Payment of Bonus Act, 1965

Applicability
(a) Every factory (as def. in Factories Act), & (b) Every other establishment in which 20 or more persons (less than 20 but 10 or more if appropriate Govt. notifies) are employed on any day subject to certain exemptions.
ii) Employees' drawing remuneration of Rs. 3,500/- or more and those who have worked for less than 30 days are not eligible to receive bonus under the Act.
iii) Bonus to be paid within eight months from the expiry of the accounting year.




Eligibility
i) Every person (other than an apprentice) drawing salary up to RS 3,500 per month.
Ii) Every person drawing salary between RS 2,501/- and RS 3,500/- per month. The bonus payable to him is to be calculated as if his salary were RS 2,500/- p.m.

Disqualification for bonus -
Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for-

(a) Fraud; or
(b) Riotous or violent behaviour while on the premises of the establishment; or

(c) Theft, misappropriation or sabotage of any property of the establishment.

Payment of minimum bonus -
Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year :

Provided that there an employee has not employed fifteen years of age at the beginning of the accounting year, the provision of this section shall have effect in relation to such employee as if for the words "one hundred rupees", the words "sixty rupees" were substituted.

Payment of maximum bonus -
(1) Where in respect of any accounting year referred to in Sec.10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.

(2) In computing the allocable surplus under this section, the amount set on or the amount set-off under the provisions of Sec.15 shall be taken into account in accordance with the provisions of that section.









Benefits
i) Subject to other provisions :— Minimum bonus shall be 8.33% of salary/wages earned or RS 100 whichever is higher.
Ii) If allocable surplus exceeds the amount of minimum bonus, then bonus shall be payable at higher rate subject to a maximum 20% of salary/wages.
Iii) Computation of bonus is to be worked out as per Schedule I to IV of the Act.


Penal Provisions
Penalty - If any person -

(a) Contravenes any of the provisions of this Act or any rule made thereunder; or
(b) To whom a direction is given or a requisition is made under this Act fails to comply with the direction or requisition.

He shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.