The Payment of Bonus Act, 1965 provides for the payment of bonus to employees in establishments with 20 or more employees based on profits. It applies to factories and other establishments and covers employees earning up to Rs. 10,000 per month who have worked for at least 30 days. The act specifies minimum and maximum bonus amounts as a percentage of salaries and carries forward surplus amounts across years for set-on or set-off.

1. Payment of Bonus Act, 1965OnkarSatamKantilalKambleAnit NairLabour Legislations Presentation SYMMS

2. Objective“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.”LabourLegislations Presentation SYMMS

3. ApplicabilityEvery factory or an establishment employing not less than 20 employees during an accounting year.

4. Establishments once covered under this act will continue to be covered even if the number of employees fall below 20 subsequently.LabourLegislations Presentation SYMMS

5. Employee?Any person other than Apprentice , engaged for hire or reward.

6. Includes Supervisors, Managers & Administrative staff

7. Person who has worked for minimum of 30 days in an accounting year

8. Person with a maximum salary of 10,000 per monthLabourLegislations Presentation SYMMS

9. Trivia Can a person drawing wages more than 10000 per month make a claim for Bonus under any special circumstance?LabourLegislations Presentation SYMMS

10. AnswerNo. It is nor maintainable under the ActLabourLegislations Presentation SYMMS

11. Important CalculationsEmployees drawing salary up to Rs 10000 per month are eligible for bonus but their salary will be limited to Rs. 3500 for the purpose of calculation for bonus.

12. Maximum of 20% and minimum of 8.33% of salary can be paid as bonus.

13. Maximum amount of payable bonus is limited to Rs. 84000. (3500 x 12 x 20/100)LabourLegislations Presentation SYMMS

14. Payment of Bonus – Source of Money?Gross Profit – Allowable Deductions = Available Surplus

15. 60% of Available Surplus = Allocable Surplus

16. Bonus to be paid irrespective of the availability of Allocable Surplus

17. Bonus to be paid within maximum of 8 months after the end of the accounting period.LabourLegislations PresentationSYMMS

18. Set OnCase when allocable surplus exceeds total Bonus payments calculated at maximum of 20% of salary

19. The excess amount is carried forward as Set On to the next accounting year