Payroll Manager Tutorial | Payment of Bonus Act

 

Payment of Bonus Act

The present Act is the outcome of the recommendations made by a Tripartite Commission, which was set up the Government of India in 1961. The Government on January 24, 1964 received the recommendation of the Commission. Payment of Bonus Act promulgated on 26th May 1965 and in the same year it was adopted by the Parliament, which in turn enacted Payment of Bonus Act, 1965.

The Payment of Bonus Act imposes statuary liability upon the employers of every establishment covered under the Act to pay bonus to their employees. It further provides for payment of minimum and maximum bonus and linking the payment of bonus with the production and productivity.

Section1. Scope and application – This Act extends to whole of India. The Act applies to every factory where 10 or more workers are working and every other establishment where 20 or more persons are employed, on any day during the accounting year.

Section32. Act not to apply to certain classes of employees – Nothing in this act shall apply to:-

• Employees employed by the Life Insurance Corporation of India
• Seamen
• Employees registered and listed under any scheme of Dock Workers (Regulation of Employment) Act, 1948
• Employees of any industry or establishment, which is carried under the authority of Central/State Government;
• Employee of Red Cross Society, university and other educational institutions, hospitals, chamber of commerce and social welfare institutions established not for profit.; Employees employed by contractors
• Employees of Industrial Finance Corporation of India, Reserve Bank of India, State Financial Corporations, Deposit Insurance Corporation, Nation Bank for Agricultural and Rural Development, Unit Trust of India, Industrial Development of India, Small Industries Development Bank of India, National Housing Bank and other financial institutions other than banking company, being an establishment in public sector.

Definitions

• Accounting Year – Accounting Year means:
• In relation to a corporation, the year ending on the day on which the accounts and books are to be closed
• In relation to company, the period for which the profit or loss is placed before its annual general meeting
• In any other case:
• The year commencing on the 1st day of April; or
• In case the books are closed on any other day, the year ending the day the accounts and books are closed.

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