Mr.KN Agarwal

Assistant Labour Commissioner,U.P. (Retd.)

From the very beginning of industrial revolution, when the workers saws that their employers were making huge profit, started agitating for a share in profits. Numbers of attempts were made to achieve this goal not only by workers but also by the social democrats in various countries including our country. During and after agitation, it was almost universally accepted that the profits are made possible by the contribution of both Capital & labour in any industry and social justice requires that labour should be allowed a reasonable share in the increased profits| prosperity that are made in any particular period and on the basis of this principle , the Payment of Bonus Act,1965 passed in the year 1965 in the India.

Salient Features of the Payment of Bonus Act,1965

1. Applicability of Act-This act shall apply to Every factory and every other establishment in which 20 or more persons are employed on any day during an accounting year. Establishment includes departments, undertaking and branches etc
2. Act is not applicable to certain classes of employees, employed by LIC, General Insurance, Dock Yards, Red Cross, Universities & Educational Institutions, Chambers of Commerce, Social Welfare Institutions etc.
3. Eligibility of Bonus- An employee will be entitled only when he has worked for 30 working days in that year.

4. Disqualification  and   Deduction  of   Bonus-if   employee dismissed from service for- Fraud; or
   • Riotous or violent behaviour while on the premises of the establishment; or
   • Theft, misappropriation or sabotage of any property of the establishment; or
   • Misconduct of causing financial loss to the employer to the extent that bonus can be deducted for that year.

4. Payment of Minimum Bonus- An establishment has to pay bonus @8.33% of the salary or Rs.100, (on completion of 5 accounting years following the accounting year in which the Employer sells the goods produced or manufactured by him or renders services, even if there is no profit.
5. Payment of Maximum Bonus- Maximum bonus is payable up to @20% subject to, and in proportion to, availability of sufficient allocable surplus
6. Eligible Employees- Employees drawing wages up to Rs.21,000 per month or less. However, if salary of an employee is more than Rs 7000 p.m. or more than minimum wage fixed in scheduled employment, bonus shall be payable @ Rs.7,000 per month or minimum wage in scheduled employment whichever is higher.
7. Time Limit for Payment of Bonus- Within 8 months from the close of accounting year.
8. Maintenance of Registers & Records etc-

• A register showing the computation of the allocable surplus in Form A.
• A register showing the set-on and set-off of the allocable surplus, in Form B.
• A register showing the details of the amount of bonus actually disbursed, in Form C.

9. Submission of Return- Every employer shall on or before the 1st day of February in each year upload annual returns in the Form D on the web portal of Ministry of Labour and Employment giving information as to the particular specified in respect of the preceding year:
10. PENALTY- For contravention of any provisions of the Act or the Rules-shall be punishable with imprisonment up to 6 months or with fine up to Rs. 1000 or both