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Features of Payment of Bonus (Amendment) Act 2015

Features of Payment of Bonus (Amendment) Act 2015
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The salient features of the Payment of Bonus (Amendment) Act 2015 is as follows.

  1. The Parliament has passed the Amendment to the Payment of Bonus Act and the Act has received the assent of the President on the 31st December 2015. A copy of the Gazette of India dated 1.1.2016 is enclosed.
  2. The main features of the amendment are as under.
  • The number of employees who would be benefitted from the amendments has gone up on account of raising the eligibility limit from salary of Rs.10,000/- per month to Rs.21,000/- per month. Thus the amendment would extend the benefit to the substantial number of employees who were out of the coverage of the Payment of Bonus Act.
  • Section 12 of the Payment of Bonus Act which contains the provision with regard to calculation of Bonus in respect of certain employees has been amended and the amended Section provides that salary or wage of an employee where it exceeds Rs. 7,000/- (Rupees Seven Thousand) per mensem or the minimum wage for the Scheduled employment as fixed by the Appropriate Government whichever is higher, the Bonus payable to such employees under Section 10 or

as the case may under Section 11 shall be calculated as if his salary or wage were Rs.7,000/- (Rupees Seven Thousand) per mensem. The explanation appended to the amended section provides that for the purpose of the section, the expression scheduled employment shall have the same meaning as assigned to which in Clause (e) of Section 2 of the Minimum Wages Act, 1948.

  1. Arising out of the Amendments, there are several issues which would affect the Establishments and required to be addressed immediately. Some of the issues of concern are listed below:-
  • The Amendments have been given retrospective effect from 1.4.2014. In other words, the Bonus shall have to be paid to the employees in accordance with the amended provisions for the financial year 2014-15. All the Establishments have already paid the Bonus for the year 2014-15. In some cases, the issue of Bonus has been settled after long negotiations and may be after certain strain in the industrial relations. The Amended Act would reopen the settled issues and possibility of further strain in the industrial relations in some of the Establishments cannot be ruled out.
  • The Hon.ble Supreme Court in the case of Remington Rand of India vs. Workmen AIR 1970 SC 1421 has held that the Payment of Bonus cannot have retrospective operations. In the said case, the workmen had demanded Bonus for the Year 1963-64, but the Court held that it would not apply from the retrospective effect.
  • There is no uniformity in the minimum wages fixed by the different States. In some States, the minimum wages fixed is more than Rs.7,000/-. Further, the definition of .wages. which has not been amended excludes allowances like HRA, etc. In some States, the minimum wages fixed includes allowances like HRA, etc. Thus

there would be a serious inconsistency in determining the wages for the purpose of payment of Bonus. The minimum wages fixed for different scheduled employment also differ within the States. Further, the minimum wages are fixed in some States on the basis of Zones. Thus some employees would get higher quantum of Bonus on account of their being posted in the Zones where higher minimum wages is payable.

  • The amended section 12 with regard to the calculation of Bonus payable to the employees who are drawing salary / wages above Rs. 7,000/- per month stipulates that the Bonus payable to such employees either the minimum or the maximum amount of Bonus shall be calculated either on Rs.7,000/- per month or on the minimum wages for the Scheduled employment whichever is higher. This stipulation would lead to a serious grievances among the employees.
  • The above issues may create more problems at the industries and may affect the industrial relations.
  1. The Labour Law experts feel that the Amended Act can be challenged on the retrospective effect and inclusion of the word Minimum Wage in Section 12 on the above grounds. The Association is also examining the issues in totality. The Association invites the views of the members with regard to the above concerns and remedial measures to be taken in this behalf.

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