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INDIAN BONUS ACT ± 1965
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The term ³bonus´ is not defined in the Payment of Bonus Act, 1965

        




Bonus ± means ± something given in addition to what is ordinarily received by or
strictly due to the recipient

     
An Act to provide for the payment of bonus to persons employed in certain
establishments on the Basis of PROFITS or on the basis of production or
productivity and for matters connected therewith.
therewith.
It extends to the whole of India
Every other establishment in which twenty or more persons are employed on any
day during an accounting year±
year±
  


The object of the Act being to maintain peace and

harmony between labor and capital by allowing the
employees to share the prosperity of the
establishment and prescribing the maximum and
minimum rates of bonus together with the scheme of
³set--off´ and ³set-
³set ³set-on´ not only secures the right of
labour to share in the profits but also ensure a
reasonable degree of uniformity
    
Every factory (as def
def.. in Factories Act), & (b) Every other
establishment in which 20 or more persons (less than 20 but 10
or more if appropriate Govt.
Govt. notifies) are employed on any day
subject to certain exemptions
exemptions..

 ESTABLISHMENT: Establishments to include departments,

ESTABLISHMENT:
undertakings and branches

 Where an establishment consists of different departments or

undertakings or has branches, whether situated in the same
place or in different places, all such departments or
undertakings or branches shall be treated as parts of the same
establishment for the purpose of computation of bonus

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 A dispute relating to payment of bonus by the cotton mills of
Bombay ± the LAT laid down the main principles involved in the
grant of bonus to workers. These principles are known as LAT
formula.

 According to the formula, the following prior charges were to

be deducted from ·

:

:

 (i). Provisions for depreciation;

 (ii) Reserve for rehabilitation;
 iii) Return of 6% on the paid-
paid-up capital; and
 iv) Return on the working capital at a lower rate than the return
on paid-
paid-up capital.
 The balance if any was called available surplus and the
workmen were to be awarded a reasonable share out of it by
way of bonus for the year.
 
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Notwithstanding anything contained in this Act,--
Act,--

(i) where an agreement or a settlement has been entered into by the

employees with their employer before the commencement of the
Payment of Bonus (Amendment) Act, 1976 (23 of 1976), or

(ii) where the employees enter into any agreement or settlement with
their employer after such commencement,
for payment of an annual bonus linked with production or productivity in
lieu of bonus BASED ON PROFITS payable under this Act, then, such
employees shall be entitled to receive bonus due to them under such
agreement or settlement, as the case may be:
Provided that any such agreement or settlement whereby the employees
relinquish their right to receive the minimum bonus under section 10
shall be null and void in so far as it purports to deprive them of such
right
Provided further that such employees shall not be entitled to be paid
such bonus in excess of twenty per cent (20%) of the salary or wage
earned by them during the relevant accounting year.
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INDUSTRIES DISPUTE   



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Nothing in this Act shall apply to ±

(i) Employees employed by any insurer carrying on general
insurance business and the employees employed by the Life
Insurance Corporation of India;
(ii) Seamen

(iii) Employees registered or listed under any scheme made

under the Dock Workers
(iv) Employees employed by an establishment engaged in
any industry carried on by or under the authority of any
department of the Central Government or a State
Government or a Local authority;
Cont«.
 
    

(v) Employees employed by --

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(vi) Employees employed through contractor on

building operations;
 
    

(vii) Employees employed by the Reserve Bank of India;

(viii) Employees employed by --

 the Industrial Finance Corporation of India;

 any Financial Corporation established under section 3,
 or any Joint Financial Corporation established under section 3A,
 of the State Financial Corporations Act, 1951 (63 of 1951);
the Deposit Insurance Corporation;
the National Bank for Agriculture and Rural Development;]
the Unit Trust of India;
the Industrial Development Bank of India;
 
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 For contravention of the provisions of the Act or rules the penalty is

imprisonment upto 6 months, or fine up to Rs.
Rs.1000,
1000, or both.
both.
 For failure to comply with the directions or requisitions made the
penalty is imprisonment upto 6 months, or fine up to Rs.
Rs.1000,
1000, or both.
both.
 In case of offences by companies, firms, body corporate or
association of individuals, its director, partner or a principal officer
responsible for the conduct of its business, shall be deemed to be
guilty of that offence, unless the person concerned proves that the
offence was committed without his knowledge or that he exercised all
due diligence