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. In certain cases of industrial disputes demand for payment of bonus was also included. In 1950, the Full Bench of the Labour Appellate evolved a formula for determination of bonus. A plea was made to raise that formula in 1959. At the second and third meetings of the Eighteenth Session of Standing Labour Committee (G. O.I.) held in New Delhi in March/April 1960, it was agreed that a Commission be appointed to go into the question of bonus and evolve suitable norms. A Tripartite Commission was set up by the Government of India to consider in a comprehensive manner, the question of payment of bonus based on profits to employees employed in establishments and to make recommendations to the Government. The Government of India accepted the recommendations of the Commission subject to certain modifications. To implement these recommendations the Payment of Bonus Ordinance, 1965 was promulgated on 29th May, 1965. To replace the said Ordinance the Payment of Bonus Bill was introduced in the Parliament. The Bonus Formula: The Bonus Formula was first evolved in the case of Mill Owners Association, Bombay v. Rashtriya Mill Mazdoor Sangh, Bombay, (1950). The formula, which came to be known as the Full Bench Formula or the Available Surplus Formula is as follow: As both labour and capital contribute to the industrial concern it is fair that labour should derive some benefit if there is surplus after meeting prior or necessary charges. These first charges on gross profit are:
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Provision for depreciation Reserve for rehabilitation A return of six percent on the paid-up capital, and A return on the working capital at a lower rate than the return on paid-up capital.

Bonus Commission: The government of India appointed a commission by the suggestion given by the associated cement companys known as the bonus commission, by its resolution dated 6th Dec, 1961. The bonus commission submitted its report to the government on 18th Jan, 1964. Then the government accepted the report with slight modification by their resolution dated 2nd Sept, 1964, and in order to give statutory effect to the recommendation made by the bonus commission an, ordinance known as the payment bonus ordinance was promulgated in may 1965. The ordinance was later replaced by the payment of bonus act 1965 in September of that year. The act came into operation with effect from 25th Sept, 1965. To review the operation of the payment of bonus act 1965 the governments setup in 1972 a bonus review committee. As a result of the recommendation of this committee, the payment of

bonus (Amendment) act, 1972 was passed. This amendment increases the minimum compulsory payment of bonus from 4% to 8 1/3%. Payment of Bonus (Amendment) Act 1977: Presidential ordinaries was promulgated on 3rd Sept, 1976 to give statutory effect to the governments decision taken on 18th August, 1977 for restoring the payment of a minimum bonus of 8.33%, the legal right for which had been taken away from the employees during emergency. The ordinance was replaced by the payment of bonus (Amendment) act, 1977 which was come into force retrospectively from the 3rd of September, 1977. The important provisions of the Amendment Act have been discussed at relevant places. The Act does not preclude employees employed in any establishment or class of establishment from entering into agreement with their employer for granting them an amount of bonus under a formula which is different from that under this Act. But no such agreement shall have effect unless it is entered into with the previous approval of appropriate government. This is subject to stipulations which among other things, provide that such employees shall not be entitled to be paid bonus in excess of
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8.33% of the salary or wage earned by them during the accounting year if the employer has no allocable surplus in the accounting year or the amount of such allocable surplus is only so much that, but for the provisions of Sec. 10(2-A), it would entitle the employees only to receive an amount of bonus which is less than the aforesaid percentage; or, 20% of the salary or wage earned by them during the accounting year. (Sec.34 as substituted by the Amendment Act of 1977).

Eligibility for Bonus: 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 thirty working days in that year. 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 service for: a) b) c) Fraud; or Riotous or violent behavior while on the premises of the establishment; or Theft, misappropriation or sabotage of any property of the establishment.

Payment of Minimum 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 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effect in relation to such employee as if for the words one hundred rupees, the words sixty rupees were substituted. Payment of Maximum Bonus: 1. Where is respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year, subject to a maximum of twenty percent of such salary or wage. 2. In computing the allocable surplus under this section, the amount set on the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section. 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 per cent, of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced Deduction of Certain Amounts from Bonus Payable under the Act: Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any. Time-Limit for Payment of Bonus: All amounts payable to an employee by way of bonus under this Act shall be paid in cash by his employer (a) Where there is a dispute regarding payment of bonus pending before any authority under section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute; (b) In any other case, within a period of eight months from the close of the accounting year.

Penalty: If any person(a) contravenes any of the provision of this Act or any rule made there under, or

(b) to whom a direction is given or a requisition is made under this Act fails to comply with the direction or requisition, He shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

2. The Payment of Wages Act, 1936

The Payment of Wages Act, 1936 is a central legislation which has been enacted to regulate the payment of wages to workers employed in certain specified industries and to ensure a speedy and effective remedy to them against illegal deductions and/or unjustified delay caused in paying wages to them. It applies to the persons employed in a factory, industrial or other establishment, whether directly or indirectly, through a sub-contractor. The Central Government is responsible for enforcement of the Act in railways, mines, oilfields and air transport services, while the State Governments are responsible for it in factories and other industrial establishments. The basic provisions of the Act are as follows: The person responsible for payment of wages shall fix the wage period up to which wage payment is to be made. No wage-period shall exceed one month. All wages shall be paid in current legal tender, that is, in current coin or currency notes or both. However, the employer may, after obtaining written authorization of workers, pay wages either by cheque or by crediting the wages in their bank accounts. All payment of wages shall be made on a working day. In railways, factories or industrial establishments employing less than 1000 persons, wages must be paid before the expiry of the seventh day after the last date of the wage period. In all other cases, wages must be paid before the expiry of the tenth day after the last day of the wage period. However, the wages of a worker whose services have been terminated shall be paid on the next day after such termination. The Act allows deductions from the wages of an employee on the account of the following:(i) fines; (ii) absence from duty; (iii) damage to or loss of goods expressly entrusted to the employee; (iv) housing accommodation and amenities provided by the employer; (v) recovery of advances or adjustment of over-payments of wages; (vi) recovery of loans made from any fund constituted for the welfare of labour in accordance with the rules approved by the State

Government, and the interest due in respect thereof; (vii) subscriptions to and for repayment of advances from any provident fund;(viii) income-tax; (ix) payments to co-operative societies approved by the State Government or to a scheme of insurance maintained by the Indian Post Office; (x) deductions made with the written authorization of the employee for payment of any premium on his life insurance policy or purchase of securities. Responsibility for payment of wages: Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid under this Act: (a) In factories, if a person has been named as the manager of the factory under clause f of subsection 1 of section 7 of the Factories Act, 1948 (63 of 1948). (b) In industrial or other establishments, if there is a person responsible to the employer for the supervision and control of the industrial or other establishments. (c) Upon railways (otherwise than in factories), if the employer is the railway administration and the railway administration has nominated a person in this behalf for the local area concerned. Fixation of wage-periods: (1) Every person responsible for the payment of wages under section 3 shall fix periods (in this Act referred to as wage-periods) in respect of w

3.Factory Act 1948

1. Government regulation o the working condition in factories begins in India in 1881 when the first Indian factories Act was passed. 2. This act was substantially amended in 1934 on the basis ob the recommendations of the Royal commission on labour. 3. 4. The act of 1934 dividend factories into two categories-seasonal and perennial. This act was amended several times.

5. On the eve of independence the national government announced far reaching legislative program for the welfare of workers. 6. As a part of this program, the factories act 1948 was passed.

7. The factories act 1948 is comprehensive in nature and through it the government has tried to implement as many provisions of the ILO code of industrial hygiene as were practicable under Indian conditions. 8. 9. The factories act was substantially amended in 1976. Since then there has been substantial modernization and innovation in the industrial field.

10. Provisions have also been made for the workers participation in safety management. Objectives: The main objective of the factories act is to regulate conditions of work in manufacturing establishing and to ensure adequate safety sanitation, health, working hours, leave with wages and weekly holidays for workers employed in such establishment.
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The act is a protective legislation. It also regulates employment of women and young persons in factories. The factories ac 1948 came into force on April 1st, 1948. It applies to factories all over India. Unless otherwise stated this act shall apply to factories belonging to central and state governments.

Definition of Factory According to Sec 2 (m) factory means: In simple words, a factory is a premise whereon 10 or more persons are engaged if power is used, or 20 or more persons are engaged if power is not used, in a manufacturing process.

Whereon 10 or more workers are working or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on. The first Factories Act in India was passed in 1881. It was designed primarily to protect children and to provide for some health and safety measures. It was followed by new Acts in 1891, 1911 & 1934. The act of 1934 was passed to implement the recommendations of the Royal Commission on Labour in India & the conventions of the International Labour Organization. Hence the Factories Act of 1948. The Act makes detailed provisions regarding health, safety and welfare of workers, working hours of adults, employment of young persons (which includes children & adolescents), annual leave with wages, and so on. The Act of 1948 not only consolidated but also amended the law regulating labour in factories. It came into force on 1st April, 1949. In farming the new Act, the labour Minister stated in the Legislature on 30th January, 1948 that the Government had tried to implement as many of the provisions of the I.L.O code of industrial hygiene as were practicable under Indian conditions and the provisions relating to periodical medical examin

Workers Compensation Act, 1923

The Workers Compensation Act, aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen. It provides for payment by certain classes of employers to their workmen compensation for injury by accident. The latest amendment to the Act was made in 1984. Object and scope of the Act: The passing of the Act in 1923 was the first step towards social security of workmen. The main objective of the Act is to provide for the payment of compensation by certain classes of employers to their workers for injury by accident. The theory of Act is that The cost of the product should bear the blood of the workmen. The Act came into force on the first day of July, 1924. The growing complexity of industry with increasing use of machinery and consequent dangers to workmen rendered it advisable that they and their families should be protected, as far as possible, from hardship arising from accidents. Keeping in view this fact an Act called the Workmens Compensation Act was passed which came into force on 1st July 1924.it applies to the whole of India except the state of Jammu & Kashmir. The Act provides for cheaper & quicker disposal of disputed relating to compensation

through special tribunals than possible under the Civil Law. The Act looks upon compensation as relief to the workmen & not as damages payable by the employer for a wrongful act. Position before the Act: Prior to the passing of the Workmens Compensation Act, the position was very unsatisfactory. The employer was liable to pay compensation only when the injury was caused to the worker on account of his (employers)negligence, & here also, the employer could escape liability on any of the following grounds:
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The doctrine of common employment. The doctrine of assumed risks. The doctrine of contributory negligence.

Who is Workman? Workman means any person (other than a person whose employment is of a casual nature and who is employed otherwise than for the purposes of the employers trade or business) who is- i. a railway servant as defined in section 3 of the Indian Railways Act, 1890 not permanently employed in any administrative, district or sub-divisional office of a railway and not employed in any such capacity as is specified in Schedule II, or ii. Employed in any such capacity as is specified in Schedule II, Whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing. The provisions of the Act have been extended to cooks employed in hotels, restaurants using power, liquefied petroleum gas or any other mechanical device in the process of cooking. Employees Entitled To Compensation: Every employee (including those employed through a contractor but excluding casual employees), who is engaged for the purposes of employers business and who suffers an injury in any accident arising out of and in the course of his employment, shall be entitled for compensation under the Act. Employers