Before the commencement of this Act, there was no concept of minimum and maximum bonus under the Bonus Act. Result of that most of the employer was taking unfair advantage of the employee. The government felt hues harassment of the employee. Therefore the Government decides to introduce a new law known as The Payment of Bonus Act, 1965.
So if you are an employee or an employer then it goes more important for you to understand the rules relating to a minimum and maximum bonus under the Bonus Act.
According to the provision of the Payment of Bonus Act, 1965, every employee of the establishment shall be liable to pay a minimum amount of bonus to his employee at the rate of 8.33% of the wages or salary earned by that employee in respect of that accounting year or 100 rupees whichever is higher.
However, if the employee of the establishment has not completed 15 years of age then the minimum amount of 100 shall be substituted with 60 rupees.
If the allocable surplus exceeds the amount of minimum bonus payable to the employee of the establishment in an accounting year then the employer shall in addition to the minimum bonus payable be bound to pay an amount in proportion to the wages or salary.
However, the maximum amount of bonus shall be 20% of wages or salary payable to the employee in respect of that accounting year. In the calculation of allocable surplus, set on and set off of profit shall be count.
Bonus with respect of certain employee
If the wages or salary of the employee exceeds 2500 per mensem, the for the calculation of bonus, salary or wages of the employee shall be deemed to be 2500 per mensem.
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Special provisions with respect to certain establishment
This section deal with the newly established organization, whether before or after the commencement of this act.
As per this section bonus shall be paid in accordance with the provision of subsections (1A) (1B) (1C) of this section.
Subsection (1A), according to this subsection, in the first 5 accounting year following the accounting year in which employer renders services or sells the goods manufactured or produced by him. The bonus shall be payable in that accounting year only in which employer earned profit.
In the first five years, the bonus shall be calculated as per the provision of this act but the provision of setting on and set-off shall not be applicable for this subsection.
Subsection (1B), in respect of Sixth and seventh accounting years following the accounting year in which employer renders services or sells the goods manufactured or produced by him, the provision of set-off and carry forward shall apply subject to some conditions.
(1) For the sixth accounting year, set on or set off, shall be made in the manner of Fourth Schedule by taking into account the excess or deficiency of the allocable surplus in respect of the fifth and sixth accounting years.
(2) For the seventh accounting year, set on or set off, shall be made in the manner of the fourth Schedule by taking into account the excess or deficiency of the allocable surplus in respect of the fifth, sixth and seventh accounting years.
(3) From the eighth accounting year following the accounting year in which the employer renders services, sells the goods produced or manufactured by him from such establishment, the provisions set off and carry forward shall apply in relation to such establishment as they apply in relation to any other establishment.
Deduction of certain amounts from bonus payable
If in any accounting year, an employee is found guilty of misconduct which causing financial loss to the employer then the employer has a right to deduct the amount of loss caused to the employer from the amount of bonus payable by him to the employee in respect of that accounting year and the employee shall be entitled to receive the balance amount of bonus.
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