The Payment of Bonus Act, 1965 powerpoint presentation

1. The Payment of Bonus Act, 1965
Presented by
Amit Kumar
Roll Number:-MGCU2017SWRK4001
Mahatma Gandhi Central University,
Motihari

2. Structure
1. History
2. Introduction
3. Objective of the Act
4. Applicability and Non-Applicability
5. Definitions
6. Eligibility and Disqualification
7. Payment, Calculation, Mode and
Time of payment of bonus
8. Special provisions applicable to
Newly Set-Up Establishments
9. Powers of Inspectors
10.Exemptions
11.References

3. Prices
Decreases
Profits
decreases
Bonus
decreases
Conflicts
Strikes
History
Prices High Profits High
Bonus (10% of their Salary)
After World War 1
During world war 1
The Payment of Bonus Act, 1965

4. Introduction
Bonus
Commission
established in 1961
Recommendation came in
1964
Government promulgated
the ordinance in 1965
Came in to force in
October 1965 as Act No.
21 of 1965
It has 40 sections and 4
schedules
There were number of amendments
The last amendment of 2015 was notified on 1st Jan.,
2016 and is effective from 1st April, 2014.

5. Objective of the Act
To maintain peace and harmony
between labor capital by
allowing the employees to share
in the prosperity of the
establishment reflected by the
profits earned by the
contributions together from
capital, management and labor.

6. Applicability and Non-Applicability
Applicability of Act (Section 1)
✓ Every factory
✓ Establishments having 20 or more
employees.
✓ Appropriate Government can extend the
provisions of this Act to any other
establishments where 10 or more persons
are working.
✓Applicability will be continuous even
though the employee falls below the
specified limit (20 or 10)
Non-Applicability (sec 32)
✓ Employees employed in GIC, LIC, RBI, IFCI, IDBI, SIDBI,
NABARD, UTI, National Housing Bank, IDBI, Red Cross Society
of India, Universities and other educational Institutions etc.
✓ Employees employed by RBI, CG, SG or any other
local authority
✓ Seamen
✓ Employees registered under any scheme made under the
Dock Workers Act, 1948
✓ Employees employed by Inland water Transport
Establishments

7. Definitions
Accounting Year
✓ Corporation:-Period for
which Accounts are closed
and balanced.
✓ Company:- Period for which
PROFIT &LOSS ACCOUNT is
prepared
✓ In any other Case:- 1st
April-31st March
Allocable Surplus
✓ In relation to an employer,
being a company (other than a
banking company) which has not
made the arrangements
prescribed the declaration and
payment of dividends- 67% of
the available surplus in an
accounting year.
✓ In any other case:- 60% of such
available surplus

8. Continue…
Employer [Sec 2(14)]
If establishment is factory,
✓ The owner or occupier of the
factory,
✓ Including the agent of such owner
or occupier,
✓ The legal representative of a
deceased owner or occupier and
✓ Where a person has been named as
a manager
Any other establishment,
✓ the person who, or the authority
which, has the ultimate control over
the affairs of the establishment
Employee [Sec 2(13)]
Whose wages does not exceed Rs.
21000/ month
✓ Employee include
• Part-time employee,
• Piece-rated Employee,
• probationer,
• daily paid worker,
• Temporary employee,
• seasonal employee and does not
include an apprentice

9. Continue…
It includes basic
pay and DA but
not any other
allowance.
It excludes the
value of
accommodation
supplied, supply of
light, water,
medical
attendance,
contribution to PF,
Gratuity etc.
Salary or Wages[section 2(21)]

10. ELIGIBILITYAND DISQUALIFICATION
Eligibility for bonus (Sec 8)
Every Employee is eligible for
bonus if he has worked in the
establishment for 30 or more
working days in an AY
Disqualification from Bonus (Sec 9)
Disqualified from bonus if he
is dismissed 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.

11. Payment and Calculation of Bonus
(Section 12)

12. Mode and Time of Payment of Bonus
(Sec 19)
➢ Mode:- Cash
➢ Time:-
✓ Normal:- Within 8 months from the
end of AY but can be extended up to 2
years by Appropriate Government.
✓ Dispute:- Within 1 month of award
become enforceable

13. Special provisions applicable to Newly Set-Up
Establishments (Sec 16)
In the First five years
✓ Bonus is payable
only in respect of an
AY in which the
employer derives
profit.
✓ Bonus shall be calculated in
accordance with the provisions
of the act.
✓ The provisions of
Sec 15 doesn’t apply.

14. Powers of Inspectors (Sec 27)
Can enter into
establishment during
business hours
Can examine the
places, employees of
the establishment
Can demand
information relevant
to inspection
Can demand books,
records relevant to
inspection
Can take copies or
extracts of books,
records etc.
Can seize books,
records, documents etc.

15. Exemptions from the Provisions of the
Act (Sec 36)
➢ Before granting any exemption,
Appropriate Govt. shall consider financial
position
➢ The exemption shall be given only if
Appropriate Govt. is satisfied that it is not
in public interest to apply all or any of
the provisions of this act to an
establishment or class of establishments

16. Reference
1. The payment of bonus act,1965
Thank You