A bonus is a kind of incentive or reward by an employer to the employees in addition to their salary or basic pay. Bonus is generally paid to employees based on the exceptional job performance of the employees, however, payment of Bonus is also governed by the statute under Payment of Bonus Act, 1965.
Payment of Bonus Act prescribes the regulations under which employers are entitled to pay bonusses to their employees.
Applicability of Payment of Bonus Act, 1965: Payment of Bonus Act is applicable to
Compliance requirements under the Act in accordance with the Payment of Bonus Rules, 1975
Every employer shall, on or before 1st February of each year, upload the unified annual return in Form D on the web portal of the Ministry of Labour and Employment. The return must provide particulars of the preceding year in respect of all employees in establishments employing 20 or more persons and factories registered under the Factories Act, 1948 with employees drawing wages up to ₹21,000.
Every employer shall prepare and maintain a register in Form C showing details of the bonus payable to each employee, deductions under Sections 17 and 18, and the amount actually disbursed. For the purpose of computing working days, the following shall be deemed as days worked: lay-off days, leave with wages, temporary absence due to employment injury, and maternity leave with wages.
The bonus is computed at 8.33% of the above-mentioned ceiling limit or minimum wages notified, whichever is higher.
Minimum Bonus is 8.33% of the prescribed ceiling limit as mentioned above.
Maximum Bonus is 20% of the prescribed ceiling limit as mentioned above.
Penalties & Punishment
General Penalty on contravention:
Imprisonment which may extend up to 6 months, or Fine up to Rs. 1,000 or both
Conclusion
The Payment of Bonus Act, 1965 ensures equitable distribution of profits and provides financial participation to employees in the success of the establishment. It not only motivates employees by linking their efforts with rewards but also fosters industrial harmony by mandating timely payment of bonus. The Act thus serves as a social welfare legislation strengthening employee-employer relations.
Disclaimer: The information contained in this Article is intended solely for personal non-commercial use of the user who accepts full responsibility of its use. The information in the article is general in nature and should not be considered to be legal, tax, accounting, consulting or any other professional advice. We make no representation or warranty of any kind, express or implied regarding the accuracy, adequacy, reliability or completeness of any information on our page/article.