Payment of Bonus Act, 1965 - CA IPCC (Old Course) - by Prof. Khushboo Sanghavi
R ecently, the government approved amendments to the Bonus Act, 1965 raising the limit for calculations of bonuses.
More so, it has also made this act applicable from April 1st, 2014.
Establishments will now have to pay the unpaid bonus for the previous 2 financial years as well.
The amendments have been made with the intention to bring more employees under the eligibility of the Bonus Act.
While this will certainly be cheered by employees, this also creates a financial liability for employers.
We came up with 10 questions that would clear all doubts and help you tackle the increase in statutory bonuses head on.
Here are the answers to all the questions that you may have: 1 What is Statutory Bonus?
A bonus is an additional payment given to employees with the intention to motivate them.
The Statutory Bonus came into existence with the approval of the Payment of Bonus Act in 1965 by latest bonus act in india Government.
According to this act, certain establishments had to pay an amount to their employees based on their profitability each year.
This amount was to be latest bonus act in india and above their basic salaries.
The purpose of the act was to enable employees to partake in the profits of their respective companies.
The bonus, when applicable, also gives employees an opportunity to earn more than the minimum wages.
The government has approved amendments that have not only increased the amount paid out but also the number of people who are eligible.
Here are the latest bonus act in india changes to the act: 1.
Wage limit increased from Rs.
However, the amendment has raised this ceiling to Rs.
This has been done with the intention of bringing more employees under the eligibility of the Bonus Act.
This also means that employers will have to pay employees that fall between the Rs.
Maximum bonus limit increased to 20% of Rs.
However, this has been changed to 20% of Rs.
Minimum Bonus increased to 8.
However, this amount has been doubled to become Rs.
Since, companies are expected to pay all arrears since 2014, this particular change seems to be causing the highest discomfort for employers.
In states where the minimum wage is higher than Rs 7,000, the statutory arrears liability becomes even higher.
For the purpose of this Act, wages are defined as the total of the Basic salary + DA Dearness Allowance.
Yes, employees that have left the organization are still eligible for their arrears.
Employers will have to pay the outstanding bonus of past employees as well.
The payment of Bonus for a financial year has to be made within 8 months of its completion.
Since the financial link in India ends in March, payments have to be made by the end of October of the latest bonus act in india financial year.
Although the bill for the amendment of the Bonus Act has been sanctioned by the government, there has been no formal date that has been declared for the payment link the arrears.
It can be assumed that these arrears should be paid out before the due date of the current financial year.
Companies can make the payment to current employees using the same medium that they use to transfer salaries.
On the other hand, past employees can be paid by issuing individual cheques.
As a current employee, you can simply expect this amount to be transferred to you along with your salary.
Past employees will have to enquire with their companies on how they can make their collection.
Companies should prepare and organize cheques for all previous employees to make the payout a smooth latest bonus act in india />Changing the mandatory components of salaries like Basic salary or HRA will only make things more complicated.
The amendments to the Bonus Act and its retrospective impact puts labour based companies in an unfavourable position.
This is why planters in Kerala decided to file a petition with the Kerala High court, challenging the retrospective effect of the act.
The High Court, in response, has issued an interim order staying the latest bonus act in india implementation of the Bonus Act.
In the coming months and weeks, other states may also join Kerala https://money-spin-games.website/account/bonus-account-3-in-1.html challenging the amendments of the Bonus Act.
Download the free Bonus Liability Calculator The changes in the Bonus Act has left a lot to be done on the calculation front.
Just put in a few quick details and the tool will do the rest for you.
Labour law is also referred to as employment law which is separate branch of law that protects workers rights. The Republic of India being a federal form of government having labour matters subject on its concurrent list in the the Indian Constitution, where the Central government and State governments can enact laws on labour relations and employment issues.
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