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Bonus Act, 1956

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Published in: Law, Ethics and Communication
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The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers in 1917.  Eligibility: • Every factory or every other establishment in which 20 or more employee are employed on any day during an accounting year. • Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this act, provided he has worked in the establishment for not less than 30 working days. • It extends to the whole India except Jammu & Kashmir.

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  1. The Payment of Bonus Act, 1965 The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers in 1917. a) b) c) Eligibility: Every factory or every other establishment in which 20 or more employee are employed on any day during an accounting year. Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this act, provided he has worked in the establishment for not less than 30 working days. It extends to the whole India except Jammu & Kashmir. Disqualification for bOnus:Notwithstanding anything contained in this act, an employee shall be disqualified from receiving bonus under this act, if he is dismissed from services for- Fraud, Riotous or violent behavior while on the premises of the establishment, Theft, misappropriation or sabotage of any property of the establishment. Payment of maximum bonus:Subject to the other provisions of this act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 & in respect of every subsequent accounting year, a minimum bonus which shall be 8.33% of the salary as wages earned by the employor during the accounting year or 100, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. Provided that where an employee has not completed 15 year of age & at the beginning of the provision of this section shall have effect in relation to such employee rupees, the words "one hundred rupees" the words "sixty rupees" were substituted. Payment of Maximum Bonus -Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employee under that section, the employer shall, in lieu of such minimum bonus, be bound to pay every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or
  2. wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage. Calculation of Bonus with respect to certain employees-where the salary or wage of an employee exceeds [seven thousand rupees, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were[Seven thousand rupees] Proportionate reduction in bonus in certain cases -Where an employee has not worked for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than 8.33% of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced. Set on and set off of allocable surplus-where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 11, then, the excess shall, subject to a limit of twenty per cent of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilized for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.

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