3.9.1 Object
– to provide for the payment of Bonus on
the basis of profit or production or
productivity, define principles, formula, and
machinery liability for the payment of
Bonus.
3.9.2 Scope
– it applies to every factory wherein 10 or
more persons are employed running with the
aid of power and in other cases including
establishments 20 or more employees are
employed. But it does not apply to LIC,
Central or State Govt. establishments, Indian
Red Cross Society, Universities and
Educational Institutions. Hospitals, Chamber
of Commerce, R.B.I., I.F.C.I., U.T.I., Social
Welfare Institutions, Local Bodies. What
they are paying as bonus is ex gratia
payment.
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For the purpose of counting the number of
employees department or branches are to be
clubbed, unless considered separate and
preparing a separate balance sheet.
Coverage –an employee who has worked for
30 working days in an accounting year and
drawing wages up to Rs. 10,000/- p.m. ( for
calculation purpose Rs.3500/- p.m.
maximum will be considered – Sec.12 ).
Part-time time employee, daily wage earner,
sweeper, probationer are entitled but
apprentices are not eligible.
Minimum bonus – 8.33 % or Rs.100/- on
completion of 5 years after 1st Accounting
year even if there is no profit whichever is
higher. It should not exceed 20 % of wages
in any case.
Components of bonus – salary or wages
includes dearness allowance, free food
allowance or the value of such food when it
is being paid in lieu of wages, but it does not
include - over-time wages, house rent or
other allowance, bonus, (including
incentive, production and attendance bonus)
or commission, T.A.,P.F- ESI contribution
paid by the employer etc.
Time limit – it should be paid in cash and
within 8 months from the closing of the
accounting year. Bonus is payable only on
annual and not on half yearly basis.
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3.9.3 Calculation of Bonus
1. Calculate the gross profit in the manner
prescribed in –
(a) First Schedule, in case of banking
company; or
(b) Second Schedule, in any other case.
2. Calculate the Available Surplus. (Sec. 5, 6
and 7)
Available Surplus = A + B, where
A = Gross Profit – Depreciation admissible
u/s 32 of the Income Tax Act – Development
rebate or investment allowance or development
allowance – Direct Taxes payable for the
accounting year ( calculated as per Sec. 7 ) –
Sums specified in the Third Schedule.
B = Direct Taxes ( calculated as per Sec. 7 )
in respect of gross profit for the immediately
preceding accounting year – Direct Taxes in
respect of such gross profit as reduced by the
amount of bonus, for the immediately preceding
accounting year.
3.9.4 Calculate Allocable Surplus.
Allocable Surplus = 60 % of Available
Surplus. (67 % - foreign co. )
Make adjustment for ‗Set-on and Set-off‘ as
per Fourth Schedule.
The Allocable Surplus so computed is
distributed among the employees in
proportion to salary or wages received by
them during the relevant accounting year.
( Sec 2 (4) )
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3.9.5 Maintenance of Registers and
Records, offences and Penalties
A register showing the –
- Computation of the Allocable Surplus
referred to in Sec. 2(4) in Form A.
- Set-on and Set-off of the Allocable
Surplus, u/s 15, in Form B.
- details of the amount of bonus due to each
of the employees, the deductions u/s 17 and
18 and the amount actually disbursed, in
Form C. ( Sec.26, Rule 4 )
3.9.6 Offences
– contraventions of the provisions of the
Act or Rules, and failure to comply with the
directions or requisitions made –
Imprisonment up to 6 months or fine up to
Rs. 1,000/- or both.
3.9.7 Contracting out is void (Sec. 31A)
3.9.8 Deduction
It is permissible for any financial loss caused by
misconduct.
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3.9.9 Forfeiture
- if he is dismissed from service for fraud, riotous /
violent behaviour / theft / misappropriation /
sabotage of any property of the establishment, not
only for the year in which he is so dismissed but
also for the past years remaining unpaid to him.
3.10 The Equal Remuneration Act, 1976
3.10.1 Object
– To provide equal remuneration to both male and
female workers for the work of similar nature and to
prevent discrimination on ground of sex against
women in the matter of employment
3.10.2 Application
- To almost all establishments
Act shall have overriding effect on other
law, agreement, award or contract of service
notwithstanding anything inconsistent
therein.
It is the duty of the employer to pay equal
remuneration to both men and women for
equal work, and shall not reduce the rate of
remuneration only on the ground of sex.
No discrimination in the matter of
promotion, training or transfer except where
employment of women is restricted.
