I have gathered from all the replies is as follows: The contractor has to pay the bonus to his workers from the profit he earned. If the contractor has enough allocable surplus, he can pay 20%. If not, he has to pay a minimum bonus of 8.33% to his workers. If he fails to pay accordingly, then the principal employer is responsible for paying the minimum bonus to the contract workers. However, there is no relation to the profits earned by the principal employer.
Could you please confirm if my understanding is correct?
Regards,
GIRI
From India, Hyderabad
Acknowledge(0)Amend(0)
Could you please confirm if my understanding is correct?
Regards,
GIRI
From India, Hyderabad
Acknowledge(0)Amend(0)
Yes, Mr. Giri, you have rightly understood it. Therefore, in case the Principal Employer pays, you may show the allocable surplus paid as a percentage to the contract workers and then deduct the same from the amount payable to the Contractor.
From India, Visakhapatnam
Acknowledge(0)Amend(0)
From India, Visakhapatnam
Acknowledge(0)Amend(0)
Dear Girimaddukuri,
You may kindly go to the thread on "Applicability Of Bonus To Contract Labour" at https://www.citehr.com/193193-applic...abour-pg2.html. This question has been discussed in detail there. I too have contributed some.
Regards,
From India, Pune
Acknowledge(0)Amend(0)
You may kindly go to the thread on "Applicability Of Bonus To Contract Labour" at https://www.citehr.com/193193-applic...abour-pg2.html. This question has been discussed in detail there. I too have contributed some.
Regards,
From India, Pune
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Contract employee & Principal employer 2017.pdf
NOTE ON PRINCIPAL EMPLOYER TO ENGAGE CONTRACT LABOUR.pptx
Do's & Don'ts by Principal Employer- Engaging Contract Labour.docx