Anitha Govind Itt Presentation (Time Management)

THE
PAYMENT
OF BONUS
ACT 1965
NITHINA C
SRO0827083
What is bonus ?
The term bonus is not defined
in this act or any other
legislation.
If profits exceeds a certain
base, then it must be shared by
the workers in the
establishment in which they are
employed.
DEFINITION
Employee is defined in Section
2 (13) of the Act as any person
(other than an apprentice)
employed on a salary or wage
of not more than twenty one
thousand rupees per mensem
in any industry
EMPLOYER
Owner
occupier The person who has
Agent the ultimate control
Legal over the affairs of the
representatives establishment.
manager
PAYMENT OF BONUS
ACT
The payment of bonus
Act ,1965 applies to every
factory and every
establishments in which
twenty or more persons are
employed on any day during
an accounting year.
OBJECTIVE BEHIND THE
ACT
The objective of the Payment of
Bonus Act, 1965 is to provide for the
payment of bonus to the persons
employed in certain establishments
on the basis of profits or production.
ELIGIBILITY
The payment of bonus is a
statutory right under the act and
According to the Section 8 of
the act, any employer who has
worked for a minimum of 30
days in an accounting year, shall
be eligible for a bonus.
However employees of L.I.C.,
Universities and Educational
institutions, Hospitals, Chamber of
Commerce, R.B.I., IFCI, U.T.I.,
IDBI, NABARD, SIDBI, Social
Welfare institutions are not entitled to
bonus under this Act.
DISQUALIFICATION
According to the sec 9 of the act an employee shall be
disqualified from receiving bonus under the Payment
of Bonus Act, 1965, if he is dismissed from service for:
•Fraud, or
•Riotous or violent behavior while on the premises of
the establishment, or
•Theft, misappropriation or sabotage of any
property of the establishment.
RIGHTS AVAILABLE TO
EMPLOYEES
1.Right to claim bonus due under the
Act, which allows them to make a
request to the government for payment
and recovery of bonus amounts that are
not paid to them within one year of
their due date
2.The right to take any dispute to
a Labour Court or Tribunal;
however, it is necessary to
remember that employees who
are not entitled to bonuses are
unable to take their case to a
Labour Court or Tribunal.
3.Right to seek clarity to obtain
details about whatever products
are in the name of the business
so that they can determine
whether or not they are being
fairly compensated for their
services.
DUTIES OF EMPLOYER
To calculate and pay the annual
bonus as required under the Act
To submit an annul return of
bonus paid to employees during
the year, in Form D, to the
Inspector, within 30 days of the
expiry of the time limit specified
for payment of bonus.
•To co-operate with the
Inspector, produce before
him the registers/ records
maintained, and such other
information as may be
required by them.
• To get his account audited
as per the directions of a
Labour Court/ Tribunal or
of any such other authority.
RIGHTS AVAILABLE TO
EMPLOYER
1.Rights to bring any dispute to
the Labour Court or the Tribunal
over a request for an
interpretation of any clause of
the Act.
2.Right to deduct a fair
amount from an employee's
bonus on account of a
bonus already paid as a
festival bonus or in the
event of a monetary loss
caused by the employee's
misbehavior.
3.Right to deduct the value
of a bonus paid to an
employee who has been fired
for misbehavior, offensive
behavior, or obstructing the
establishment's land.
APPLICABILITY
The Payment of Bonus Act
implements to the establishments
which fall under any of the below
listed:
•It applies to any factory or
establishment which had twenty or
more workers employed on any day
during the year.
•The act does not apply to
the non-profit making
organisations.
•It is not applicable to

establishments such as LIC,
hospitals which are excluded
under Section 32.
establishments where employees
have signed an agreement with the
employer.

establishments exempted by the
appropriate government like sick
units.
DEPARTMENTS ,UNDERTAKIN
GS
According to the Bonus Act, any
different departments or undertakings or
branches of an establishment of whether
located in the same place or at different
areas should be considered as parts of
the similar establishment for
computation of bonus under the Act.
MINIMUM BONUS
•The minimum bonus which an

employer is required to pay even
if he suffers losses during the
accounting year or there is no
allocable surplus is 8.33 % of the
salary or wages during the
accounting year, or
•Rs. 100 in case of
employees above 15
years and Rs 60 in case of
employees below 15
years, at the beginning of
the accounting year,
whichever is higher
MAXIMUM BONUS
If in an accounting year, the allocable surplus,
calculated after taking into account the amount
‘set on’ or the amount ‘set of’ exceeds the
minimum bonus, the employer should pay bonus
in proportion to the salary or wages earned by the
employee in that accounting year subject to a
maximum of 20% of such salary or wages.
CALCULATION OF BONUS PAYMENT
If an employee's income is less than Rs. 21,000,

they qualify for a bonus.
•If the base salary + DA (Dearness Allowance) is
less than Rs. 7,000, then the Bonus will be
calculated on the actual amount
•If the base salary + DA (Dearness Allowance)
exceeds Rs. 7000, the Bonus is calculated at Rs
7000
CALCULATION OF BONUS
Section 4 and Section 7, together with Annexes
1 and 2, deal with the calculation of gross profit
and available surplus, of which 67% in the case
of companies and 60% in the other cases would
be an attributable surplus. Thus, to calculate the
available surplus, the amounts that can be
deducted from the gross margin are:
•All direct taxes under Section 7
•The amounts indicated in the table
•The investment or development
deduction that the employer is entitled
to deduct from his income under the
Income Tax Act.
Available Surplus = Gross Profit –
(subtract) the following:
•Depreciation is permitted under Section 32

of the Income Tax Act.
•Development Assistance.
VIOLATIONS AND PUNISHMENTS
•In case of violation of the Payment of Bonus
Act or regulation, the penalty is imprisonment
for 6 months or can be fined Rs.1000 or both.
•In case of non-compliance with the indications
or the demands made, the penalty is
imprisonment for 6 months or can be fined Rs.
1000 or both.
•In the case of crimes committed by companies,
enterprises, legal persons, or associations of natural
persons, the director, the shareholder, or an
administrator or manager in charge of carrying out
their business must be found guilty of this crime
unless the interested party proves that he conducted
due diligence and the crime was committed without
his knowledge.
https://www.deskera.com/blog/
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THE

•It is not applicable to

•It is not applicable to

•The minimum bonus which an

If an employee's income is less than Rs. 21,000,

•Depreciation is permitted under Section 32

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